Annual Report December 31, 1999
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Oppenheimer
Multiple Strategies Fund/VA
A Series of Oppenheimer Variable Account Funds
[logo] OppenheimerFunds(R)
The Right Way to Invest
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Oppenheimer Variable Account Funds--Oppenheimer Multiple Strategies Fund/VA
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Objective
Oppenheimer Multiple Strategies Fund/VA, a series of Oppenheimer Variable
Account Funds, seeks a total investment return, which includes current income
and capital appreciation, from investments in common stocks and other equity
securities, bonds and other debt securities and money market securities.
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Narrative by Richard Rubinstein, Co-Portfolio Manager
Overall, the Fund met its objective of providing total return consistent with
preservation of principal during the fiscal year that ended December 31, 1999.
The stock market continued its advance throughout 1999. But the
market's rise was very deceiving. To a large extent, gains were mostly limited
to a few very large growth companies and the technology sector. This "narrow"
growth disguised the lackluster performance of many stocks.
For a brief moment in the second quarter of 1999, investors began
favoring economically sensitive, smaller capitalization, and more value-oriented
stocks. This "broadening" of the market's rally was seen as very positive for
the health of the stock market. With investors seeking a wider universe of
stocks for their portfolios, more companies were able to benefit from the
market's ascent.
However, the "rally" of value stocks was short-lived. With the ongoing
strength of the U.S. economy, there have been concerns over an increase in
inflation. As a result, the Federal Reserve Board raised short-term interest
rates three times this past year. Investors now appear preoccupied with the
future direction of interest rates.
With regard to the Fund, we continue to broadly diversify the portfolio
among U.S. government, high yield corporate and foreign bonds in order to take
advantage of different investment opportunities as they arise. This
diversification strategy has worked well for the Fund, as we have been able to
generate extra yield and temper risk. In the U.S. government market we have
emphasized Treasuries, among high yield bonds our largest exposure was in the
communications sector, and our foreign bonds were dominated by dollar-linked and
selective emerging market debt. In recent months, we have used a portion of our
cash position to increase our position in U.S. Treasuries. In doing so we were
able to lock in the higher yields of a rising interest rate environment.
Many of our technology stocks were strong performers over the last
year. Two securities that have performed particularly well were IBM Corp. and
Analog Devices, Inc. IBM Corp.'s strong sales have helped it surpass Wall
Street's earnings expectations and generate very strong returns. Analog Devices,
Inc. is one of a handful of companies that produce Digital Signal Processor, or
DSP chips. These chips combine analog and digital chips in a single unit. Demand
for the firm's products suffered during last year's economic crisis in Asia.
But, just as many Asian economies have rebounded, so have Analog Devices, Inc.'s
sales. With few competitors and high profit margins, demand for DSP chips has
led to record revenues for Analog Devices, Inc.
The Fund's investments in Argentinean Brady Bonds did not perform as we
had expected. Brady Bonds are U.S.-dollar denominated foreign debt obligations,
often collateralized by U.S. Treasury zero coupon obligations with the same
maturity. We believed Argentina's vast resources could help it withstand their
economic difficulties that occurred as a result of last year's Asian economic
crisis. This did not prove to be the case.
While the economy still exhibits significant strength, we expect to see
slower growth as we move into the year 2000. This could occur for a variety of
reasons. Consumer spending has been exceptionally strong for quite some time,
and growing debt levels could make that difficult to sustain. In addition, with
excess capacity in much of the world, demand for U.S. exports has fallen. While
we don't anticipate a recession, we would expect to see growth rates in the
United States fall modestly in the future.
Given our outlook, we are satisfied with the Fund's current portfolio.
We remain highly diversified, and believe that our disciplined investment
approach will continue to serve our shareholders well. These are just two
reasons why Oppenheimer Multiple Strategies Fund/VA is part of The Right Way to
Invest.
2 Oppenheimer Multiple Strategies Fund/VA
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Oppenheimer Variable Account Funds--Oppenheimer Multiple Strategies Fund/VA
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Management's discussion of performance. During the fiscal year that ended
December 31, 1999, Oppenheimer Multiple Strategies Fund/VA produced positive
returns. The Fund's investment in many value and technology stocks also enhanced
performance. The Fund's diversification strategy among its bond holdings helped
to generate incremental yield. In addition, the Fund used the rising interest
rate environment as an opportunity to lock in higher yield through its increased
exposure to U.S. Treasuries. However, economic troubles caused our holdings of
Argentina's Brady Bonds to perform poorly. The Fund continued to meet its
objective of providing total return consistent with preservation of principal
for its shareholders. The Fund's portfolio holdings, allocation and strategies
are subject to change.
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Comparing the Fund's performance to the market. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1999. 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 graph assumes 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 and the Lehman Brothers Aggregate Bond Index. The S&P 500 Index is a
broad-based index of equity securities widely regarded as a general measurement
of the performance of the U.S. equity securities market. The Lehman Brothers
Aggregate Bond Index is a broad-based, unmanaged index of U.S. corporate bond
issues, U.S. Government securities and mortgage-backed securities, widely
recognized as a measure of the performance of the domestic debt securities
market. Index performance reflects the reinvestment of income but does not
consider the effect of transaction costs, and none of the data in the graph
shows the effect of taxes. The Fund's performance reflects the effects of 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 indices.
[Begin Line Chart]
Comparison of Change in Value of $10,000 Hypothetical Investments in:
OVAF/Oppenheimer Multiple Strategies Fund/VA, S&P 500 Index and
Lehman Brothers Aggregate Bond Index
<TABLE>
<CAPTION>
OVAF/Oppenheimer Multiple
Strategies Fund/VA S&P 500 Index Lehman Brothers Aggregate Bond Index
<S> <C> <C> <C>
12.31.89 10000 10000 10000
9809 9690 10896
12.31.91 11524 12635 12640
12560 13597 13575
12.31.93 14563 14966 14899
14279 15162 14464
12.31.95 17329 20851 17136
20013 25630 17759
12.31.97 23461 34176 19473
25022 43944 21165
12.31.99 27973 53181 20991
</TABLE>
Average Annual Total Return of the Fund at 12/31/99
1-Year 11.80% 5-Year 14.40% 10-Year 10.83%
[End Line Chart]
Because the stock market can be volatile, the Fund's performance may be subject
to substantial short-term changes. For updates on the Fund's performance, please
call us at 1.800.981.2871.
The performance information in the graph for both indices begins on 12/31/89.
The inception date of the Fund is 2/9/87.
Total returns include changes in net asset value per share and do not include
the charges associated with the separate account products that 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 graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
Past performance is not predictive of future performance.
Oppenheimer Multiple Strategies Fund/VA 3
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Statement of Investments December 31, 1999
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<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
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Common Stocks--50.3%
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Basic Materials--1.8%
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Chemicals--0.8%
Bayer AG, Sponsored ADR 34,000 $1,601,682
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Du Pont (E.I.) De Nemours & Co.(1) 7,672 505,393
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Potash Corp. of Saskatchewan, Inc. 29,500 1,421,531
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Praxair, Inc.(1) 23,000 1,157,187
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4,685,793
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Metals--0.3%
De Beers Consolidated Mines Ltd., ADR 68,000 1,967,750
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Paper--0.7%
Pactiv Corp.(2) 50,000 531,250
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Sonoco Products Co. 9,500 216,125
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Wausau-Mosinee Paper Corp. 76,400 892,925
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Weyerhaeuser Co. 36,647 2,631,713
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4,272,013
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Capital Goods--1.5%
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Aerospace/Defense--0.4%
Goodrich (B.F.) Co. 80,000 2,200,000
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Industrial Services--0.1%
Service Corp. International 125,000 867,187
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Manufacturing--1.0%
Hexcel Corp.(2) 140,000 778,750
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Honeywell International, Inc. 19,687 1,135,694
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Pall Corp. 115,000 2,479,687
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Tyco International Ltd. 37,500 1,457,812
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5,851,943
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Communication Services--1.8%
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Telecommunications: Long Distance--1.0%
Intermedia Communications, Inc.(2) 3,812 147,953
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Intermedia Communications, Inc.(2)(3) 201 6,241
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MCI WorldCom, Inc.(2) 108,750 5,770,547
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5,924,741
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Telephone Utilities--0.7%
GTE Corp. 17,500 1,234,844
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SBC Communications, Inc. 44,000 2,145,000
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Tele Norte Leste Participacoes SA (Telemar) 26,250,000 472,253
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Telesp Tele de Sao Paulo 19,200,000 265,813
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4,117,910
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Telecommunications: Wireless--0.1%
Telesp Celular Participacoes SA 49,150,000 465,245
</TABLE>
4 Oppenheimer Multiple Strategies Fund/VA
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Statement of Investments (Continued)
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<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
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Consumer Cyclicals--7.0%
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Autos & Housing--1.7%
Dana Corp. 75,000 $ 2,245,312
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IRSA Inversiones y Representaciones SA 292,230 946,920
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Lear Corp.(2) 55,000 1,760,000
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Owens Corning 140,000 2,703,750
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Southdown, Inc. 17,500 903,437
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Toll Brothers, Inc.(2) 61,000 1,136,125
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9,695,544
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Consumer Services--0.2%
Alterra Healthcare Corp.(2) 115,000 955,937
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Leisure & Entertainment--2.3%
Berjaya Sports Toto Berhad 200,000 431,579
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Brunswick Corp. 56,000 1,246,000
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Callaway Golf Co. 140,000 2,476,250
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Host Marriott Corp. 130,000 1,072,500
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International Game Technology 192,500 3,910,156
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Mattel, Inc. 115,000 1,509,378
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Mirage Resorts, Inc.(2) 62,000 949,375
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Shimano, Inc. 100,000 1,760,736
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13,355,974
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Media--0.7%
South China Morning Post Holdings Ltd. 1,694,000 1,460,063
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Time Warner, Inc.(1) 32,000 2,318,000
-----------
3,778,063
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Retail: General--0.8%
Federated Department Stores, Inc.(2) 42,500 2,148,906
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Neiman Marcus Group, Inc. (The), Cl. A(2) 40,000 1,117,500
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Saks, Inc.(2) 93,000 1,447,312
-----------
4,713,718
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Retail: Specialty--0.7%
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Abercrombie & Fitch Co., Cl. A(2) 35,000 934,063
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AutoZone, Inc.(2) 43,000 1,389,438
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Borders Group, Inc.(2) 70,000 1,124,375
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Gap, Inc.(1) 14,500 667,000
-----------
4,114,876
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Textile/Apparel & Home Furnishings--0.6%
Jones Apparel Group, Inc.(2) 77,000 2,088,625
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Tommy Hilfiger Corp.(2) 48,500 1,130,656
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3,219,281
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Consumer Staples--4.8%
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Beverages--0.3%
Coca-Cola Enterprises, Inc. 41,800 841,225
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Diageo plc 125,800 1,012,086
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1,853,311
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 5
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Statement of Investments (Continued)
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<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
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Broadcasting--1.8%
CBS Corp.(1)(2) 110,000 $ 7,033,125
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MediaOne Group, Inc.(1)(2) 35,000 2,688,438
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RCN Corp.(2) 12,500 606,250
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10,327,813
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Entertainment--0.9%
Brinker International, Inc.(2) 35,000 840,000
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Disney (Walt) Co. 32,500 950,625
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Luby's, Inc. 90,000 1,023,750
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Nintendo Co. Ltd. 14,400 2,391,783
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5,206,158
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Food--0.4%
Groupe Danone 7,500 1,766,231
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Nestle SA, Sponsored ADR 6,000 546,688
-----------
2,312,919
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Food & Drug Retailers--0.1%
Cia Brasileira de Distribuicao Grupo Pao de Acucar, Sponsored ADR 14,000 452,375
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Household Goods--0.9%
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Avon Products, Inc.(1) 45,000 1,485,000
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Fort James Corp. 45,000 1,231,875
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Rexall Sundown, Inc.(2) 125,000 1,289,063
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Wella AG 55,900 1,147,658
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Wella AG, Preference 5,200 114,085
-----------
5,267,681
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Tobacco--0.4%
Philip Morris Cos., Inc. 100,000 2,318,750
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Energy--3.1%
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Energy Services--1.0%
Input/Output, Inc.(2) 193,000 977,063
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Santa Fe International Corp. 87,000 2,251,125
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Schlumberger Ltd. 22,500 1,265,625
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Transocean Sedco Forex, Inc. 43,356 1,460,555
-----------
5,954,368
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Oil: Domestic--1.3%
Comstock Resources, Inc.(2) 175,000 492,188
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Conoco, Inc., Cl. B 24,567 611,104
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Exxon Mobil Corp. 28,501 2,296,112
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Kerr-McGee Corp. 35,000 2,170,000
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Unocal Corp. 65,000 2,181,563
-----------
7,750,967
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Oil: International--0.8%
Petroleo Brasileiro SA, Preference 3,330,000 847,938
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Talisman Energy, Inc.(2) 105,510 2,690,057
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Total Fina SA, Sponsored ADR 16,000 1,108,000
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4,645,995
</TABLE>
6 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
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Statement of Investments (Continued)
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<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
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Financial--9.7%
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Banks--5.7%
ABN Amro Holding NV 62,700 $ 1,564,911
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Banco Frances del Rio de la Plata SA 95,000 750,575
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Bank of America Corp.(1) 160,000 8,030,000
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Bank One Corp. 50,000 1,603,125
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Chase Manhattan Corp. 133,000 10,332,438
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Societe Generale 20,000 4,649,567
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UBS AG 4,175 1,128,875
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UniCredito Italiano SpA 414,000 2,033,249
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Wells Fargo Co. 70,000 2,830,625
-----------
32,923,365
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Diversified Financial--0.9%
Finova Group, Inc. 26,000 923,000
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ICICI Ltd., Sponsored ADR(2) 35,500 523,625
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Merrill Lynch & Co., Inc. 16,000 1,336,000
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Morgan Stanley Dean Witter & Co. 12,500 1,784,375
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Simon Property Group, Inc. 37,500 860,156
-----------
5,427,156
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Insurance--1.0%
ACE Ltd. 140,000 2,336,250
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Skandia Forsakrings AB 115,000 3,472,769
-----------
5,809,019
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Real Estate Investment Trusts--2.1%
Archstone Communities Trust 52,000 1,066,000
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Avalonbay Communities, Inc. 30,732 1,054,492
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Brandywine Realty Trust 56,000 917,000
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Camden Property Trust 40,000 1,095,000
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CarrAmerica Realty Corp. 48,000 1,014,000
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Chastain Capital Corp.(2) 134,000 58,625
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Chelsea GCA Realty, Inc. 32,000 952,000
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Cornerstone Properties, Inc. 68,000 994,500
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Developers Diversified Realty Corp. 62,000 798,250
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JDN Realty Corp. 60,000 967,500
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Manufactured Home Communities, Inc. 44,000 1,069,750
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Post Properties, Inc. 28,000 1,071,000
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Shurgard Storage Centers, Inc. 44,000 1,020,250
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12,078,367
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 7
<PAGE>
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Statement of Investments (Continued)
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<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
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Healthcare--4.7%
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Healthcare/Drugs--3.4%
Abbott Laboratories 38,000 $ 1,379,875
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American Home Products Corp. 48,500 1,912,719
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AstraZeneca Group plc 60,540 2,560,884
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Elan Corp. plc, ADR(2) 32,000 944,000
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Johnson & Johnson(1) 33,867 3,153,864
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Merck & Co., Inc. 30,000 2,011,875
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Mylan Laboratories, Inc. 110,000 2,770,625
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Novartis AG 1,700 2,499,277
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Pliva d.d., Sponsored GDR(4) 20,000 261,000
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SmithKline Beecham plc, Cl. A, Sponsored ADR 30,000 1,933,125
-----------
19,427,244
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Healthcare/Supplies & Services--1.3%
Acuson Corp.(2) 180,000 2,261,250
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Innovasive Devices, Inc.(2) 110,000 880,000
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Manor Care, Inc.(2) 75,000 1,200,000
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McKesson HBOC, Inc. 20,000 451,250
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St. Jude Medical, Inc.(2) 30,000 920,625
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United Healthcare Corp. 32,800 1,742,500
-----------
7,455,625
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Technology--14.5%
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Computer Hardware--2.8%
Canon, Inc. 50,000 1,985,718
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Hewlett-Packard Co.(1) 10,000 1,139,375
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International Business Machines Corp.(1) 120,000 12,960,000
-----------
16,085,093
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Computer Services--0.1%
barnesandnoble.com, inc.(2) 36,100 512,169
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Computer Software--2.4%
Computer Associates International, Inc.(1) 48,599 3,398,928
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Compuware Corp.(1)(2) 49,100 1,828,975
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Novell, Inc.(2) 126,000 5,032,125
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Oracle Corp.(1)(2) 12,500 1,400,781
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Rational Software Corp.(1)(2) 7,700 378,263
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Sabre Holdings Corp.(2) 34,500 1,768,125
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Structural Dynamics Research Corp.(2) 167 2,129
-----------
13,809,326
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Communications Equipment--1.7%
Cisco Systems, Inc.(1)(2) 41,000 4,392,125
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Optical Coating Laboratory, Inc.(1) 18,000 5,328,000
-----------
9,720,125
</TABLE>
8 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
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Statement of Investments (Continued)
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<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
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Electronics--6.9%
Analog Devices, Inc.(1)(2) 67,200 $ 6,249,600
- ---------------------------------------------------------------------------------------------------------
ASM Lithography Holding NV 13,400 1,524,250
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Cognex Corp.(2) 50,000 1,950,000
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Coherent, Inc.(1)(2) 70,000 1,872,500
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General Motors Corp., Cl. H(1)(2) 30,200 2,899,200
- ---------------------------------------------------------------------------------------------------------
Grainger (W.W.), Inc. 21,000 1,004,063
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Intel Corp. 156,000 12,840,750
- ---------------------------------------------------------------------------------------------------------
Keyence Corp. 8,000 3,247,579
- ---------------------------------------------------------------------------------------------------------
Methode Electronics, Inc., Cl. A(1) 104,000 3,341,000
- ---------------------------------------------------------------------------------------------------------
STMicroelectronics NV, NY Registered Shares(1) 22,400 3,392,200
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Teradyne, Inc.(1)(2) 28,000 1,848,000
------------
40,169,142
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Photography--0.6%
Eastman Kodak Co. 26,500 1,755,625
- ---------------------------------------------------------------------------------------------------------
Xerox Corp.(1) 67,500 1,531,406
------------
3,287,031
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Transportation--0.5%
- ---------------------------------------------------------------------------------------------------------
Air Transportation--0.2%
Alaska Air Group, Inc.(2) 29,500 1,036,188
- ---------------------------------------------------------------------------------------------------------
Railroads & Truckers--0.3%
Burlington Northern Santa Fe Corp. 67,000 1,624,750
- ---------------------------------------------------------------------------------------------------------
Shipping--0.0%
Stolt-Nielsen SA 20,000 285,000
- ---------------------------------------------------------------------------------------------------------
Utilities--0.9%
- ---------------------------------------------------------------------------------------------------------
Electric Utilities--0.9%
Allegheny Energy, Inc. 50,500 1,360,344
- ---------------------------------------------------------------------------------------------------------
Reliant Energy, Inc. 80,000 1,830,000
- ---------------------------------------------------------------------------------------------------------
Southern Co. 90,000 2,115,000
------------
5,305,344
------------
Total Common Stocks (Cost $201,240,567) 291,231,256
=========================================================================================================
Preferred Stocks--0.6%
- ---------------------------------------------------------------------------------------------------------
ICG Communications, Inc., 6.75% Cum. Cv., Non-Vtg. 45,000 2,041,875
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% Cv.(4) 5,000 134,375
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr., Series D, Non-Vtg. 30,000 1,522,500
------------
Total Preferred Stocks (Cost $4,472,031) 3,698,750
=========================================================================================================
Other Securities--1.0%
- ---------------------------------------------------------------------------------------------------------
Budget Group, Inc., 6.25% Cum. Cv. Term Income Deferred Equity
Securities, Non-Vtg.(4) 20,000 615,000
- ---------------------------------------------------------------------------------------------------------
Monsanto Co., 6.50% Cv. Adjustable Conversion-rate Equity Security 35,000 1,159,375
- ---------------------------------------------------------------------------------------------------------
Qwest Trends Trust, 5.75% Cv.(4) 55,000 3,884,375
------------
Total Other Securities (Cost $5,245,203) 5,658,750
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
=========================================================================================================
Rights, Warrants and Certificates--0.0%
- ---------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08 1,000 $ 12,250
- ---------------------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/1/02 9,232 60,008
- ---------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/00(3) 2,592 38,888
- ---------------------------------------------------------------------------------------------------------
PE Corp. Cl. G Wts., Exp. 9/11/03 249 12,699
- ---------------------------------------------------------------------------------------------------------
Terex Corp. Rts., Exp. 5/15/02(3) 4,000 56,500
-----------
Total Rights, Warrants and Certificates (Cost $59,660) 180,345
Principal
Amount(5)
=========================================================================================================
Mortgage-Backed Obligations--2.0%
- ---------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg. Participation
Certificates, 7%, 5/1/29 $ 4,769,214 4,615,694
- ---------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6.50%, 11/1/27-12/1/27 4,205,093 3,971,206
- ---------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 8%, 7/15/22-4/15/23 2,084,740 2,112,922
- ---------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1994-C2, Cl. E, 8%, 4/25/25 635,799 620,104
-----------
Total Mortgage-Backed Obligations (Cost $11,602,003) 11,319,926
=========================================================================================================
U.S. Government Obligations--11.7%
- ---------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
8.875%, 8/15/17 2,900,000 3,505,375
STRIPS, 6.30%, 8/15/25(6) 12,900,000 2,438,332
STRIPS, 6.53%, 8/15/15(6) 7,100,000 2,450,210
STRIPS, 7.10%, 11/15/18(6) 16,000,000 4,449,696
STRIPS, 7.26%, 11/15/18(6) 10,000,000 2,786,070
STRIPS, 7.31%, 8/15/19(6) 18,000,000 4,766,058
- ---------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 9/30/02 15,000,000 14,845,320
6.125%, 9/30/00 15,000,000 15,018,750
6.25%, 2/15/07 8,800,000 8,662,500
6.375%, 8/15/02 5,000,000 5,010,940
6.50%, 10/15/06 3,710,000 3,700,725
-----------
Total U.S. Government Obligations (Cost $68,185,746) 67,633,976
=========================================================================================================
Foreign Government Obligations--23.7%
- ---------------------------------------------------------------------------------------------------------
Argentina--6.4%
Argentina (Republic of) Bonds:
Series BT06, 11.25%, 5/24/04 1,178,000 1,169,165
Series L, 6.812%, 3/31/05(7) 8,096,000 7,387,600
- ---------------------------------------------------------------------------------------------------------
Argentina (Republic of) Nts., 14.25%, 11/30/02(7) 13,125,000 12,993,750
- ---------------------------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 6%, 3/31/23(7) 23,750,000 15,645,312
-----------
37,195,827
- ---------------------------------------------------------------------------------------------------------
Australia--0.6%
New South Wales Treasury Corp. Gtd. Bonds, 7%, 4/1/04AUD 3,160,000 2,076,929
- ---------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable Gtd. Nts., 10.50%, 5/15/03AUD 1,800,000 1,313,947
-----------
3,390,876
</TABLE>
10 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(5) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Brazil--5.2%
Brazil (Federal Republic of) Capitalization Bonds, 6.916%, 4/15/14 $21,716,459 $ 16,368,781
- ---------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Eligible Interest Bonds, 6.937%, 4/15/06(7) 15,463,000 13,646,097
------------
30,014,878
- ---------------------------------------------------------------------------------------------------------
Canada--2.9%
Canada (Government of) Bonds:
8.50%, 4/1/02CAD 1,500,000 1,090,721
8.75%, 12/1/05CAD 12,200,000 9,469,183
9.75%, 12/1/01-6/1/01CAD 5,000,000 3,672,397
Series WL43, 5.75%, 6/1/29CAD 3,670,000 2,389,240
------------
16,621,541
- ---------------------------------------------------------------------------------------------------------
Denmark--0.9%
Denmark (Kingdom of) Bonds, 8%, 3/15/06DKK 32,100,000 4,905,143
- ---------------------------------------------------------------------------------------------------------
Great Britain--1.2%
United Kingdom Treasury Bonds, 6.75%, 11/26/04GBP 2,680,000 4,446,440
- ---------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 13%, 7/14/00GBP 1,590,000 2,662,916
------------
7,109,356
- ---------------------------------------------------------------------------------------------------------
Ireland--0.3%
Ireland (Government of) Bonds, 9.25%, 7/11/03(3)EUR 1,409,409 1,628,357
- ---------------------------------------------------------------------------------------------------------
Mexico--0.6%
United Mexican States Collateralized Fixed Rate Par Bonds,
Series W-A, 6.25%, 12/31/19 4,450,000 3,515,500
- ---------------------------------------------------------------------------------------------------------
New Zealand--5.1%
New Zealand (Government of) Bonds:
8%, 2/15/01NZD 19,440,000 10,391,131
10%, 3/15/02NZD 16,800,000 9,395,771
- ---------------------------------------------------------------------------------------------------------
New Zealand (Government of) Nts., 6.50%, 2/15/00NZD 18,600,000 9,753,559
------------
29,540,461
- ---------------------------------------------------------------------------------------------------------
Philippines--0.2%
Philippines (Republic of) Bonds, 8.60%, 6/15/27 1,500,000 1,267,994
- ---------------------------------------------------------------------------------------------------------
South Africa--0.3%
Eskom Depositary Receipts, Series E168, 11%, 6/1/08ZAR 12,570,000 1,734,295
------------
Total Foreign Government Obligations (Cost $137,782,080) 136,924,228
=========================================================================================================
Non-Convertible Corporate Bonds and Notes--6.7%
- ---------------------------------------------------------------------------------------------------------
Basic Materials--1.3%
- ---------------------------------------------------------------------------------------------------------
Chemicals--0.5%
Huntsman Corp./ICI Chemical Co. plc, Zero Coupon Sr. Disc. Nts.,
13.08%, 12/31/09(4)(6) 1,000,000 306,250
- ---------------------------------------------------------------------------------------------------------
Lyondell Chemical Co., 10.875% Sr. Sub. Nts., 5/1/09 500,000 517,500
- ---------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 85,000 88,400
- ---------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 500,000 487,500
- ---------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.75% Sr. Unsec. Sub. Nts., 8/15/06 535,000 403,925
12.375% Sr. Sec. Nts., Series B, 7/15/06 250,000 260,000
- ---------------------------------------------------------------------------------------------------------
ZSC Specialty Chemical plc, 11% Sr. Nts., 7/1/09(4) 500,000 521,250
------------
2,584,825
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(5) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Metals--0.4%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 $1,015,000 $1,037,837
- ---------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 1,000,000 1,005,000
- ---------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 407,250
----------
2,450,087
- ---------------------------------------------------------------------------------------------------------
Paper--0.4%
Aracruz Celulose SA, 10.375% Debs., 1/31/02(4) 430,000 431,075
- ---------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 300,000 280,500
- ---------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 500,000 517,500
10.875% Sr. Sub. Nts., 4/1/08 250,000 247,500
- ---------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 750,000 785,625
----------
2,262,200
- ---------------------------------------------------------------------------------------------------------
Capital Goods--0.4%
- ---------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.1%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 500,000 502,500
- ---------------------------------------------------------------------------------------------------------
Industrial Services--0.1%
Allied Waste North America, Inc., 10% Sr. Sub. Nts., 8/1/09(4) 750,000 675,000
- ---------------------------------------------------------------------------------------------------------
Manufacturing--0.2%
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09(4) 700,000 742,000
- ---------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 500,000 518,750
----------
1,260,750
- ---------------------------------------------------------------------------------------------------------
Communication Services--2.1%
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--1.3%
Exodus Communications, Inc., 11.25% Sr. Nts., 7/1/08 500,000 518,750
- ---------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 750,000 753,750
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 8.50% Sr. Nts., Series B, 1/15/08 500,000 460,000
- ---------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 250,000 257,500
10% Sr. Unsec. Nts., Series B, 11/15/08 750,000 770,625
- ---------------------------------------------------------------------------------------------------------
NTL Communications Corp., 0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(8) 500,000 356,250
- ---------------------------------------------------------------------------------------------------------
NTL, Inc., 0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(8) 500,000 347,500
- ---------------------------------------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 1,000,000 993,750
- ---------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(8) 1,000,000 937,500
9.625% Sr. Debs., 10/1/06 500,000 507,500
- ---------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV, 10.875% Sr. Nts., 8/1/09 400,000 407,000
- ---------------------------------------------------------------------------------------------------------
Verio, Inc., 11.25% Sr. Unsec. Nts., 12/1/08 600,000 633,000
- ---------------------------------------------------------------------------------------------------------
Worldwide Fiber, Inc., 12% Sr. Nts., 8/1/09(4) 400,000 414,000
----------
7,357,125
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Wireless--0.8%
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 200,000 181,000
- ---------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(8) 750,000 603,750
- ---------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(4) 250,000 270,000
11.625% Sr. Nts., 8/15/06 535,000 569,775
11.625% Sr. Nts., Series A, 8/15/06 590,000 628,350
</TABLE>
12 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(5) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Telecommunications: Wireless (continued)
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 $ 200,000 $ 145,000
- ---------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 750,000 770,625
- ---------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 1,000,000 821,250
- ---------------------------------------------------------------------------------------------------------
Voicestream Wireless Corp., 10.375% Sr. Nts., 11/15/09(4) 400,000 414,000
----------
4,403,750
- ---------------------------------------------------------------------------------------------------------
Consumer Cyclicals--0.8%
- ---------------------------------------------------------------------------------------------------------
Autos & Housing--0.4%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 100,000 95,500
- ---------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 300,000 117,750
- ---------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 500,000 525,000
- ---------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 12% Unsec. Nts., 7/15/05(3) 270,840 148,962
- ---------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 400,000 378,000
- ---------------------------------------------------------------------------------------------------------
Nortek, Inc., 8.875% Sr. Unsec. Nts., Series B, 8/1/08 750,000 716,250
- ---------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Sub. Nts., 10/15/09(4) 400,000 410,000
----------
2,391,462
- ---------------------------------------------------------------------------------------------------------
Leisure & Entertainment--0.2%
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 250,000 178,750
- ---------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07 500,000 462,500
- ---------------------------------------------------------------------------------------------------------
Premier Parks, Inc., 9.75% Sr. Nts., 6/15/07 500,000 500,000
----------
1,141,250
- ---------------------------------------------------------------------------------------------------------
Media--0.2%
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 150,000 153,750
- ---------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 500,000 589,339
- ---------------------------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 500,000 549,601
----------
1,292,690
Consumer Staples--1.4%
- ---------------------------------------------------------------------------------------------------------
Beverages--0.1%
Canadaiqua Brands, Inc., 8.625% Sr. Unsec. Nts., 8/1/06 700,000 700,875
- ---------------------------------------------------------------------------------------------------------
Broadcasting--1.1%
Aldelphia Communications Corp., 9.375% Sr. Nts., 11/15/09 750,000 738,750
- ---------------------------------------------------------------------------------------------------------
Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 1,000,000 1,012,500
- ---------------------------------------------------------------------------------------------------------
Charter Communication Holdings LLC/Charter Communication Holdings
Capital Corp., 8.625% Sr. Unsec. Nts., 4/1/09 750,000 696,563
- ---------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06 250,000 265,000
- ---------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 700,000 707,000
- ---------------------------------------------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(8) 600,000 452,250
- ---------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07 1,000,000 1,071,250
- ---------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 500,000 463,750
9% Sr. Unsec. Sub. Nts., 7/15/07 375,000 353,438
- ---------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs., 6/15/07 900,000 857,250
----------
6,617,751
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(5) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Food & Drug Retailers--0.1%
Fleming Cos., Inc.:
10.50% Sr. Sub. Nts., Series B, 12/1/04 $ 300,000 $ 276,750
10.625% Sr. Sub. Nts., Series B, 7/31/07 560,000 508,200
------------
784,950
- ---------------------------------------------------------------------------------------------------------
Household Goods--0.1%
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 400,000 202,000
9% Sr. Nts., 11/1/06 70,000 52,850
------------
254,850
- ---------------------------------------------------------------------------------------------------------
Energy--0.1%
- ---------------------------------------------------------------------------------------------------------
Energy Services--0.1%
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 950,000 812,250
- ---------------------------------------------------------------------------------------------------------
Financial--0.1%
- ---------------------------------------------------------------------------------------------------------
Banks--0.1%
First Chicago Corp., 11.25% Sub. Nts., 2/20/01 250,000 261,387
- ---------------------------------------------------------------------------------------------------------
Healthcare--0.0%
- ---------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--0.0%
Sun Healthcare Group, Inc., 9.375% Sr. Sub. Nts., 5/1/08(2)(4)(9) 1,000,000 65,000
- ---------------------------------------------------------------------------------------------------------
Transportation--0.1%
- ---------------------------------------------------------------------------------------------------------
Air Transportation--0.1%
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 1,000,000 648,750
- ---------------------------------------------------------------------------------------------------------
Shipping--0.0%
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts.,
6/30/07(4) 500,000 232,500
- ---------------------------------------------------------------------------------------------------------
Utilities--0.4%
- ---------------------------------------------------------------------------------------------------------
Electric Utilities--0.2%
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 400,000 403,000
10.50% Sr. Nts., 5/15/06 800,000 848,000
------------
1,251,000
- ---------------------------------------------------------------------------------------------------------
Gas Utilities--0.2%
Beaver Valley II Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 989,000 987,764
------------
Total Non-Convertible Corporate Bonds and Notes (Cost $41,563,563) 38,938,716
=========================================================================================================
Repurchase Agreements--3.5%
- ---------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 2.75%,
dated 12/31/99, to be repurchased at $20,504,698 on 1/3/00,
collateralized by U.S. Treasury Bonds, 5.25%-12%, 2/15/01-11/15/28,
with a value of $8,046,039 and U.S. Treasury Nts., 5%-7.50%,
12/31/00-2/15/07, with a value of $12,875,859 (Cost $20,500,000) 20,500,000 20,500,000
- ---------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $490,650,853) 99.5% 576,085,947
- ---------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.5 2,696,887
----------- ------------
Net Assets 100.0% $578,782,834
=========== ============
</TABLE>
14 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
1. A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
<CAPTION>
Shares Expiration Exercise Premium Market Value
Subject to Call Date Price Received Note 1
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Analog Devices, Inc. 6,700 6/19/00 $ 95.00 $ 41,670 $ 102,175
Avon Products, Inc. 10,000 7/24/00 40.00 43,450 26,875
Bank of America Corp. 22,000 1/24/00 90.00 59,838 --
CBS Corp. 33,000 1/24/00 55.00 93,885 305,250
Cisco Systems, Inc. 6,000 1/24/00 67.50 38,819 237,750
Cisco Systems, Inc. 5,000 4/24/00 70.00 40,474 195,000
Coherent, Inc. 4,000 5/22/00 35.00 8,380 4,500
Computer Associates International, Inc. 10,000 1/24/00 65.00 37,199 62,500
Computer Associates International, Inc. 6,000 5/22/00 75.00 44,820 42,750
Compuware Corp. 8,000 1/24/00 35.00 40,759 34,000
Du Pont (E.I.) De Nemours & Co. 7,000 1/24/00 75.00 41,789 1,750
Gap, Inc. 14,500 6/19/00 60.00 28,564 33,531
General Motors Corp., Cl. H 4,500 3/20/00 95.00 29,115 41,625
Hewlett-Packard Co. 10,000 2/22/00 125.00 55,948 52,500
International Business Machines Corp. 5,000 1/24/00 150.00 46,098 313
International Business Machines Corp. 4,000 4/24/00 110.00 43,879 40,000
Johnson & Johnson 15,000 1/18/00 60.00 61,423 23,437
MediaOne Group, Inc. 7,000 4/24/00 90.00 14,228 5,250
Methode Electronics, Inc., Cl. A 15,000 4/24/00 35.00 40,799 45,000
Optical Coating Laboratory, Inc. 6,000 5/22/00 250.00 249,562 445,500
Oracle Corp. 1,800 3/20/00 100.00 9,171 40,050
Praxair, Inc. 4,000 1/24/00 55.00 13,597 250
Rational Software Corp. 7,700 1/24/00 40.00 39,458 74,113
STMicroelectronics NV 3,000 4/24/00 140.00 49,033 76,125
Teradyne, Inc. 4,000 1/24/00 37.50 26,689 113,500
Time Warner, Inc. 6,400 6/19/00 80.00 19,007 32,000
Xerox Corp. 9,600 1/24/00 70.00 34,511 600
---------- ----------
$1,252,165 $2,036,344
========== ==========
</TABLE>
2. Non-income producing security.
3. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $10,188,075 or 1.76% of the Fund's net
assets as of December 31, 1999.
5. Principal amount is reported in U.S. Dollars, except for those denoted in
the following currencies:
AUD -- Australian Dollar GBP -- British Pound Sterling
CAD -- Canadian Dollar NZD -- New Zealand Dollar
DKK -- Danish Krone ZAR -- South African Rand
EUR -- Euro
6. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
7. Represents the current interest rate for a variable or increasing rate
security.
8. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
9. Issuer is in default.
See accompanying Notes to Financial Statements.
Oppenheimer Multiple Strategies Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
=========================================================================================================
Assets
Investments, at value (cost $490,650,853)--see accompanying statement $576,085,947
- ---------------------------------------------------------------------------------------------------------
Cash 1,043,942
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 5,069,984
Shares of beneficial interest sold 34,787
Other 6,374
------------
Total assets 582,241,034
=========================================================================================================
Liabilities
Options written, at value (premiums received $1,252,165)--see accompanying statement 2,036,344
- ---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 734,934
Investments purchased 664,056
Transfer and shareholder servicing agent fees 184
Trustees' compensation 49
Other 22,633
------------
Total liabilities 3,458,200
=========================================================================================================
Net Assets $578,782,834
============
=========================================================================================================
Composition of Net Assets
Paid-in capital $432,093,512
- ---------------------------------------------------------------------------------------------------------
Undistributed net investment income 25,784,656
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 36,252,948
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 84,651,718
------------
Net assets--applicable to 33,148,390 shares of beneficial interest outstanding $578,782,834
============
=========================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $17.46
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
=========================================================================================================
Investment Income
Interest $25,857,230
- ---------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $24,091) 4,941,295
-----------
Total income 30,798,525
=========================================================================================================
Expenses
Management fees 4,271,996
- ---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 60,945
- ---------------------------------------------------------------------------------------------------------
Trustees' compensation 6,600
- ---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,105
- ---------------------------------------------------------------------------------------------------------
Other 7,362
-----------
Total expenses 4,349,008
Less expenses paid indirectly (5,741)
-----------
Net expenses 4,343,267
=========================================================================================================
Net Investment Income 26,455,258
=========================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 36,754,035
Closing and expiration of option contracts written 853,989
Foreign currency transactions (1,215,313)
-----------
Net realized gain 36,392,711
- ---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 3,765,208
Translation of assets and liabilities denominated in foreign currencies (624,794)
-----------
Net change 3,140,414
-----------
Net realized and unrealized gain 39,533,125
=========================================================================================================
Net Increase in Net Assets Resulting from Operations $65,988,383
===========
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Multiple Strategies Fund/VA 17
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
==============================================================================================================================
Operations
Net investment income $ 26,455,258 $ 25,911,095
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain 36,392,711 29,540,227
- ------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 3,140,414 (15,895,873)
------------ ------------
Net increase in net assets resulting from operations 65,988,383 39,555,449
==============================================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (20,765,472) (5,964,037)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (30,037,334) (34,591,414)
==============================================================================================================================
Beneficial Interest Transactions
Net decrease in net assets resulting from
beneficial interest transactions (58,736,044) (14,211,527)
==============================================================================================================================
Net Assets
Total decrease (43,550,467) (15,211,529)
- ------------------------------------------------------------------------------------------------------------------------------
Beginning of period 622,333,301 637,544,830
------------ ------------
End of period (including undistributed net investment
income of $25,784,656 and $20,748,181, respectively) $578,782,834 $622,333,301
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
================================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $17.05 $17.01 $15.63 $14.55 $12.91
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .82 .71 .62 .72 .66
Net realized and unrealized gain 1.04 .42 1.95 1.45 2.00
- --------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 1.86 1.13 2.57 2.17 2.66
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.59) (.16) (.61) (.74) (.65)
Distributions from net realized gain (.86) (.93) (.58) (.35) (.37)
- --------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (1.45) (1.09) (1.19) (1.09) (1.02)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.46 $17.05 $17.01 $15.63 $14.55
====== ====== ====== ====== ======
================================================================================================================================
Total Return, at Net Asset Value(1) 11.80% 6.66% 17.22% 15.50% 21.36%
================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $578,783 $622,333 $637,545 $484,285 $381,263
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $593,151 $640,131 $564,369 $428,277 $344,745
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 4.46% 4.05% 3.86% 4.89% 4.81%
Expenses 0.73% 0.76%(3) 0.75%(3) 0.77%(3) 0.77%(3)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 17% 43% 42% 40% 39%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period.
Total returns are not annualized for periods less than one full year. Total
return information does not reflect expenses that apply at the separate account
level or to related insurance products. Inclusion of these charges would reduce
the total return figures for all periods shown.
2. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $94,111,384 and $130,260,786, respectively.
See accompanying Notes to Financial Statements.
Oppenheimer Multiple Strategies Fund/VA 19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Multiple Strategies Fund/VA (the Fund) is a separate series of
Oppenheimer Variable Account Funds (the Trust), a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's investment objective is to seek a total investment
return, which includes current income and capital appreciation in the value of
its shares. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The following is a summary of significant accounting policies
consistently followed by the Fund.
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Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
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Security Credit Risk. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. As of December 31, 1999, securities with an
aggregate market value of $65,000, representing 0.01% of the Fund's net assets,
were in default.
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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.
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Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
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Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders.
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Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
20 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
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Notes to Financial Statements (Continued)
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Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of distributions made
during the year from net investment income or net realized gains may differ from
its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in undistributed net investment income of $653,311. Accumulated net
realized gain on investments was increased by the same amount.
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Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
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Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Realized gains and losses on
investments and options written and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
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2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1999 Year Ended December 31, 1998
------------------------------ ------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Sold 1,494,012 $ 25,019,610 3,352,415 $ 56,547,384
Dividends and/or distributions reinvested 3,209,274 50,802,806 2,387,019 40,555,451
Redeemed (8,052,445) (134,558,460) (6,714,957) (111,314,362)
---------- ------------- ---------- -------------
Net decrease (3,349,159) $ (58,736,044) (975,523) $ (14,211,527)
========== ============= ========== =============
</TABLE>
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3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities and options
written of $84,650,915 was composed of gross appreciation of $121,520,407, and
gross depreciation of $36,869,492.
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4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. The annual fees are 0.75% of the
first $200 million of average annual net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million and 0.60% of
average annual net assets over $800 million. The Fund's management fee for the
year ended December 31, 1999, was 0.72% of average annual net assets.
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Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
Oppenheimer Multiple Strategies Fund/VA 21
<PAGE>
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Notes to Financial Statements (Continued)
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5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transaction. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
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6. Option Activity
The Fund may buy and sell put and call options, or write put and
covered call options on portfolio securities in order to produce incremental
earnings or protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options
to hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the
principal exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended December 31, 1999, was as follows:
<TABLE>
<CAPTION>
Call Options
------------------------------
Number of Amount of
Options Premiums
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 1998 5,871 $ 1,686,387
Options written 7,204 3,421,612
Options closed or expired (7,188) (2,544,448)
Options exercised (3,535) (1,311,386)
------ -----------
Options outstanding as of December 31, 1999 2,352 $ 1,252,165
====== ===========
</TABLE>
22 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
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Notes to Financial Statements (Continued)
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7. Illiquid or Restricted Securities
As of December 31, 1999, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of December 31, 1999, was $1,878,948,
which represents 0.32% of the Fund's net assets, of which $6,241 is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation Per
Unit as of
Acquisition Cost Per December 31,
Security Date Unit 1999
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. 9/29/98 $21.69 $31.05
</TABLE>
Oppenheimer Multiple Strategies Fund/VA 23
<PAGE>
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Independent Auditors' Report
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To the Board of Trustees and Shareholders of Oppenheimer Multiple
Strategies Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Multiple Strategies Fund/VA (which
is a series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998, and the
financial highlights for the period January 1, 1995, to December 31, 1999. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of Oppenheimer
Multiple Strategies Fund/VA as of December 31, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Denver, Colorado
January 24, 2000
24 Oppenheimer Multiple Strategies Fund/VA
<PAGE>
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Federal Income Tax Information (Unaudited)
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In early 2000 shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1999.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
Distributions of $1.4520 per share were paid to shareholders on March
22, 1999, of which $0.8570 was designated as a "capital gain distribution" for
federal income tax purposes. Whether received in stock or in cash, the capital
gain distribution should be treated by shareholders as a gain from the sale of
capital assets held for more than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended December 31,
1999, which are not designated as capital gain distributions should be
multiplied by 15.33% to arrive at the net 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.
Oppenheimer Multiple Strategies Fund/VA 25
<PAGE>
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Oppenheimer Multiple Strategies Fund/VA
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A Series of Oppenheimer Variable Account Funds
<TABLE>
=====================================================================================================
<S> <C>
Officers and Trustees James C. Swain, Trustee and Chairman of the Board
Bridget A. Macaskill, President
William H. Armstrong, Trustee
Robert G. Avis, Trustee
William A. Baker, Trustee
Edward L. Cameron, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
John P. Doney, Vice President
Michael S. Levine, Vice President
Richard H. Rubinstein, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
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Investment Advisor OppenheimerFunds, Inc.
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Transfer Agent OppenheimerFunds Services
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Custodian of Portfolio Securities The Bank of New York
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Independent Auditors Deloitte & Touche LLP
=====================================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer
Multiple Strategies Fund/VA. This report must be preceded
or accompanied by a Prospectus of Oppenheimer Multiple
Strategies Fund/VA. For material information concerning
the Fund, see the Prospectus.
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.
</TABLE>
26 Oppenheimer Multiple Strategies Fund/VA
