N-30D 1 ra0650_6460vef.txt RA0650_6460VEF December 31, 2002 -------------------------------------------------------------------------------- Oppenheimer Main Street Growth & Income Fund(R)/VA A Series of Oppenheimer Variable Account Funds Annual Report -------- Management Commentaries -------------------------------------------------------------------------------- [GRAPHIC] Performance Update Investment Strategy Discussion Financial Statements [LOGO] OppenheimerFunds(R) The Right Way to Invest OPPENHEIMER MAIN STREET GROWTH & INCOME FUND(R)/VA -------------------------------------------------------------------------------- Objective Oppenheimer Main Street Growth & Income Fund(R)/VA, a series of Oppenheimer Variable Account Funds, seeks high total return (which includes growth in the value of its shares as well as current income) from equity and debt securities. -------------------------------------------------------------------------------- Narrative by Chuck Albers & Nicholas Monoyios, Portfolio Managers Oppenheimer Main Street Growth & Income Fund/VA's Non-Service shares provided an average annual total return of -18.80% for the 12-month period that ended December 31, 2002. 1 We use a quantitative approach to managing the Oppenheimer Main Street Growth & Income Fund/VA. Quantitative investing may seem a bit unconventional, but we use it for the simple reason that it works. The essence of a quantitative process for us is to research and understand repeatable patterns, anomalies and other signals in the market that we believe can give us an edge or advantage. We look at as many as 60 factors like this to try to develop a consistent relative return advantage. Equities were clearly not the place to be in 2002. Nevertheless, we were able to do what we set out to do, beat our benchmark, the S&P 500 Index. Although we were disappointed that the Fund's absolute performance was negative for the year, we were pleased with the Fund's returns relative to its benchmark, as the S&P 500 Index lost -22.09% as of 12/31/02. 2 2002 was a year in which the majority of U.S. stocks lost value. However, within that framework you could outperform the market by avoiding a few narrow clusters of really poor-performing stocks. Most of these were in technology and telecomm sectors, and the more speculative areas of healthcare, like biotech stocks. Our relative returns were the result of limiting our exposure to the worst performing areas of the market. Our models--specifically those that analyze quality of earnings, corporate actions (i.e. stock buybacks and offerings) and corporate momentum--did an excellent job of identifying the really bad stocks from the not so bad ones during the period and it made a significant difference to relative results. We were able to avoid the worst performing areas because our stock selection models, which are the foundation of our investment process, directed us away from these problem areas. The models also help with our approach to portfolio construction. Our portfolio construction process involves making investments in many companies, thereby limiting the individual weights of each company in the Fund and helping to avoid concentrated positions in any particular sectors or industries. We seek to add a small amount of performance from a large number of stocks, rather than seeking to add large amounts of performance from a small number of stocks, which normally involves taking risks that are too large in our opinion. Thus, our portfolio concentration was a benefit to performance during the period, as it limited the Fund's exposure to many of the corporate and accounting scandals that took place in 2002. Our research strongly suggests that the market tends to perform well after hitting the sort of multi-year lows we hit last summer. So while we may see additional ups and downs as the economic recovery takes hold, history suggests that stocks are likely to post better than average results over the next 5 years. There are generally two times when investors can make mistakes--the first is when the market is near a peak or a trough. Near a market peak, investors become overly optimistic. They often take on too much risk, which could come back to haunt them later on. The other time when investors may make mistakes is near a market bottom. Many investors get exaggerated views of long-term risks and become too cautious. This human reaction works against the 1. Includes changes in net asset value per share and does not include the charges associated with the separate account products that offer this Fund. Such performance is shown for non-service shares and would have been lower if such charges were taken into account. 2. The Fund's performance is compared to the S&P 500 Index (For more information on the Fund's benchmark, please see "Comparing the Fund's Performance to the Market" on page 4). 2 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA typical average investor. All things considered, we believe there is reason for optimism. When you have a multi-year period where the markets hit new lows, everybody's discouraged and very risk averse. Thus, stocks tend to be undervalued relative to the long-term trend of things. We believe the fourth quarter 2002 was a good time for long-term investors to take advantage of these undervalued stocks. We have a Main Street team working together on the Fund. It's not just one bright person working alone; it is a team of people, an entire body of data, and a comprehensive method of analysis. There is a momentum to what we do as a culture, and we think that's going to continue to carry on successfully for many years into the future. All this is part of what makes Oppenheimer Main Street Growth & Income Fund/VA 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 FUND PERFORMANCE Management's Discussion of Fund Performance. For the one-year period ended December 31, 2002, Oppenheimer Main Street Growth & Income Fund/VA produced negative results, however, in an extremely difficult and volatile investing environment. The Fund also outperformed its benchmark index, the S&P 500 Index. Three of the factors--quality of earnings, corporate actions and corporate momentum--we use to analyze our holdings and possible holdings worked well during the period. All three factors played a key role in the Fund's relative performance by limiting its exposure to many of the big corporate blow-ups of the past year. The Fund's holdings, strategy and management are subject to change. Comparing the Fund's Performance to the Market. The graphs that follow show the performance of a hypothetical $10,000 investment in each share class of the Fund held until December 31, 2002. In the case of Non-Service shares, performance is measured from inception of the class on July 5, 1995. In the case of Service shares, performance is measured from inception of the class on July 13, 2000. Performance information does not reflect charges that apply to separate accounts investing in the Fund. If these charges were taken into account, performance would be lower. The graphs assume that all dividends and capital gains distributions were reinvested in additional shares. The Fund's performance is compared to the performance of the S&P 500 Index, a broad-based index of equity securities widely regarded as a general measurement of the performance of the U.S. equity securities market. Index performance reflects the reinvestment of income but does not consider the effect of transaction costs. The Fund's performance reflects the effects of the Fund's business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the investments in the index. 4 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA Non-Service shares Comparison of Change in Value of $10,000 Hypothetical Investments in: Oppenheimer Main Street Growth & Income Fund/VA (Non-Service) S&P 500 Index [LINE CHART]
Oppenheimer Main Street Growth & Income Fund/VA (Non-Service) S&P 500 Index 7/5/95 10,000 10,000 9/30/95 10,850 10,794 12/31/95 12,525 11,443 3/31/96 13,383 12,058 6/30/96 14,881 12,598 9/30/96 15,506 12,988 12/31/96 16,598 14,069 3/31/97 16,756 14,447 6/30/97 18,900 16,967 9/30/97 21,410 18,238 12/31/97 21,988 18,761 3/31/98 24,742 21,376 6/30/98 24,865 22,086 9/30/98 19,301 19,894 12/31/98 23,022 24,127 3/31/99 23,913 25,328 6/30/99 26,393 27,110 9/30/99 25,073 25,422 12/31/99 28,020 29,202 3/31/00 28,879 29,870 6/30/00 28,073 29,077 9/30/00 28,362 28,795 12/31/00 25,561 26,544 3/31/01 23,012 23,399 6/30/01 24,040 24,767 9/30/01 21,295 21,133 12/31/01 22,964 23,391 3/31/02 23,394 23,456 6/30/02 21,350 20,315 9/30/02 17,856 16,808 12/31/02 18,647 18,224
Average Annual Total Returns of Non-Service shares of the Fund at 12/31/02 1-Year -18.80% 5-Year -3.24% Since Inception 8.68% Service shares Comparison of Change in Value of $10,000 Hypothetical Investments in: Oppenheimer Main Street Growth & Income Fund/VA (Service) S&P 500 Index [LINE CHART]
Oppenheimer Main Street Growth & Income Fund/VA (Service) S&P 500 Index 7/13/00 10,000 10,000 9/30/00 9,813 9,903 12/31/00 8,839 9,129 3/31/01 7,952 8,047 6/30/01 8,308 8,518 9/30/01 7,353 7,268 12/31/01 7,931 8,045 3/31/02 8,075 8,067 6/30/02 7,364 6,987 9/30/02 6,151 5,780 12/31/02 6,425 6,267
Average Annual Total Returns of Service shares of the Fund at 12/31/02 1-Year -18.99% Since Inception -16.42% Because of ongoing market volatility, the Fund's performance has been subject to fluctuations and current performance may be less than the results shown. For updates on the Fund's performance, please call us at 1.800.981.2871. Past performance is not predictive of future performance. The inception dates of the Fund were 7/5/95 for the Non-Service shares and 7/13/00 for its Service shares. The performance information in the graphs for the S&P 500 Index begins on 6/30/95 in the first graph and on 6/30/00 for the second graph. Total returns include changes in net asset value per share and does 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. Total returns and the ending account value in the graphs show change in share value and include reinvestment of all dividends and capital gains distributions. Graphs are not drawn to same scale. An explanation of the calculation of the performance is in the Statement of Additional Information. 5 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA Financial Statements Pages 7-22 6 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF INVESTMENTS December 31, 2002 Market Value Shares See Note 1 -------------------------------------------------------------------------------- Common Stocks--97.0% -------------------------------------------------------------------------------- Consumer Discretionary--13.8% -------------------------------------------------------------------------------- Auto Components--1.0% Aftermarket Technology Corp. 1 14,800 $ 214,600 -------------------------------------------------------------------------------- American Axle & Manufacturing Holdings, Inc. 18,100 423,902 -------------------------------------------------------------------------------- ArvinMeritor, Inc. 13,700 228,379 -------------------------------------------------------------------------------- Borg-Warner Automotive, Inc. 20,900 1,053,778 -------------------------------------------------------------------------------- Cooper Tire & Rubber Co. 13,000 199,420 -------------------------------------------------------------------------------- Dana Corp. 93,900 1,104,264 -------------------------------------------------------------------------------- Delphi Corp. 298,200 2,400,510 -------------------------------------------------------------------------------- Goodyear Tire & Rubber Co. 114,500 779,745 -------------------------------------------------------------------------------- Johnson Controls, Inc. 21,500 1,723,655 -------------------------------------------------------------------------------- Lear Corp. 1 44,700 1,487,616 -------------------------------------------------------------------------------- Superior Industries International, Inc. 1,100 45,496 -------------------------------------------------------------------------------- Tower Automotive, Inc. 1 5,800 26,100 ------------ 9,687,465 -------------------------------------------------------------------------------- Automobiles--1.3% Ford Motor Co. 586,615 5,455,520 -------------------------------------------------------------------------------- General Motors Corp. 163,500 6,026,610 -------------------------------------------------------------------------------- Winnebago Industries, Inc. 7,800 305,994 ------------ 11,788,124 -------------------------------------------------------------------------------- Hotels, Restaurants & Leisure--0.6% AFC Enterprises, Inc. 1 600 12,606 -------------------------------------------------------------------------------- Alliance Gaming Corp. 1 1,100 18,733 -------------------------------------------------------------------------------- Boyd Gaming Corp. 1 5,400 75,870 -------------------------------------------------------------------------------- CEC Entertainment, Inc. 1 17,600 540,320 -------------------------------------------------------------------------------- Choice Hotels International, Inc. 1 2,800 63,560 -------------------------------------------------------------------------------- GTech Holdings Corp. 1 53,900 1,501,654 -------------------------------------------------------------------------------- Mandalay Resort Group 1 25,600 783,616 -------------------------------------------------------------------------------- McDonald's Corp. 81,800 1,315,344 -------------------------------------------------------------------------------- P.F. Chang's China Bistro, Inc. 1 12,400 450,120 -------------------------------------------------------------------------------- Papa John's International, Inc. 1 1,100 30,668 -------------------------------------------------------------------------------- Rare Hospitality International, Inc. 1 400 11,048 -------------------------------------------------------------------------------- Ruby Tuesday, Inc. 39,600 684,684 -------------------------------------------------------------------------------- Ryan's Family Steak Houses, Inc. 1 12,450 141,308 ------------ 5,629,531 -------------------------------------------------------------------------------- Household Durables--1.8% American Greetings Corp., Cl. A 1 49,300 778,940 -------------------------------------------------------------------------------- Beazer Homes USA, Inc. 1 6,700 406,020 -------------------------------------------------------------------------------- Black & Decker Corp. 34,200 1,466,838 -------------------------------------------------------------------------------- D.R. Horton, Inc. 17,800 308,830 -------------------------------------------------------------------------------- Fortune Brands, Inc. 52,700 2,451,077 -------------------------------------------------------------------------------- Hovnanian Enterprises, Inc., Cl. A 1 15,700 497,690 -------------------------------------------------------------------------------- Lennar Corp. 45,800 2,363,280 Market Value Shares See Note 1 -------------------------------------------------------------------------------- Household Durables Continued M.D.C. Holdings, Inc. 1,300 $ 49,738 -------------------------------------------------------------------------------- Maytag Corp. 69,800 1,989,300 -------------------------------------------------------------------------------- Meritage Corp. 1 5,300 178,345 -------------------------------------------------------------------------------- NVR, Inc. 1 8,000 2,604,000 -------------------------------------------------------------------------------- Pulte Homes, Inc. 40,244 1,926,480 -------------------------------------------------------------------------------- Ryland Group, Inc. (The) 56,900 1,897,615 -------------------------------------------------------------------------------- Standard Pacific Corp. 11,100 274,725 ------------ 17,192,878 -------------------------------------------------------------------------------- Internet & Catalog Retail--0.5% Amazon.com, Inc. 1 98,100 1,853,109 -------------------------------------------------------------------------------- USA Interactive 1 118,700 2,720,604 ------------ 4,573,713 -------------------------------------------------------------------------------- Leisure Equipment & Products--0.8% Action Performance Cos., Inc. 29,900 568,100 -------------------------------------------------------------------------------- Brunswick Corp. 68,000 1,350,480 -------------------------------------------------------------------------------- Eastman Kodak Co. 136,300 4,775,952 -------------------------------------------------------------------------------- Hasbro, Inc. 58,300 673,365 -------------------------------------------------------------------------------- Nautilus Group, Inc. (The) 1 16,700 223,112 ------------ 7,591,009 -------------------------------------------------------------------------------- Media--1.2% AOL Time Warner, Inc. 1 201,800 2,643,580 -------------------------------------------------------------------------------- Cablevision Systems New York Group, Cl. A 1 56,000 937,440 -------------------------------------------------------------------------------- Comcast Corp., Cl. A 1 118,415 2,791,041 -------------------------------------------------------------------------------- Cox Communications, Inc., Cl. A 1 47,100 1,337,640 -------------------------------------------------------------------------------- Gannett Co., Inc. 4,000 287,200 -------------------------------------------------------------------------------- Viacom, Inc., Cl. B 1 73,330 2,988,931 ------------ 10,985,832 -------------------------------------------------------------------------------- Multiline Retail--2.9% Big Lots, Inc. 1 47,600 629,748 -------------------------------------------------------------------------------- BJ's Wholesale Club, Inc. 1 26,300 481,290 -------------------------------------------------------------------------------- Costco Wholesale Corp. 1 400 11,224 -------------------------------------------------------------------------------- Federated Department Stores, Inc. 1 93,100 2,677,556 -------------------------------------------------------------------------------- May Department Stores Co. 108,100 2,484,138 -------------------------------------------------------------------------------- Penney (J.C.) Co., Inc. (Holding Co.) 124,600 2,867,046 -------------------------------------------------------------------------------- Sears Roebuck & Co. 66,300 1,587,885 -------------------------------------------------------------------------------- Shopko Stores, Inc. 1 6,000 74,700 -------------------------------------------------------------------------------- Wal-Mart Stores, Inc. 334,100 16,875,391 ------------ 27,688,978 -------------------------------------------------------------------------------- Specialty Retail--3.3% American Eagle Outfitters, Inc. 1 5,100 70,278 -------------------------------------------------------------------------------- AnnTaylor Stores Corp. 1 60,850 1,242,557 -------------------------------------------------------------------------------- AutoZone, Inc. 1 31,900 2,253,735 7 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF INVESTMENTS Continued Market Value Shares See Note 1 -------------------------------------------------------------------------------- Specialty Retail Continued Bed Bath & Beyond, Inc. 1,700 $ 58,701 -------------------------------------------------------------------------------- Christopher & Banks Corp. 1 34,800 722,100 -------------------------------------------------------------------------------- Deb Shops, Inc. 700 15,547 -------------------------------------------------------------------------------- Electronics Boutique Holdings Corp. 1 8,800 139,128 -------------------------------------------------------------------------------- Gap, Inc. (The) 281,500 4,368,880 -------------------------------------------------------------------------------- Group 1 Automotive, Inc. 1 700 16,716 -------------------------------------------------------------------------------- Hollywood Entertainment Corp. 1 6,600 99,660 -------------------------------------------------------------------------------- Home Depot, Inc. 391,300 9,375,548 -------------------------------------------------------------------------------- Hot Topic, Inc. 1 16,400 375,232 -------------------------------------------------------------------------------- Limited Brands, Inc. 346,200 4,822,566 -------------------------------------------------------------------------------- Lowe's Cos., Inc. 13,300 498,750 -------------------------------------------------------------------------------- Movie Gallery, Inc. 1 2,300 29,900 -------------------------------------------------------------------------------- Pacific Sunwear of California, Inc. 1 16,650 294,538 -------------------------------------------------------------------------------- Pep Boys-Manny, Moe & Jack 9,600 111,360 -------------------------------------------------------------------------------- Pier 1 Imports, Inc. 48,918 926,018 -------------------------------------------------------------------------------- Rent-A-Center, Inc. 1 14,700 734,265 -------------------------------------------------------------------------------- TJX Cos., Inc. (The) 215,300 4,202,656 -------------------------------------------------------------------------------- Too, Inc. 1 12,557 295,341 -------------------------------------------------------------------------------- United Auto Group, Inc. 1 3,400 42,398 -------------------------------------------------------------------------------- Urban Outfitters, Inc. 1 1,400 32,998 ------------ 30,728,872 -------------------------------------------------------------------------------- Textiles & Apparel--0.4% Fossil, Inc. 1 500 10,170 -------------------------------------------------------------------------------- Kellwood Co. 5,300 137,800 -------------------------------------------------------------------------------- Nike, Inc., Cl. B 88,200 3,922,254 -------------------------------------------------------------------------------- Quicksilver, Inc. 1 200 5,332 -------------------------------------------------------------------------------- Timberland Co., Cl. A 1 3,100 110,391 -------------------------------------------------------------------------------- Tommy Hilfiger Corp. 1 5,900 41,005 ------------ 4,226,952 -------------------------------------------------------------------------------- Consumer Staples--8.0% -------------------------------------------------------------------------------- Beverages--1.4% Anheuser-Busch Cos., Inc. 29,200 1,413,280 -------------------------------------------------------------------------------- Coca-Cola Co. (The) 228,800 10,026,016 -------------------------------------------------------------------------------- PepsiCo, Inc. 50,250 2,121,555 ------------ 13,560,851 -------------------------------------------------------------------------------- Food & Drug Retailing--1.8% Albertson's, Inc. 107,300 2,388,498 -------------------------------------------------------------------------------- CVS Corp. 145,200 3,625,644 -------------------------------------------------------------------------------- Kroger Co. (The) 1 307,700 4,753,965 -------------------------------------------------------------------------------- Safeway, Inc. 1 194,700 4,548,192 -------------------------------------------------------------------------------- Walgreen Co. 28,200 823,158 -------------------------------------------------------------------------------- Winn-Dixie Stores, Inc. 31,000 473,680 ------------ 16,613,137 Market Value Shares See Note 1 -------------------------------------------------------------------------------- Food Products--1.9% Campbell Soup Co. 193,400 $ 4,539,098 -------------------------------------------------------------------------------- ConAgra Foods, Inc. 179,000 4,476,790 -------------------------------------------------------------------------------- Dean Foods Co. 1 31,700 1,176,070 -------------------------------------------------------------------------------- Fresh Del Monte Produce, Inc. 3,900 73,749 -------------------------------------------------------------------------------- Hershey Foods Corp. 30,500 2,056,920 -------------------------------------------------------------------------------- Interstate Bakeries Corp. 8,300 126,575 -------------------------------------------------------------------------------- Kellogg Co. 19,400 664,838 -------------------------------------------------------------------------------- Kraft Foods, Inc., Cl. A 28,700 1,117,291 -------------------------------------------------------------------------------- Sara Lee Corp. 38,038 856,235 -------------------------------------------------------------------------------- Wrigley, William Jr. Co. 56,500 3,100,720 ------------ 18,188,286 -------------------------------------------------------------------------------- Household Products--1.4% Clorox Co. (The) 87,600 3,613,500 -------------------------------------------------------------------------------- Procter & Gamble Corp. (The) 111,900 9,616,686 ------------ 13,230,186 -------------------------------------------------------------------------------- Personal Products--0.3% Avon Products, Inc. 36,800 1,982,416 -------------------------------------------------------------------------------- Gillette Co. 24,100 731,676 ------------ 2,714,092 -------------------------------------------------------------------------------- Tobacco--1.2% Philip Morris Cos., Inc. 285,200 11,559,156 -------------------------------------------------------------------------------- Universal Corp. 1,400 51,744 ------------ 11,610,900 -------------------------------------------------------------------------------- Energy--7.1% -------------------------------------------------------------------------------- Energy Equipment & Services--0.1% Diamond Offshore Drilling, Inc. 5,500 120,175 -------------------------------------------------------------------------------- Helmerich & Payne, Inc. 7,600 212,116 ------------ 332,291 -------------------------------------------------------------------------------- Oil & Gas--7.0% Amerada Hess Corp. 31,900 1,756,095 -------------------------------------------------------------------------------- Baytex Energy Ltd. 1 109,600 588,308 -------------------------------------------------------------------------------- Brown (Tom), Inc. 1 93,200 2,339,320 -------------------------------------------------------------------------------- Canadian 88 Energy Corp. 1 445,000 715,470 -------------------------------------------------------------------------------- Chesapeake Energy Corp. 113,100 875,394 -------------------------------------------------------------------------------- ChevronTexaco Corp. 117,650 7,821,372 -------------------------------------------------------------------------------- Cimarex Energy Co. 1 4,039 72,298 -------------------------------------------------------------------------------- Compton Petroleum Corp. 1 260,000 837,701 -------------------------------------------------------------------------------- ConocoPhillips 41,321 1,999,523 -------------------------------------------------------------------------------- Devon Energy Corp. 37,100 1,702,890 -------------------------------------------------------------------------------- Enbridge Energy Management LLC 23,379 876,713 -------------------------------------------------------------------------------- Exxon Mobil Corp. 893,816 31,229,931 -------------------------------------------------------------------------------- Frontier Oil Corp. 142,200 2,448,684 8 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA Market Value Shares See Note 1 -------------------------------------------------------------------------------- Oil & Gas Continued Marathon Oil Corp. 79,000 $ 1,681,910 -------------------------------------------------------------------------------- Murphy Oil Corp. 60,000 2,571,000 -------------------------------------------------------------------------------- Noble Energy, Inc. 12,200 458,110 -------------------------------------------------------------------------------- Occidental Petroleum Corp. 97,200 2,765,340 -------------------------------------------------------------------------------- Paramount Resources Ltd. 1 152,700 1,449,867 -------------------------------------------------------------------------------- Sunoco, Inc. 48,100 1,595,958 -------------------------------------------------------------------------------- Talisman Energy, Inc. 69,900 2,515,391 ------------ 66,301,275 -------------------------------------------------------------------------------- Financials--24.0% -------------------------------------------------------------------------------- Banks--9.8% AmSouth Bancorp 85,700 1,645,440 -------------------------------------------------------------------------------- Astoria Financial Corp. 46,200 1,254,330 -------------------------------------------------------------------------------- Bank of America Corp. 247,500 17,218,575 -------------------------------------------------------------------------------- Bank of New York Co., Inc. (The) 188,000 4,504,480 -------------------------------------------------------------------------------- Bank One Corp. 208,900 7,635,295 -------------------------------------------------------------------------------- Comerica, Inc. 54,500 2,356,580 -------------------------------------------------------------------------------- Downey Financial Corp. 200 7,800 -------------------------------------------------------------------------------- FleetBoston Financial Corp. 329,400 8,004,420 -------------------------------------------------------------------------------- Golden West Financial Corp. 75,000 5,385,750 -------------------------------------------------------------------------------- Independence Community Bank Corp. 10,300 261,414 -------------------------------------------------------------------------------- KeyCorp 190,700 4,794,198 -------------------------------------------------------------------------------- National City Corp. 111,400 3,043,448 -------------------------------------------------------------------------------- North Fork Bancorporation, Inc. 76,500 2,581,110 -------------------------------------------------------------------------------- PNC Financial Services Group 4,000 167,600 -------------------------------------------------------------------------------- Prosperity Bancshares, Inc. 109,100 2,072,900 -------------------------------------------------------------------------------- Regions Financial Corp. 8,100 270,216 -------------------------------------------------------------------------------- Roslyn Bancorp, Inc. 2,200 39,666 -------------------------------------------------------------------------------- Sovereign Bancorp, Inc. 136,800 1,922,040 -------------------------------------------------------------------------------- SunTrust Banks, Inc. 65,400 3,722,568 -------------------------------------------------------------------------------- U.S. Bancorp 346,370 7,349,971 -------------------------------------------------------------------------------- Union Planters Corp. 40,800 1,148,112 -------------------------------------------------------------------------------- UnionBanCal Corp. 28,200 1,107,414 -------------------------------------------------------------------------------- Wachovia Corp. 338,000 12,316,720 -------------------------------------------------------------------------------- Wells Fargo Co. 73,200 3,430,884 ------------ 92,240,931 -------------------------------------------------------------------------------- Diversified Financials--8.6% American Express Co. 164,400 5,811,540 -------------------------------------------------------------------------------- Bear Stearns Cos., Inc. (The) 32,000 1,900,800 -------------------------------------------------------------------------------- CIT Group, Inc. 18,100 354,760 -------------------------------------------------------------------------------- Citigroup, Inc. 778,788 27,405,550 -------------------------------------------------------------------------------- Doral Financial Corp. 3,750 107,250 -------------------------------------------------------------------------------- E*TRADE Group, Inc. 1 144,000 699,840 -------------------------------------------------------------------------------- Fannie Mae 151,500 9,745,995 -------------------------------------------------------------------------------- Freddie Mac 107,800 6,365,590 Market Value Shares See Note 1 -------------------------------------------------------------------------------- Diversified Financials Continued Goldman Sachs Group, Inc. (The) 22,500 $ 1,532,250 -------------------------------------------------------------------------------- Household International, Inc. 116,900 3,250,989 -------------------------------------------------------------------------------- J.P. Morgan Chase & Co. 399,400 9,585,600 -------------------------------------------------------------------------------- Lehman Brothers Holdings, Inc. 24,000 1,278,960 -------------------------------------------------------------------------------- MBNA Corp. 206,700 3,931,434 -------------------------------------------------------------------------------- Morgan Stanley 196,400 7,840,288 -------------------------------------------------------------------------------- New Century Financial Corp. 21,600 548,424 -------------------------------------------------------------------------------- Providian Financial Corp. 1 25,000 162,250 -------------------------------------------------------------------------------- Stilwell Financial, Inc. 75,300 984,171 ------------ 81,505,691 -------------------------------------------------------------------------------- Insurance--5.5% ACE Ltd. 102,900 3,019,086 -------------------------------------------------------------------------------- AFLAC, Inc. 68,200 2,054,184 -------------------------------------------------------------------------------- Allstate Corp. 106,800 3,950,532 -------------------------------------------------------------------------------- American International Group, Inc. 207,140 11,983,049 -------------------------------------------------------------------------------- Berkley (W.R.) Corp. 10,400 411,944 -------------------------------------------------------------------------------- Chubb Corp. 83,900 4,379,580 -------------------------------------------------------------------------------- CNA Financial Corp. 1 3,300 84,480 -------------------------------------------------------------------------------- Fidelity National Financial, Inc. 82,438 2,706,440 -------------------------------------------------------------------------------- Loews Corp. 109,600 4,872,816 -------------------------------------------------------------------------------- Marsh & McLennan Cos., Inc. 2,100 97,041 -------------------------------------------------------------------------------- MBIA, Inc. 46,550 2,041,683 -------------------------------------------------------------------------------- MetLife, Inc. 172,600 4,667,104 -------------------------------------------------------------------------------- Nationwide Financial Services, Inc., Cl. A 22,800 653,220 -------------------------------------------------------------------------------- Partnerre Holdings Ltd. 6,800 352,376 -------------------------------------------------------------------------------- Progressive Corp. 85,300 4,233,439 -------------------------------------------------------------------------------- RenaissanceRe Holdings Ltd. 33,500 1,326,600 -------------------------------------------------------------------------------- Safeco Corp. 32,900 1,140,643 -------------------------------------------------------------------------------- St. Paul Cos., Inc. 58,550 1,993,627 -------------------------------------------------------------------------------- Travelers Property Casualty Corp., Cl. B 1 44,441 651,061 -------------------------------------------------------------------------------- XL Capital Ltd., Cl. A 11,800 911,550 ------------ 51,530,455 -------------------------------------------------------------------------------- Real Estate--0.1% Equity Office Properties Trust 43,100 1,076,638 -------------------------------------------------------------------------------- FBR Asset Investment Corp. 2,900 98,310 ------------ 1,174,948 -------------------------------------------------------------------------------- Health Care--11.3% -------------------------------------------------------------------------------- Biotechnology--0.5% Affymetrix, Inc. 1 18,800 430,332 -------------------------------------------------------------------------------- Amgen, Inc. 1 30,000 1,450,200 -------------------------------------------------------------------------------- Gilead Sciences, Inc. 1 70,800 2,407,200 -------------------------------------------------------------------------------- Myriad Genetics, Inc. 1 22,000 321,200 ------------ 4,608,932 9 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF INVESTMENTS Continued Market Value Shares See Note 1 -------------------------------------------------------------------------------- Health Care Equipment & Supplies--1.0% Advanced Medical Optics, Inc. 1 188 $ 2,250 -------------------------------------------------------------------------------- Baxter International, Inc. 165,300 4,628,400 -------------------------------------------------------------------------------- Bio-Rad Laboratories, Inc., Cl. A 1 2,800 108,360 -------------------------------------------------------------------------------- Cooper Cos., Inc. (The) 22,700 567,954 -------------------------------------------------------------------------------- Guidant Corp. 1 120,600 3,720,510 -------------------------------------------------------------------------------- Medtronic, Inc. 13,100 597,360 ------------ 9,624,834 -------------------------------------------------------------------------------- Health Care Providers & Services--1.5% Aetna, Inc. 69,200 2,845,504 -------------------------------------------------------------------------------- Apria Healthcare Group, Inc. 1 19,500 433,680 -------------------------------------------------------------------------------- Cigna Corp. 51,500 2,117,680 -------------------------------------------------------------------------------- Covance, Inc. 1 13,100 322,129 -------------------------------------------------------------------------------- HCA, Inc. 77,900 3,232,850 -------------------------------------------------------------------------------- Healthsouth Corp. 1 93,000 390,600 -------------------------------------------------------------------------------- LifePoint Hospitals, Inc. 1 2,200 65,848 -------------------------------------------------------------------------------- Option Care, Inc. 1 3,325 26,467 -------------------------------------------------------------------------------- Oxford Health Plans, Inc. 1 82,700 3,014,415 -------------------------------------------------------------------------------- Pediatrix Medical Group, Inc. 1 24,500 981,470 -------------------------------------------------------------------------------- Per-Se Technologies, Inc. 1 8,600 77,134 -------------------------------------------------------------------------------- Sierra Health Services, Inc. 1 12,700 152,527 ------------ 13,660,304 -------------------------------------------------------------------------------- Pharmaceuticals--8.3% Abbott Laboratories 127,000 5,080,000 -------------------------------------------------------------------------------- Bristol-Myers Squibb Co. 50,300 1,164,445 -------------------------------------------------------------------------------- Eli Lilly & Co. 70,900 4,502,150 -------------------------------------------------------------------------------- Forest Laboratories, Inc. 1 6,700 658,074 -------------------------------------------------------------------------------- Johnson & Johnson 264,406 14,201,246 -------------------------------------------------------------------------------- Merck & Co., Inc. 279,300 15,811,173 -------------------------------------------------------------------------------- Pfizer, Inc. 869,300 26,574,501 -------------------------------------------------------------------------------- Pharmaceutical Resources, Inc. 1 8,000 238,400 -------------------------------------------------------------------------------- Pharmacia Corp. 171,500 7,168,700 -------------------------------------------------------------------------------- Schering-Plough Corp. 106,900 2,373,180 -------------------------------------------------------------------------------- Taro Pharmaceutical Industries Ltd. 1 18,300 688,080 ------------ 78,459,949 -------------------------------------------------------------------------------- Industrials--8.7% -------------------------------------------------------------------------------- Aerospace & Defense--1.7% Boeing Co. 209,600 6,914,704 -------------------------------------------------------------------------------- Goodrich Corp. 103,200 1,890,624 -------------------------------------------------------------------------------- Honeywell International, Inc. 246,000 5,904,000 -------------------------------------------------------------------------------- InVision Technologies, Inc. 1 24,700 651,092 -------------------------------------------------------------------------------- Precision Castparts Corp. 5,300 128,525 -------------------------------------------------------------------------------- Raytheon Co. 5,100 156,825 ------------ 15,645,770 Market Value Shares See Note 1 -------------------------------------------------------------------------------- Air Freight & Couriers--0.9% FedEx Corp. 126,800 $ 6,875,096 -------------------------------------------------------------------------------- United Parcel Service, Inc., Cl. B 23,400 1,476,072 ------------ 8,351,168 -------------------------------------------------------------------------------- Airlines--0.1% AMR Corp. 1 75,900 500,940 -------------------------------------------------------------------------------- Continental Airlines, Inc., Cl. B 33,300 241,425 ----------- 742,365 -------------------------------------------------------------------------------- Building Products--0.4% ElkCorp 2,400 41,520 -------------------------------------------------------------------------------- Lennox International, Inc. 1,700 21,335 -------------------------------------------------------------------------------- Masco Corp. 176,600 3,717,430 ------------ 3,780,285 -------------------------------------------------------------------------------- Commercial Services & Supplies--1.4% Arbitron, Inc. 1 2,400 80,400 -------------------------------------------------------------------------------- Convergys Corp. 1 48,200 730,230 -------------------------------------------------------------------------------- Deluxe Corp. 23,600 993,560 -------------------------------------------------------------------------------- First Data Corp. 147,800 5,233,598 -------------------------------------------------------------------------------- H&R Block, Inc. 96,400 3,875,280 -------------------------------------------------------------------------------- Harland (John H.) Co. 9,100 201,383 -------------------------------------------------------------------------------- Iron Mountain, Inc. 1 6,400 211,264 -------------------------------------------------------------------------------- ITT Educational Services, Inc. 1 7,300 171,915 -------------------------------------------------------------------------------- Pittston Brink's Group 2,500 46,200 -------------------------------------------------------------------------------- Regis Corp. 3,700 96,163 -------------------------------------------------------------------------------- Right Management Consultants, Inc. 1 2,475 32,794 -------------------------------------------------------------------------------- Waste Management, Inc. 53,800 1,233,096 ------------ 12,905,883 -------------------------------------------------------------------------------- Construction & Engineering--0.0% EMCOR Group, Inc. 1 5,100 270,351 -------------------------------------------------------------------------------- Electrical Equipment--0.2% Emerson Electric Co. 25,400 1,291,590 -------------------------------------------------------------------------------- Molex, Inc., Cl. A 20,750 412,717 -------------------------------------------------------------------------------- Rockwell Automation, Inc. 500 10,355 ------------ 1,714,662 -------------------------------------------------------------------------------- Industrial Conglomerates--2.9% 3M Co. 36,500 4,500,450 -------------------------------------------------------------------------------- Carlisle Cos., Inc. 4,800 198,624 -------------------------------------------------------------------------------- General Electric Co. 952,700 23,198,245 ------------ 27,897,319 -------------------------------------------------------------------------------- Machinery--0.4% Cummins, Inc. 23,500 661,055 -------------------------------------------------------------------------------- Deere & Co. 1,700 77,945 -------------------------------------------------------------------------------- EnPro Industries, Inc. 1 5,180 20,720 -------------------------------------------------------------------------------- Ingersoll-Rand Co., Cl. A 67,300 2,897,938 10 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA Market Value Shares See Note 1 -------------------------------------------------------------------------------- Machinery Continued Navistar International Corp. 1 7,300 $ 177,463 -------------------------------------------------------------------------------- Oshkosh Truck Corp. 700 43,050 -------------------------------------------------------------------------------- Timken Co. 8,200 156,620 ------------ 4,034,791 -------------------------------------------------------------------------------- Road & Rail--0.7% Burlington Northern Santa Fe Corp. 43,100 1,121,031 -------------------------------------------------------------------------------- CNF Transportation, Inc. 2,300 76,452 -------------------------------------------------------------------------------- CSX Corp. 59,000 1,670,290 -------------------------------------------------------------------------------- Hunt (J.B.) Transport Services, Inc. 1 4,700 137,710 -------------------------------------------------------------------------------- Norfolk Southern Corp. 126,300 2,524,737 -------------------------------------------------------------------------------- Roadway Corp. 9,400 346,014 -------------------------------------------------------------------------------- Union Pacific Corp. 11,900 712,453 ------------ 6,588,687 -------------------------------------------------------------------------------- Information Technology--12.6% -------------------------------------------------------------------------------- Communications Equipment--1.3% Brocade Communications Systems, Inc. 160,700 665,298 -------------------------------------------------------------------------------- Cisco Systems, Inc. 1 338,300 4,431,730 -------------------------------------------------------------------------------- McData Corp., Cl. A 1 4,887 34,698 -------------------------------------------------------------------------------- Motorola, Inc. 743,900 6,434,735 -------------------------------------------------------------------------------- Scientific-Atlanta, Inc. 61,400 728,204 -------------------------------------------------------------------------------- UTStarcom, Inc. 1 16,400 325,212 ------------ 12,619,877 -------------------------------------------------------------------------------- Computers & Peripherals--3.8% Dell Computer Corp. 1 350,900 9,383,066 -------------------------------------------------------------------------------- EMC Corp. 1 643,400 3,950,476 -------------------------------------------------------------------------------- International Business Machines Corp. 199,200 15,438,000 -------------------------------------------------------------------------------- Lexmark International, Inc., Cl. A 1 44,200 2,674,100 -------------------------------------------------------------------------------- Maxtor Corp. 1 15,700 79,442 -------------------------------------------------------------------------------- Presstek, Inc. 1 7,200 33,192 -------------------------------------------------------------------------------- SanDisk Corp. 1 31,900 647,570 -------------------------------------------------------------------------------- Seagate Technology International, Inc. Escrow Shares 1,2 31,000 -- -------------------------------------------------------------------------------- StorageNetworks, Inc. 1 400 464 -------------------------------------------------------------------------------- Sun Microsystems, Inc. 1 1,124,700 3,497,817 ------------ 35,704,127 -------------------------------------------------------------------------------- Electronic Equipment & Instruments--0.5% Agilent Technologies, Inc. 1 91,600 1,645,136 -------------------------------------------------------------------------------- Avnet, Inc. 1 55,100 596,733 -------------------------------------------------------------------------------- Benchmark Electronics, Inc. 1 28,000 802,480 -------------------------------------------------------------------------------- Photon Dynamics, Inc. 1 16,200 369,360 -------------------------------------------------------------------------------- Solectron Corp. 1 278,700 989,385 ------------ 4,403,094 Market Value Shares See Note 1 -------------------------------------------------------------------------------- Internet Software & Services--0.1% Check Point Software Technologies Ltd. 1 66,600 $ 863,802 -------------------------------------------------------------------------------- Websense, Inc. 1 4,500 96,124 ------------ 959,926 -------------------------------------------------------------------------------- Office Electronics--0.3% Ikon Office Solutions, Inc. 14,900 106,535 -------------------------------------------------------------------------------- Xerox Corp. 1 301,800 2,429,490 ------------ 2,536,025 -------------------------------------------------------------------------------- Semiconductor Equipment & Products--2.3% Atmel Corp. 1 236,000 526,280 -------------------------------------------------------------------------------- Cypress Semiconductor Corp. 1 59,000 337,480 -------------------------------------------------------------------------------- ESS Technology, Inc. 1 37,200 233,988 -------------------------------------------------------------------------------- Integrated Device Technology, Inc. 1 53,200 445,284 -------------------------------------------------------------------------------- Intel Corp. 1,020,200 15,884,514 -------------------------------------------------------------------------------- National Semiconductor Corp. 1 89,200 1,338,892 -------------------------------------------------------------------------------- Rambus, Inc. 1 22,700 152,317 -------------------------------------------------------------------------------- RF Micro Devices, Inc. 1 77,400 567,342 -------------------------------------------------------------------------------- Silicon Laboratories, Inc. 1 34,600 660,168 -------------------------------------------------------------------------------- Skyworks Solutions, Inc. 1 77,500 668,050 -------------------------------------------------------------------------------- Teradyne, Inc. 1 94,200 1,225,542 ------------ 22,039,857 -------------------------------------------------------------------------------- Software--4.3% Amdocs Ltd. 1 55,300 543,046 -------------------------------------------------------------------------------- Cadence Design Systems, Inc. 1 66,200 780,498 -------------------------------------------------------------------------------- Citrix Systems, Inc. 1 69,600 857,472 -------------------------------------------------------------------------------- Documentum, Inc. 1 3,400 53,244 -------------------------------------------------------------------------------- Electronic Arts, Inc. 1 62,100 3,090,717 -------------------------------------------------------------------------------- FactSet Research Systems, Inc. 11,100 313,797 -------------------------------------------------------------------------------- Microsoft Corp. 1 508,300 26,279,110 -------------------------------------------------------------------------------- Oracle Corp. 1 674,300 7,282,440 -------------------------------------------------------------------------------- Take-Two Interactive Software, Inc. 1 43,700 1,026,513 ------------ 40,226,837 -------------------------------------------------------------------------------- Materials--3.6% -------------------------------------------------------------------------------- Chemicals--1.2% Air Products & Chemicals, Inc. 900 38,475 -------------------------------------------------------------------------------- Cytec Industries, Inc. 1 2,400 65,472 -------------------------------------------------------------------------------- Dow Chemical Co. 123,100 3,656,070 -------------------------------------------------------------------------------- Du Pont (E.I.) de Nemours & Co. 109,800 4,655,520 -------------------------------------------------------------------------------- Georgia Gulf Corp. 900 20,826 -------------------------------------------------------------------------------- IMC Global, Inc. 36,800 392,656 -------------------------------------------------------------------------------- OM Group, Inc. 47,600 327,488 -------------------------------------------------------------------------------- Praxair, Inc. 3,300 190,641 -------------------------------------------------------------------------------- Rohm & Haas Co. 40,200 1,305,696 ------------ 10,652,844 11 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF INVESTMENTS Continued Market Value Shares See Note 1 -------------------------------------------------------------------------------- Containers & Packaging--0.3% Ball Corp. 42,600 $ 2,180,694 -------------------------------------------------------------------------------- Crown Cork & Seal Co., Inc. 1 44,800 356,160 -------------------------------------------------------------------------------- Owens-Illinois, Inc. 1 18,000 262,440 --------------- 2,799,294 -------------------------------------------------------------------------------- Metals & Mining--1.1% AK Steel Holding Corp. 1 4,700 37,600 -------------------------------------------------------------------------------- Alcan, Inc. 159,300 4,702,536 -------------------------------------------------------------------------------- Alcoa, Inc. 204,300 4,653,954 -------------------------------------------------------------------------------- Meridian Gold, Inc. 1 21,500 379,045 -------------------------------------------------------------------------------- Phelps Dodge Corp. 1 2,900 91,785 -------------------------------------------------------------------------------- Quanex Corp. 1,500 50,250 -------------------------------------------------------------------------------- United States Steel Corp. 54,600 716,352 --------------- 10,631,522 -------------------------------------------------------------------------------- Paper & Forest Products--1.0% Boise Cascade Corp. 7,500 189,150 -------------------------------------------------------------------------------- International Paper Co. 127,700 4,465,669 -------------------------------------------------------------------------------- Weyerhaeuser Co. 96,800 4,763,528 --------------- 9,418,347 -------------------------------------------------------------------------------- Telecommunication Services--5.0% -------------------------------------------------------------------------------- Diversified Telecommunication Services--4.7% BellSouth Corp. 356,100 9,212,307 -------------------------------------------------------------------------------- Citizens Communications Co. 1 12,600 132,930 -------------------------------------------------------------------------------- Qwest Communications International, Inc. 1 226,400 1,132,000 -------------------------------------------------------------------------------- SBC Communications, Inc. 597,000 16,184,670 -------------------------------------------------------------------------------- Sprint Corp. (Fon Group) 103,000 1,491,440 -------------------------------------------------------------------------------- Verizon Communications, Inc. 412,856 15,998,170 --------------- 44,151,517 -------------------------------------------------------------------------------- Wireless Telecommunication Services--0.3% AT&T Corp. 91,600 2,391,676 -------------------------------------------------------------------------------- Sprint Corp. (PCS Group) 1 125,100 547,938 -------------------------------------------------------------------------------- Telephone & Data Systems, Inc. 1,700 79,934 --------------- 3,019,548 -------------------------------------------------------------------------------- Utilities--2.9% -------------------------------------------------------------------------------- Electric Utilities--2.8% CenterPoint Energy, Inc. 62,600 532,100 -------------------------------------------------------------------------------- Consolidated Edison Co. of New York, Inc. 17,900 766,478 -------------------------------------------------------------------------------- Constellation Energy Group, Inc. 80,100 2,228,382 -------------------------------------------------------------------------------- Entergy Corp. 86,400 3,938,976 -------------------------------------------------------------------------------- Exelon Corp. 155,224 8,191,171 -------------------------------------------------------------------------------- FirstEnergy Corp. 151,300 4,988,361 -------------------------------------------------------------------------------- FPL Group, Inc. 50,100 3,012,513 Market Value Shares See Note 1 -------------------------------------------------------------------------------- Electric Utilities Continued PG&E Corp. 1 52,500 $ 729,750 -------------------------------------------------------------------------------- Progress Energy, Inc. 31,100 1,348,185 -------------------------------------------------------------------------------- Progress Energy, Inc., Contingent Value Obligation 1,2 32,000 4,480 -------------------------------------------------------------------------------- Wisconsin Energy Corp. 21,300 536,760 --------------- 26,277,156 -------------------------------------------------------------------------------- Gas Utilities--0.1% Kinder Morgan Management LLC 24,310 767,953 -------------------------------------------------------------------------------- Nicor, Inc. 8,200 279,046 -------------------------------------------------------------------------------- Peoples Energy Corp. 4,400 170,060 --------------- 1,217,059 --------------- Total Common Stocks (Cost $985,667,651) 914,038,727 -------------------------------------------------------------------------------- Preferred Stocks--0.0% Wachovia Corp., Dividend Equalization Preferred Shares 2 (Cost $0) 6,000 750 Units -------------------------------------------------------------------------------- Rights, Warrants and Certificates--0.0% Dime Bancorp, Inc. Wts., Exp. 1/2/10 1 (Cost $0) 31,900 3,860 Principal Amount -------------------------------------------------------------------------------- Joint Repurchase Agreements--3.2% Undivided interest of 4.43% in joint repurchase agreement (Market Value $694,610,000) with Banc One Capital Markets, Inc., 1.07%, dated 12/31/02, to be repurchased at $30,754,828 on 1/2/03, collateralized by U.S. Treasury Nts., 3%--6.50%, 2/15/03--2/15/12, with a value of $311,989,144 and U.S. Treasury Bonds, 1.75%--9.375%, 4/30/04--2/15/23, with a value of $397,082,690 (Cost $30,753,000) $30,753,000 30,753,000 -------------------------------------------------------------------------------- Total Investments, at Value (Cost $1,016,420,651) 100.2% 944,796,337 ------------------------------------------------------------------------------- Liabilities in Excess of Other Assets (0.2) (2,127,439) ------------------------------ Net Assets 100.0% $ 942,668,898 ============================== Footnotes to Statement of Investments 1. Non-income producing security. 2. Identifies issues considered to be illiquid--See Note 7 of Notes to Financial Statements. See accompanying Notes to Financial Statements. 12 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF ASSETS AND LIABILITIES December 31, 2002
-------------------------------------------------------------------------------------------------------------------- Assets Investments, at value (cost $1,016,420,651)--see accompanying statement $ 944,796,337 -------------------------------------------------------------------------------------------------------------------- Cash 5,129 -------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest and dividends 1,420,363 Shares of beneficial interest sold 857,643 Investments sold 684,357 Other 9,101 ---------------- Total assets 947,772,930 -------------------------------------------------------------------------------------------------------------------- Liabilities Payables and other liabilities: Investments purchased 4,649,159 Shares of beneficial interest redeemed 389,844 Shareholder reports 28,221 Distribution and service plan fees 3,767 Transfer and shareholder servicing agent fees 1,878 Trustees' compensation 857 Other 30,306 ---------------- Total liabilities 5,104,032 -------------------------------------------------------------------------------------------------------------------- Net Assets $ 942,668,898 ================ -------------------------------------------------------------------------------------------------------------------- Composition of Net Assets Par value of shares of beneficial interest $ 61,529 -------------------------------------------------------------------------------------------------------------------- Additional paid-in capital 1,313,100,883 -------------------------------------------------------------------------------------------------------------------- Undistributed net investment income 9,701,404 -------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (308,570,482) -------------------------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (71,624,436) -------------------------------------------------------------------------------------------------------------------- Net Assets $ 942,668,898 ---------------- -------------------------------------------------------------------------------------------------------------------- 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 $890,740,383 and 58,126,139 shares of beneficial interest outstanding) $15.32 -------------------------------------------------------------------------------------------------------------------- Service shares: Net asset value, redemption price per share and offering price per share (based on net assets of $51,928,515 and 3,402,612 shares of beneficial interest outstanding) $15.26
See accompanying Notes to Financial Statements 13 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENT OF OPERATIONS For the Year Ended December 31, 2002
----------------------------------------------------------------------------------------- Investment Income Dividends (net of foreign withholding taxes of $75,840) $ 16,256,469 ---------------------------------------------------------------------------------------- Interest 658,191 -------------- Total investment income 16,914,660 ---------------------------------------------------------------------------------------- Expenses Management fees 7,045,796 ---------------------------------------------------------------------------------------- Distribution and service plan fees--Service shares 53,627 ---------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees 21,739 ---------------------------------------------------------------------------------------- Trustees' compensation 19,884 ---------------------------------------------------------------------------------------- Custodian fees and expenses 11,515 ---------------------------------------------------------------------------------------- Shareholder reports 10,551 ---------------------------------------------------------------------------------------- Other 17,732 -------------- Total expenses 7,180,844 Less reduction to custodian expenses (659) -------------- Net expenses 7,180,185 ---------------------------------------------------------------------------------------- Net Investment Income 9,734,475 ---------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) Net realized loss on: Investments (118,262,443) Closing of futures contracts (8,508,514) Foreign currency transactions (266,659) -------------- Net realized loss (127,037,616) ---------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments (102,118,446) Translation of assets and liabilities denominated in foreign currencies 449,592 -------------- Net change (101,668,854) -------------- Net realized and unrealized loss (228,706,470) ---------------------------------------------------------------------------------------- Net Decrease in Net Assets Resulting from Operations $(218,971,995) ==============
See accompanying Notes to Financial Statements. 14 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 2002 2001 ---------------------------------------------------------------------------------------------------------------------- Operations Net investment income $ 9,734,475 $ 7,607,459 ---------------------------------------------------------------------------------------------------------------------- Net realized loss (127,037,616) (146,466,223) ---------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) (101,668,854) 27,081,515 ------------------------------------------ Net decrease in net assets resulting from operations (218,971,995) (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 34,464,855 181,776,278 Service shares 38,273,092 20,508,172 ---------------------------------------------------------------------------------------------------------------------- Net Assets Total increase (decrease) (153,821,827) 84,969,421 ---------------------------------------------------------------------------------------------------------------------- Beginning of period 1,096,490,725 1,011,521,304 ------------------------------------------ End of period [including undistributed net investment income of $9,701,404 and $7,557,571, respectively] $ 942,668,898 $1,096,490,725 ==========================================
See accompanying Notes to Financial Statements. 15 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA FINANCIAL HIGHLIGHTS
Non-Service shares Year Ended December 31, 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $18.99 $21.26 $24.63 $20.48 $20.58 ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .16 .13 .10 .11 .13 Net realized and unrealized gain (loss) (3.70) (2.29) (2.14) 4.29 .92 -------------------------------------------------------------------- Total from investment operations (3.54) (2.16) (2.04) 4.40 1.05 ------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.13) (.11) (.09) (.09) (.05) Distributions from net realized gain -- -- (1.24) (.16) (1.10) -------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.13) (.11) (1.33) (.25) (1.15) ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $15.32 $18.99 $21.26 $24.63 $20.48 ==================================================================== ------------------------------------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 1 (18.80)% (10.16)% (8.78)% 21.71% 4.70% ------------------------------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $890,740 $1,074,945 $1,009,823 $555,311 $308,353 ------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $999,275 $1,028,913 $ 809,662 $391,063 $234,306 ------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 2 Net investment income 0.94% 0.73% 0.69% 0.63% 0.74% Expenses 0.69% 0.73% 0.73% 0.78% 0.79% 3 ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 98% 69% 63% 118% 86%
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. 16 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
Service shares Year Ended December 31, 2002 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 .13 .14 .02 Net realized and unrealized loss (3.70) (2.32) (2.82) ------------------------------------- Total investment operations (3.57) (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 $15.26 $18.95 $21.24 ===================================== ---------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 (18.99)% (10.27)% (11.61)% ---------------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $51,929 $21,545 $1,698 ---------------------------------------------------------------------------------------------------- Average net assets (in thousands) $34,604 $10,306 $ 543 ---------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 0.87% 0.66% 0.50% Expenses 0.84% 0.88% 0.88% ---------------------------------------------------------------------------------------------------- Portfolio turnover rate 98% 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. 17 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 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 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 funds of the Manager, 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. -------------------------------------------------------------------------------- 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. 18 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA As of December 31, 2002, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows: Expiring --------------------- 2008 $ 28,801,633 2009 140,898,750 2010 126,747,906 ------------ Total $296,448,289 ============ During the fiscal year ended December 31, 2002, the Fund did not utilize any capital loss carryforward. As of December 31, 2002, the Fund had approximately $1,028,000 of post-October losses available to offset future capital gains, if any. Such losses, if unutilized, will expire in 2011. Additionally, the Fund had approximately $49,000 of post-October foreign currency losses which were deferred. If unutilized by the Fund in the following fiscal year, such losses will expire. -------------------------------------------------------------------------------- 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. 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. The Fund adjusts the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, during the year ended December 31, 2002, amounts have been reclassified to reflect a decrease in undistributed net investment income of $2,863. Accumulated net realized loss on investments was decreased by the same amount. Net assets of the Fund were unaffected by the reclassifications. The tax character of distributions paid during the years ended December 31, 2002 and December 31, 2001 was as follows: Year Ended Year Ended December 31, 2002 December 31, 2001 --------------------------------------------------------------- Distributions paid from: Ordinary income $ 7,587,779 $ 5,537,780 Long-term capital gain -- -- Return of capital -- -- ------------------------------- Total $ 7,587,779 $ 5,537,780 =============================== As of December 31, 2002, the components of distributable earnings on a tax basis were as follows: Undistributed net investment income $ 9,701,404 Accumulated net realized loss (308,570,482) Net unrealized depreciation (71,624,436) --------------- Total $ (370,493,514) =============== -------------------------------------------------------------------------------- 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. 19 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- 1. Significant Accounting Policies Continued 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. -------------------------------------------------------------------------------- 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
Year Ended December 31, 2002 Year Ended December 31, 2001 Shares Amount Shares Amount --------------------------------------------------------------------------------------------------------------------- Non-Service shares Sold 11,919,835 $ 204,743,555 14,383,759 $ 283,714,091 Dividends and/or distributions reinvested 383,139 7,425,251 289,225 5,518,418 Redeemed (10,772,337) (177,703,951) (5,577,498) (107,456,231) -------------------------------------------------------------------------- Net increase 1,530,637 $ 34,464,855 9,095,486 $ 181,776,278 ========================================================================== --------------------------------------------------------------------------------------------------------------------- Service shares Sold 2,415,625 $ 40,562,767 1,070,886 $ 20,739,629 Dividends and/or distributions reinvested 8,403 162,528 1,016 19,362 Redeemed (158,496) (2,452,203) (14,766) (250,819) -------------------------------------------------------------------------- Net increase 2,265,532 $ 38,273,092 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 year ended December 31, 2002, were $1,054,643,977 and $980,134,297, respectively. As of December 31, 2002, unrealized appreciation (depreciation) based on cost of securities for federal income tax purposes of $1,027,505,247 was composed of: Gross unrealized appreciation $ 36,395,883 Gross unrealized depreciation (119,104,793) --------------- Net unrealized depreciation $ (82,708,910) =============== The difference between book-basis and tax-basis unrealized appreciation and depreciation, if applicable, is attributable primarily to the tax deferral of losses on wash sales, or return of capital dividends, and the realization for tax purposes of unrealized gain (loss) on certain futures contracts, investments in passive foreign investment companies, and forward foreign currency exchange contracts. -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- Tranfer 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. 20 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA 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 0.35% 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. For the year ended December 31, 2002, payments under the Service Plan totaled $53,627. -------------------------------------------------------------------------------- 5. Foreign Currency Contracts A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts to settle specific purchases or sales of securities denominated in a foreign currency and to seek to protect against adverse exchange rate fluctuation. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using prevailing foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the forward transaction. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. -------------------------------------------------------------------------------- 6. 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 on 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. 21 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- 7. Illiquid Securities As of December 31, 2002, investments in securities included issues that are illiquid. 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 Fund intends to invest no more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. The aggregate value of illiquid securities subject to this limitation as of December 31, 2002 was $5,230, which represents less than 0.01% of the Fund's net assets. 22 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA INDEPENDENT AUDITORS' REPORT -------------------------------------------------------------------------------- To the Board of Trustees and Shareholders of Oppenheimer Main Street Growth & Income Fund/VA: We have audited the accompanying statement of assets and liabilities of Oppenheimer Main Street Growth & Income Fund/VA, which is a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2002, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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, 2002, 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, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Main Street Growth & Income Fund/VA as of December 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Denver, Colorado January 23, 2003 23 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA FEDERAL INCOME TAX INFORMATION Unaudited -------------------------------------------------------------------------------- In early 2003, shareholders of record received information regarding all dividends and distributions paid to them by the Fund during calendar year 2002. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Dividends of $0.1271 and $0.1162 per share were paid to Non-Service and Service shareholders, respectively, on March 15, 2002, all of which was designated as "ordinary income" for federal income tax purposes. Dividends paid by the Fund during the fiscal year ended December 31, 2002, which are not designated as capital gain distributions should be multiplied by 100% to arrive at the amount eligible for the corporate dividend-received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 24 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA TRUSTEES AND OFFICERS
------------------------------------------------------------------------------------------------------------------------------------ Name, Position(s) Held with Principal Occupation(s) During Past 5 Years; Other Trusteeships/Directorships Held by Trustee; Fund, Length of Service, Age Number of Portfolios in Fund Complex Currently Overseen by Trustee INDEPENDENT The address of each Trustee in the chart below is 6803 S. Tucson Way, Centennial, CO 80112-3924. TRUSTEES Each Trustee serves for an indefinite term, until his or her resignation, retirement, death or removal. James C. Swain, Formerly, Chief Executive Officer (until August 27, 2002) of the Board II Funds, Vice Chairman Chairman and Trustee (until January 2, 2002) of the Manager and President and a director (until 1997) of Centennial (since 1985) Asset Management Corporation (a wholly-owned investment advisory subsidiary of the Manager). Age: 69 Oversees 41 portfolios in the OppenheimerFunds complex. William L. Armstrong, Chairman of the following private mortgage banking companies: Cherry Creek Mortgage Company (since Trustee (since 1999) 1991), Centennial State Mortgage Company (since 1994), The El Paso Mortgage Company (since 1993), Age: 65 Transland Financial Services, Inc. (since 1997); Chairman of the following private companies: Great Frontier Insurance (insurance agency) (since 1995) and Ambassador Media Corporation (since 1984); a director of the following public companies: Storage Technology Corporation (computer equipment company) (since 1991), Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992), UNUMProvident (insurance company) (since 1991). Formerly Director of International Family Entertainment (television channel) (1992-1997) and Natec Resources, Inc. (air pollution control equipment and services company) (1991-1995), Frontier Real Estate, Inc. (residential real estate brokerage) (1994-1999), and Frontier Title (title insurance agency) (1995-June 1999); a U.S. Senator (January 1979-January 1991). Oversees 41 portfolios in the OppenheimerFunds complex. Robert G. Avis, Formerly, Director and President of A.G. Edwards Capital, Inc. (General Partner of private equity Trustee (since 1995) funds) (until February 2001); Chairman, President and Chief Executive Officer of A.G. Edwards Age: 71 Capital, Inc. (until March 2000); Vice Chairman and Director of A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards & Sons, Inc. (its brokerage company subsidiary) (until March 1999); Chairman of A.G. Edwards Trust Company and A.G.E. Asset Management (investment advisor) (until March 1999); and a Director (until March 2000) of A.G. Edwards & Sons and A.G. Edwards Trust Company. Oversees 41 portfolios in the OppenheimerFunds complex. George C. Bowen, Formerly (until April 1999): Senior Vice President (from September 1987) and Treasurer (from March Trustee (since 1997) 1985) of the Manager; Vice President (from June 1983) and Treasurer (since March 1985) of Age: 66 OppenheimerFunds Distributor, Inc. (a subsidiary of the Manager); Senior Vice President (since February 1992), Treasurer (since July 1991) Assistant Secretary and a director (since December 1991) of Centennial Asset Management Corporation; Vice President (since October 1989) and Treasurer (since April 1986) of HarbourView Asset Management Corporation (an investment advisory subsidiary of the Manager); President, Treasurer and a director (June 1989-January 1990) of Centennial Capital Corporation (an investment advisory subsidiary of the Manager); Vice President and Treasurer (since August 1978) and Secretary (since April 1981) of Shareholder Services, Inc. (a transfer agent subsidiary of the Manager); Vice President, Treasurer and Secretary (since November 1989) of Shareholder Financial Services, Inc. (a transfer agent subsidiary of the Manager); Assistant Treasurer (since March 1998) of Oppenheimer Acquisition Corp. (the Managers parent corporation); Treasurer (since November 1989) of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the Manager); Vice President and Treasurer (since July 1996) of Oppenheimer Real Asset Management, Inc. (an investment advisory subsidiary of the Manager); Chief Executive Officer and director (since March 1996) of MultiSource Services, Inc. (a broker-dealer subsidiary of the Manager); Treasurer (since October 1997) of Oppenheimer Funds International Ltd. and Oppenheimer Millennium Funds plc (offshore fund management subsidiaries of the Manager). Oversees 41 portfolios in the OppenheimerFunds complex. Edward L. Cameron, A member of The Life Guard of Mount Vernon, (George Washingtons home) (since June 2000). Formerly Trustee (since 1999) (March 2001--May 2002) Director of Genetic ID, Inc. and its subsidiaries (a privately held biotech Age: 64 company); a partner with PricewaterhouseCoopers LLP (from 1974-1999) (an accounting firm) and Chairman (from 1994-1998), Price Waterhouse LLP Global Investment Management Industry Services Group. Oversees 41 portfolios in the OppenheimerFunds complex. Jon S. Fossel, Chairman and Director (since 1998) of Rocky Mountain Elk Foundation (a not-for-profit foundation); Trustee (since 1995) and a director (since October 1999) of P.R. Pharmaceuticals (a privately held company) and Age: 60 UNUMProvident (an insurance company) (since June 1, 2002). Formerly Chairman and a director (until October 1996) and President and Chief Executive Officer (until October 1995) of the Manager; President, Chief Executive Officer and a director of Oppenheimer Acquisition Corp., Shareholders Services Inc. and Shareholder Financials Services, Inc. (until October 1995). Oversees 41 portfolios in the OppenheimerFunds complex.
25 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
TRUSTEES AND OFFICERS Continued Sam Freedman, A trustee or director of other Oppenheimer funds. Formerly (until October 1994) Mr. Freedman held Trustee (since 1996) several positions in subsidiary or affiliated companies of the Manager. Oversees 41 portfolios in Age: 62 the OppenheimerFunds complex. Beverly L. Hamilton, Trustee (since 1996) of MassMutual Institutional Funds and of MML Series Investment Fund (open-end Trustee (since 2002) investment companies); Director of MML Services (since April 1987) and America Funds Emerging Age: 56 Markets Growth Fund (since October 1991) (both are investment companies), The California Endowment (a philanthropy organization) (since April 2002), and Community Hospital of Monterey Peninsula, (since February 2002); a trustee (since February 2000) of Monterey International Studies (an educational organization), and an advisor to Unilever (Holland)'s pension fund and to Credit Suisse First Bostons Sprout venture capital unit. Mrs. Hamilton also is a member of the investment committees of the Rockefeller Foundation, the University of Michigan and Hartford Hospital. Formerly, President (February 1991-April 2000) ARCO Investment Management Company. Oversees 40 portfolios in the OppenheimerFunds complex. Robert J. Malone, Director (since 2001) of Jones Knowledge, Inc. (a privately held company), U.S. Exploration, Inc., Trustee (since 2002) (since 1997), Colorado UpLIFT (a non-profit organization) (since 1986) and a trustee of the Age: 58 Gallagher Family Foundation (since 2000). Formerly, Chairman of U.S. Bank (a subsidiary of U.S. Bancorp and formerly Colorado National Bank,) (July 1996-April 1, 1999) and a director of Commercial Assets, Inc. (1993-2000). Oversees 40 portfolios in the OppenheimerFunds complex. F. William Marshall, Jr., Trustee (since 1996) of MassMutual Institutional Funds and of MML Series Investment Fund (open-end Trustee (since 2000) investment companies); Trustee and Chairman (since May 1987) of the investment committee for the Age: 60 Worcester Polytech Institute; President and Treasurer (since January 1999) of the SIS Fund (a private not for profit charitable organization); Trustee (since 1995) of the Springfield Library and Museum Association; Trustee (since 1996) of the Community Music School of Springfield; Member of the investment committee of the Community Foundation of Western Massachusetts (since 1998). Formerly, Chairman (January 1999-July 1999) of SIS & Family Bank, F.S.B. (formerly SIS Bank); President, Chief Executive Officer and Director (May 1993-December 1998) of SIS Bankcorp, Inc. and SIS Bank (formerly Springfield Institution for Savings) and Executive Vice President (January 1999-July 1999) of Peoples Heritage Financial Group, Inc. Oversees 41 portfolios in the OppenheimerFunds complex. ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEE The address of Mr. Murphy in the chart below is 498 Seventh Avenue, New York, NY 10018. Mr. Murphy AND OFFICER serves for an indefinite term, until his resignation, retirement, death or removal. John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President (since September President and Trustee 2000) of the Manager; President and a director or trustee of other Oppenheimer funds; President and (since 2001) a director (since July 2001) of Oppenheimer Acquisition Corp. and of Oppenheimer Partnership Age: 53 Holdings, Inc.; a director (since November 2001) of OppenheimerFunds Distributor, Inc.; Chairman and a director (since July 2001) of Shareholder Services, Inc. and of Shareholder Financial Services, Inc.; President and a director (since July 2001) of OppenheimerFunds Legacy Program (a charitable trust program established by the Manager); a director of the following investment advisory subsidiaries of OppenheimerFunds, Inc.: OFI Institutional Asset Management, Inc. and Centennial Asset Management Corporation (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 1, 2001) and a director (since July 2001) of Oppenheimer Real Asset Management, Inc.; a director (since November 2001) of Trinity Investment Management Corp. and Tremont Advisers, Inc. (investment advisory affiliates of the Manager); Executive Vice President (since February 1997) of Massachusetts Mutual Life Insurance Company (the Managers parent company); a director (since June 1995) of DLB Acquisition Corporation (a holding company that owns the shares of David L. Babson & Company, Inc.); formerly, Chief Operating Officer (September 2000-June 2001) of the Manager; President and trustee (November 1999-November 2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end investment companies); a director (September 1999-August 2000) of C.M. Life Insurance Company; President, Chief Executive Officer and director (September 1999-August 2000) of MML Bay State Life Insurance Company; a director (June 1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 69 portfolios in the OppenheimerFunds complex.
26 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
------------------------------------------------------------------------------------------------------------------------------------ OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Albers, Monoyios and Zack, 498 Seventh Avenue, New York, NY 10018, for Mr. Wixted, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer serves for an annual term or until his earlier retirement, resignation, death or removal. Charles Albers, Senior Vice President (since April 1998) of the Manager; a Certified Financial Analyst; formerly a Vice President (since 1999) Vice President and portfolio manager for Guardian Investor Services, the investment management Age: 61 subsidiary of The Guardian Life Insurance Company (1972 - April 1998). An officer of 6 portfolios in the OppenheimerFunds complex. Nikolaos D. Monoyios, Vice President of the Manager (since April 1998); a Certified Financial Analyst; formerly a Vice Vice President (since 1999) President and portfolio manager for Guardian Investor Services, the investment management Age: 53 subsidiary of The Guardian Life Insurance Company (1979 March 1998). An officer of 4 portfolios in the OppenheimerFunds complex. Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer (since March 1999) Treasurer, Principal of HarbourView Asset Management Corporation, Shareholder Services, Inc., Oppenheimer Real Asset and Accounting Officer Financial Management Corporation, Shareholder Financial Services, Inc., Oppenheimer Partnership (since 1999) Holdings, Inc., OFI Private Investments, Inc. (since March 2000), OppenheimerFunds International Age: 43 Ltd. and Oppenheimer Millennium Funds plc (since May 2000) and OFI Institutional Asset Management, Inc. (since November 2000); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy Program (since April 2000); formerly Principal and Chief Operating Officer (March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An officer of 85 portfolios in the OppenheimerFunds complex. Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February 2002) of the Manager; Vice President and Secretary General Counsel and a director (since November 2001) of OppenheimerFunds Distributor, Inc.; Senior (since 2001) Vice President and General Counsel (since November 2001) of HarbourView Asset Management Age: 54 Corporation; Vice President and a director (since November 2000) of Oppenheimer Partnership Holdings, Inc.; Senior Vice President, General Counsel and a director (since November 2001) of Shareholder Services, Inc., Shareholder Financial Services, Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI Institutional Asset Management, Inc.; General Counsel (since November 2001) of Centennial Asset Management Corporation; a director (since November 2001) of Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director (since November 2001) of OppenheimerFunds International Ltd.; Vice President (since November 2001) of OppenheimerFunds Legacy Program; Secretary (since November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001); OppenheimerFunds International Ltd. And Oppenheimer Millennium Funds plc (October 1997-November 2001). An officer of 85 portfolios in the OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information about the Fund's Trustees and is available without charge upon request. 27 | OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA OPPENHEIMER MAIN STREET GROWTH & INCOME FUND(R)/VA A Series of Oppenheimer Variable Account Funds -------------------------------------------------------------------------------- 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. to the Fund -------------------------------------------------------------------------------- Legal Counsel to the Mayer Brown Rowe & Maw Independent Trustees For more complete information about Oppenheimer Main Street Growth & Income Fund/VA, please refer to the Prospectus. To obtain a copy, call your financial advisor, or call OppenheimerFunds, Inc. at 1.800.981.2871. [LOGO] OppenheimerFunds(R) Distributor, Inc. (C) Copyright 2003 OppenheimerFunds, Inc. All rights reserved.