-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HAxw3XmT1pvxS0oFp26Pi5KUKaODI3OIREfdT4uyZq95i/aH3yNKmN3Ea1rS8Zz/ KcC7tMlifRPb6pROoOacdg== 0000935069-03-000263.txt : 20030303 0000935069-03-000263.hdr.sgml : 20030303 20030228184610 ACCESSION NUMBER: 0000935069-03-000263 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030303 EFFECTIVENESS DATE: 20030303 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER VARIABLE ACCOUNT FUNDS CENTRAL INDEX KEY: 0000752737 IRS NUMBER: 840974272 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04108 FILM NUMBER: 03587884 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 2: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER VARIABLE LIFE FUNDS DATE OF NAME CHANGE: 19860609 N-30D 1 ra0670_6462vef.txt RA0670_6462VEF December 31, 2002 - -------------------------------------------------------------------------------- Oppenheimer Multiple Strategies Fund/VA A Series of Oppenheimer Variable Account Funds Annual Report ------ Management Commentaries - -------------------------------------------------------------------------------- Performance Update Investment Strategy Discussion Financial Statements [LOGO] OppenheimerFunds(R) The Right Way to Invest OPPENHEIMER MULTIPLE STRATEGIES FUND/VA - -------------------------------------------------------------------------------- Objective Oppenheimer Multiple Strategies Fund/VA, a series of Oppenheimer Variable Account Funds, seeks a high total investment return, which includes current income and capital appreciation in the value of its shares. - -------------------------------------------------------------------------------- Narrative by Portfolio Management Team While negative results are never satisfying, we believe that challenging and volatile conditions in the equity markets once again demonstrated the value of a broadly diversified, balanced fund such as Oppenheimer Multiple Strategies Fund/VA. However, the Fund did have favorable relative results, outperforming its benchmark, the S&P 500 Index. 1 During 2002, conflicting economic and political forces buffeted the equity markets. Although we began to see indications that the U.S. economy was emerging from recession, the pace of recovery proved slower than many observers had forecast. As a result, a wide variety of companies in various industries and market sectors failed to meet earnings and revenue expectations. The war on terrorism and conflict in the Middle East exacerbated concerns regarding the pace of U.S. economic growth and introduced an added level of uncertainty into the economic equation. Furthermore, highly publicized accounting debacles at several prominent corporations undermined confidence in the accuracy of financial statements and the reliability of corporate governance at a variety of other companies. These conditions combined to drive stock prices broadly lower during most of the period. Despite these problems, markets rallied during the last quarter of the year as low interest rates and improving economic indicators led many investors to anticipate a return to better economic growth in 2003. The bond market delivered markedly better returns than stocks. With the exception of high-yield bonds, every sector of the bond market--treasuries, corporates, agencies and mortgage-backed securities--delivered positive returns. For that we can thank lower interest rates, which support higher bond prices, as well as cautious investors, who were drawn to the relative safety of treasuries and other higher-quality bonds. Two keys to the Fund's above-average relative performance were its decisions to continue to buy even in the down market and to stick with its technology position. As is always the case, the Fund looks to find good investments at attractive prices. The market environment of the past year, along with our high cash position, allowed us to buy into the decline, and the Fund was rewarded for this as the market experienced a strong rally towards the end of the period. In addition, while some of the exact holdings changed during the year, we continued to believe in the Fund's technology position. We were again rewarded for this decision as the technology sector came back the strongest of any sector during the market's rally in October and November of 2002. On the negative side, the Fund's fixed-income portfolio hindered its relative performance. Treasuries, agencies and mortgages performed best during the period. The Fund's strategic approach, which also included high yield and emerging market bonds, reduced absolute returns and hurt our performance relative to our peers. We are in the process of making three changes to the Fund's portfolio. First, as just mentioned, the Fund's fixed-income portion is evolving to a "core plus" approach, which while similar to the "strategic" approach, is more conservative and stresses U.S. treasuries and high quality bonds. We believe this will help the fixed-income portion of the Fund to serve as more of a counterbalance in down markets to the equity side of the portfolio. Secondly, we substantially increased the Fund's exposure to the health care group, primarily among pharmaceutical companies. In our view, many drug stocks fell to unwarranted low levels because of concerns that upcoming patent expirations and potential government regulation might limit earnings. Despite these factors, we believe that profits at pharmaceutical companies should continue to grow, partly because we expect demographic trends to increasingly favor drug therapies. 1. The S&P 500 Index had a one-year return for the period ended 12/31/02 of - -22.09%. For more information on the S&P 500, please refer to "Comparing the Fund's Performance to the Market" on page 4. 2 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA Finally, the third major focus/change of the Fund is technology. We currently have a higher tech allocation than our peer group and are in line with the benchmark index. We are focusing more on software and service names and less on hardware companies, because we believe there's more proprietary content within software. We are cautiously optimistic. While we believe the economy is in recovery mode, it is still a very volatile and fragile recovery. We believe equity returns, after three negative years, should recover and return to normal growth rates. However, many wildcards remain including terrorism, the health of the consumer and interest rates. We believe these uncertain times only serve to further show the value of a balanced fund, performing well in up markets and limiting exposure in down markets. This is part of what makes Oppenheimer Multiple Strategies 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 MULTIPLE STRATEGIES FUND/VA FUND PERFORMANCE Management's Discussion of Fund Performance. For the fiscal year ended December 31, 2002, Oppenheimer Multiple Strategies Fund/VA produced negative results, but did outperform its benchmark, the S&P 500 Index, in what proved to be an extremely volatile market environment. The Fund's above-average relative performance can be attributed to its decision to buy into the decline before the markets rallied late in the period in October and November. In addition, the Fund benefited from not selling its technology position, as technology was the best performing sector over the last few months of 2002. On the other end, the Fund's fixed-income allocations hurt relative performance. With less of a focus on treasuries and more exposure to high yield and emerging market debt than its peers, the Fund's fixed-income portion dragged down performance. The Fund's management is currently shifting the focus of the bond section to put more emphasis on treasuries, high quality corporate bonds and mortgages. In addition, our exposure to health care has been increased during the period. Finally, the Fund continues to focus on the technology sector, in particular to names within software and services. As the market slowly starts to recover, technology should be one of the sectors leading the way. The Fund's holdings, strategies and management are subject to change. Comparing the Fund's Performance to the Market. The graph that follows shows 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 over a ten-year period. In the case of service shares, performance is measured from inception of the class on May 1, 2002. 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 both the S&P 500 Index, an unmanaged index of U.S. equity securities that is a measure of the general domestic stock market, and the Lehman Brothers Aggregate Bond Index, an unmanaged index of U.S. corporate, government and mortgage-backed securities that is a measure of the domestic bond market. 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 MULTIPLE STRATEGIES FUND/VA Non-Service shares Comparison of Change in Value of $10,000 Hypothetical Investments in: [LINE CHART] Oppenheimer Multiple Strategies Lehman Brothers Fund/VA (Non-Service) S&P 500 Index Aggregate Bond Index 12/31/92 10,000 10,000 10,000 3/31/93 10,482 10,436 10,413 6/30/93 10,749 10,486 10,690 9/30/93 11,192 10,757 10,968 12/31/93 11,595 11,006 10,975 3/31/94 11,316 10,589 10,660 6/30/94 11,122 10,633 10,550 9/30/94 11,567 11,152 10,615 12/31/94 11,369 11,150 10,655 3/31/95 12,105 12,235 11,192 6/30/95 12,903 13,401 11,874 9/30/95 13,515 14,465 12,107 12/31/95 13,797 15,335 12,623 3/31/96 14,266 16,158 12,399 6/30/96 14,650 16,883 12,470 9/30/96 15,219 17,405 12,701 12/31/96 15,936 18,854 13,082 3/31/97 15,941 19,361 13,008 6/30/97 17,394 22,737 13,486 9/30/97 18,742 24,440 13,934 12/31/97 18,680 25,142 14,345 3/31/98 19,970 28,647 14,568 6/30/98 20,005 29,598 14,908 9/30/98 17,913 26,660 15,538 12/31/98 19,923 32,332 15,591 3/31/99 20,245 33,943 15,513 6/30/99 21,610 36,331 15,377 9/30/99 20,896 34,068 15,481 12/31/99 22,273 39,133 15,462 3/31/00 23,635 40,029 15,804 6/30/00 23,764 38,966 16,079 9/30/00 23,836 38,588 16,564 12/31/00 23,707 35,571 17,260 3/31/01 23,509 31,357 17,784 6/30/01 24,973 33,190 17,884 9/30/01 22,235 28,321 18,709 12/31/01 24,233 31,347 18,718 3/31/02 24,319 31,433 18,735 6/30/02 22,537 27,224 19,427 9/30/02 20,343 22,524 20,317 12/31/02 21,712 24,421 20,637 Average Annual Total Returns of Non-Service shares of the Fund at 12/31/02 1-Year -10.40% 5-Year 3.05% 10-Year 8.06% Service shares Comparison of Change in Value of $10,000 Hypothetical Investments in: [LINE CHART] Oppenheimer Multiple Strategies Lehman Brothers Fund/VA (Service) S&P 500 Index Aggregate Bond Index 5/1/02 10,000 10000 10,000 6/30/02 9,407 9,220 10,172 9/30/02 8,491 7,628 10,638 12/31/02 9,056 8,271 10,806 Cumulative Total Return of Service shares of the Fund at 12/31/02 Since Inception (5/1/02) -9.44% 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 2/9/87 for the non-service shares and 5/1/02 for its service shares. The performance information in the graphs for the S&P 500 Index begins on 12/31/92 in the first graph and on 4/30/02 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. Cumulative total returns are not annualized. Graphs are not drawn to same scale. An explanation of the calculation of the performance is in the Statement of Additional Information. 5 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA Financial Statements Pages 7-26 6 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA STATEMENT OF INVESTMENTS December 31, 2002 Market Value Shares See Note 1 - -------------------------------------------------------------------------------- Common Stocks--53.5% - -------------------------------------------------------------------------------- Consumer Discretionary--10.6% - -------------------------------------------------------------------------------- Auto Components--0.6% Borg-Warner Automotive, Inc. 1 20,000 $ 1,008,400 - -------------------------------------------------------------------------------- Delphi Corp. 221,100 1,779,855 ------------ 2,788,255 - -------------------------------------------------------------------------------- Hotels, Restaurants & Leisure--0.9% Brinker International, Inc. 3 70,000 2,257,500 - -------------------------------------------------------------------------------- McDonald's Corp. 68,200 1,096,656 - -------------------------------------------------------------------------------- MGM Mirage, Inc. 1,3 30,000 989,100 ------------ 4,343,256 - -------------------------------------------------------------------------------- Household Durables--0.9% Matsushita Electric Industrial Co. Ltd., Sponsored ADR 82,000 787,200 - -------------------------------------------------------------------------------- Nintendo Co. Ltd. 10,000 934,524 - -------------------------------------------------------------------------------- Sony Corp. 13,000 543,356 - -------------------------------------------------------------------------------- Sony Corp., Sponsored ADR 10,000 413,100 - -------------------------------------------------------------------------------- Toll Brothers, Inc. 3 60,000 1,212,000 ------------ 3,890,180 - -------------------------------------------------------------------------------- Leisure Equipment & Products--1.5% Callaway Golf Co. 120,000 1,590,000 - -------------------------------------------------------------------------------- Hasbro, Inc. 90,000 1,039,500 - -------------------------------------------------------------------------------- Mattel, Inc. 138,000 2,642,705 - -------------------------------------------------------------------------------- Shimano, Inc. 100,000 1,516,811 ------------ 6,789,016 - -------------------------------------------------------------------------------- Media--4.6% Comcast Corp., Cl. A 3 117,000 2,757,690 - -------------------------------------------------------------------------------- Cox Radio, Inc., Cl. A 1,3 48,300 1,101,723 - -------------------------------------------------------------------------------- EchoStar Communications Corp., Cl. A 1, 3 115,000 2,559,900 - -------------------------------------------------------------------------------- News Corp. Ltd. (The), Sponsored ADR, Preference 56,000 1,268,400 - -------------------------------------------------------------------------------- Omnicom Group, Inc. 1 45,700 2,952,220 - -------------------------------------------------------------------------------- Reed Elsevier plc 144,000 1,233,312 - -------------------------------------------------------------------------------- SCMP Group Ltd. 1,608,000 670,137 - -------------------------------------------------------------------------------- SES Global, FDR 80,000 537,293 - -------------------------------------------------------------------------------- Viacom, Inc., Cl. B 1,3 200,000 8,152,000 ------------ 21,232,675 - -------------------------------------------------------------------------------- Multiline Retail--0.6% Sears Roebuck & Co. 111,000 2,658,450 - -------------------------------------------------------------------------------- Specialty Retail--1.0% Borders Group, Inc. 3 70,000 1,127,000 - -------------------------------------------------------------------------------- Children's Place Retail Stores, Inc. 3 37,000 393,680 - -------------------------------------------------------------------------------- Gap, Inc. (The) 1 144,000 2,234,880 - -------------------------------------------------------------------------------- Talbots, Inc. (The) 29,000 798,370 ------------ 4,553,930 Market Value Shares See Note 1 - -------------------------------------------------------------------------------- Textiles & Apparel--0.5% Compagnie Financiere Richemont AG, A Units 3 48,150 $ 898,438 - -------------------------------------------------------------------------------- Nike, Inc., Cl. B 1 36,000 1,600,920 ------------ 2,499,358 - -------------------------------------------------------------------------------- Consumer Staples--3.6% - -------------------------------------------------------------------------------- Food & Drug Retailing--0.6% Companhia Brasileira de Distribuicao Grupo Pao de Acucar, Sponsored ADR 14,000 214,200 - -------------------------------------------------------------------------------- Safeway, Inc. 3 110,000 2,569,600 ------------ 2,783,800 - -------------------------------------------------------------------------------- Food Products--1.4% ConAgra Foods, Inc. 58,000 1,450,580 - -------------------------------------------------------------------------------- Sara Lee Corp. 60,000 1,350,600 - -------------------------------------------------------------------------------- Tyson Foods, Inc., Cl. A 155,000 1,739,100 - -------------------------------------------------------------------------------- Unilever NV, NY Shares 30,000 1,851,300 ------------ 6,391,580 - -------------------------------------------------------------------------------- Personal Products--0.9% Estee Lauder Cos., Inc. (The), Cl. A 58,000 1,531,200 - -------------------------------------------------------------------------------- Wella AG 47,500 2,878,635 ------------ 4,409,835 - -------------------------------------------------------------------------------- Tobacco--0.7% Philip Morris Cos., Inc. 1 78,000 3,161,340 - -------------------------------------------------------------------------------- Energy--4.5% - -------------------------------------------------------------------------------- Energy Equipment & Services--1.2% Cooper Cameron Corp. 1,3 9,000 448,380 - -------------------------------------------------------------------------------- Core Laboratories NV 3 73,000 828,550 - -------------------------------------------------------------------------------- GlobalSantaFe Corp. 1 78,000 1,896,960 - -------------------------------------------------------------------------------- Noble Corp. 1,3 66,000 2,319,900 - -------------------------------------------------------------------------------- Petroleum Geo-Services ASA, Sponsored ADR 3 140,000 56,000 ------------ 5,549,790 - -------------------------------------------------------------------------------- Oil & Gas--3.3% BP plc, ADR 20,800 845,520 - -------------------------------------------------------------------------------- ChevronTexaco Corp. 13,000 864,240 - -------------------------------------------------------------------------------- Devon Energy Corp. 1 50,000 2,295,000 - -------------------------------------------------------------------------------- Exxon Mobil Corp. 17,000 593,980 - -------------------------------------------------------------------------------- Houston Exploration Co. 3 18,300 559,980 - -------------------------------------------------------------------------------- Ocean Energy, Inc. 40,000 798,800 - -------------------------------------------------------------------------------- Perez Companc SA, Sponsored ADR 3 14,880 93,446 - -------------------------------------------------------------------------------- Petroleo Brasileiro SA, Preference 33,300 436,475 - -------------------------------------------------------------------------------- Talisman Energy, Inc. 64,000 2,303,076 - -------------------------------------------------------------------------------- TotalFinaElf SA, B Shares 1,700 242,800 - -------------------------------------------------------------------------------- TotalFinaElf SA, Sponsored ADR 17,100 1,222,650 7 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA STATEMENT OF INVESTMENTS Continued Market Value Shares See Note 1 - -------------------------------------------------------------------------------- Oil & Gas Continued Unocal Corp. 130,000 $ 3,975,400 - -------------------------------------------------------------------------------- Westport Resources Corp. 3 50,000 1,040,000 ------------ 15,271,367 - -------------------------------------------------------------------------------- Financials--8.4% - -------------------------------------------------------------------------------- Banks--3.4% AmSouth Bancorp 50,400 967,680 - -------------------------------------------------------------------------------- Bank of America Corp. 1 75,000 5,217,750 - -------------------------------------------------------------------------------- Bank of New York Co., Inc. (The) 1 71,000 1,701,160 - -------------------------------------------------------------------------------- BBVA Banco Frances SA, ADR 3 15,833 46,232 - -------------------------------------------------------------------------------- U.S. Bancorp 93,000 1,973,460 - -------------------------------------------------------------------------------- UBS AG 3 25,050 1,217,444 - -------------------------------------------------------------------------------- UniCredito Italiano SpA 414,000 1,655,261 - -------------------------------------------------------------------------------- Washington Mutual, Inc. 80,000 2,762,400 ------------ 15,541,387 - -------------------------------------------------------------------------------- Diversified Financials--1.9% CIT Group, Inc. 105,000 2,058,000 - -------------------------------------------------------------------------------- ICICI Bank Ltd., Sponsored ADR 44,375 288,438 - -------------------------------------------------------------------------------- J.P. Morgan Chase & Co. 1 225,400 5,409,600 - -------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 1 31,800 1,206,810 ------------ 8,962,848 - -------------------------------------------------------------------------------- Insurance--0.9% American International Group, Inc. 1 32,000 1,851,200 - -------------------------------------------------------------------------------- Hartford Financial Services Group, Inc. 1 47,600 2,162,468 ------------ 4,013,668 - -------------------------------------------------------------------------------- Real Estate--2.2% Camden Property Trust 28,000 924,000 - -------------------------------------------------------------------------------- CarrAmerica Realty Corp. 33,000 826,650 - -------------------------------------------------------------------------------- Developers Diversified Realty Corp. 100,000 2,199,000 - -------------------------------------------------------------------------------- Equity Office Properties Trust 46,000 1,149,080 - -------------------------------------------------------------------------------- Health Care Property Investors, Inc. 32,000 1,225,600 - -------------------------------------------------------------------------------- Host Marriott Corp. 3 276,000 2,442,600 - -------------------------------------------------------------------------------- IRSA Inversiones y Representaciones SA, Sponsored GDR 3 16,553 84,420 - -------------------------------------------------------------------------------- Shurgard Storage Centers, Inc. 44,000 1,378,960 ------------ 10,230,310 - -------------------------------------------------------------------------------- Health Care--8.7% - -------------------------------------------------------------------------------- Biotechnology--0.8% Affymetrix, Inc. 1,3 38,000 869,820 - -------------------------------------------------------------------------------- Human Genome Sciences, Inc. 3 63,000 555,030 - -------------------------------------------------------------------------------- Millennium Pharmaceuticals, Inc. 1,3 35,000 277,900 - -------------------------------------------------------------------------------- Wyeth 50,000 1,870,000 ------------ 3,572,750 Market Value Shares See Note 1 - -------------------------------------------------------------------------------- Health Care Equipment & Supplies--0.8% Beckman Coulter, Inc. 59,000 $ 1,741,680 - -------------------------------------------------------------------------------- Guidant Corp. 1,3 63,000 1,943,550 - -------------------------------------------------------------------------------- Sun Healthcare Group, Inc. 3 496 689 ------------ 3,685,919 - -------------------------------------------------------------------------------- Health Care Providers & Services--1.6% Anthem, Inc. 1,3 17,400 1,094,460 - -------------------------------------------------------------------------------- Covance, Inc. 1,3 88,000 2,163,920 - -------------------------------------------------------------------------------- Healthsouth Corp. 3 130,000 546,000 - -------------------------------------------------------------------------------- Humana, Inc. 3 170,000 1,700,000 - -------------------------------------------------------------------------------- Quintiles Transnational Corp. 3 60,000 726,000 - -------------------------------------------------------------------------------- Service Corp. International 3 304,000 1,009,280 ------------ 7,239,660 - -------------------------------------------------------------------------------- Pharmaceuticals--5.5% Abbott Laboratories 1 105,000 4,200,000 - -------------------------------------------------------------------------------- AstraZeneca plc 41,800 1,467,963 - -------------------------------------------------------------------------------- Bristol-Myers Squibb Co. 74,800 1,731,620 - -------------------------------------------------------------------------------- Eli Lilly & Co. 16,500 1,047,750 - -------------------------------------------------------------------------------- GlaxoSmithKline plc, ADR 71,000 2,659,660 - -------------------------------------------------------------------------------- Johnson & Johnson 1 88,000 4,726,480 - -------------------------------------------------------------------------------- Novartis AG 91,000 3,320,279 - -------------------------------------------------------------------------------- Pharmacia Corp. 37,000 1,546,600 - -------------------------------------------------------------------------------- Pliva d.d., GDR 2 20,000 284,000 - -------------------------------------------------------------------------------- Schering-Plough Corp. 120,000 2,664,000 - -------------------------------------------------------------------------------- Watson Pharmaceuticals, Inc. 1,3 70,000 1,978,900 ------------ 25,627,252 - -------------------------------------------------------------------------------- Industrials--3.0% - -------------------------------------------------------------------------------- Aerospace & Defense--0.5% Boeing Co. 45,000 1,484,550 - -------------------------------------------------------------------------------- Northrop Grumman Corp. 1 10,000 970,000 - -------------------------------------------------------------------------------- Orbital Sciences Corp. 3 1,476 6,229 ------------ 2,460,779 - -------------------------------------------------------------------------------- Air Freight & Couriers--0.3% United Parcel Service, Inc., Cl. B 21,000 1,324,680 - -------------------------------------------------------------------------------- Airlines--0.3% Delta Air Lines, Inc. 1 42,000 508,200 - -------------------------------------------------------------------------------- Singapore Airlines Ltd. 116,000 682,156 ------------ 1,190,356 - -------------------------------------------------------------------------------- Commercial Services & Supplies--0.3% Pittston Brink's Group 82,000 1,515,360 - -------------------------------------------------------------------------------- Construction & Engineering--0.2% Insituform Technologies, Inc., Cl. A 3 64,000 1,091,200 - -------------------------------------------------------------------------------- Electrical Equipment--0.0% Active Power, Inc. 3 137,000 243,860 8 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA Market Value Shares See Note 1 - -------------------------------------------------------------------------------- Industrial Conglomerates--0.3% Tyco International Ltd. 1 76,000 $ 1,298,080 - -------------------------------------------------------------------------------- Machinery--0.5% Komatsu Ltd. 196,000 639,185 - -------------------------------------------------------------------------------- Morgan Crucible Co. plc 3 321,800 269,394 - -------------------------------------------------------------------------------- SureBeam Corp., Cl. A 3 120,000 484,800 - -------------------------------------------------------------------------------- Wolverine Tube, Inc. 3 122,400 698,904 ------------ 2,092,283 - -------------------------------------------------------------------------------- Road & Rail--0.6% Canadian National Railway Co. 22,000 914,320 - -------------------------------------------------------------------------------- Swift Transportation Co., Inc. 3 90,000 1,801,620 ------------ 2,715,940 - -------------------------------------------------------------------------------- Information Technology--8.3% - -------------------------------------------------------------------------------- Communications Equipment--0.6% Brocade Communications Systems, Inc. 65,000 269,100 - -------------------------------------------------------------------------------- Cisco Systems, Inc. 1,3 100,000 1,310,000 - -------------------------------------------------------------------------------- Juniper Networks, Inc. 1,3 40,000 272,000 - -------------------------------------------------------------------------------- Motorola, Inc. 1 106,000 916,900 ------------ 2,768,000 - -------------------------------------------------------------------------------- Computers & Peripherals--2.3% EMC Corp. 3 103,000 632,420 - -------------------------------------------------------------------------------- International Business Machines Corp. 1 128,000 9,920,000 ------------ 10,552,420 - -------------------------------------------------------------------------------- Electronic Equipment & Instruments--1.1% Cognex Corp. 3 54,000 995,220 - -------------------------------------------------------------------------------- Keyence Corp. 8,360 1,454,740 - -------------------------------------------------------------------------------- Millipore Corp. 1 32,000 1,088,000 - -------------------------------------------------------------------------------- Waters Corp. 1,3 62,000 1,350,360 ------------ 4,888,320 - -------------------------------------------------------------------------------- Internet Software & Services--0.2% Yahoo!, Inc. 1,3 52,000 850,200 - -------------------------------------------------------------------------------- IT Consulting & Services--0.2% Titan Corp. (The) 1,3 110,000 1,144,000 - -------------------------------------------------------------------------------- Semiconductor Equipment & Products--2.4% Analog Devices, Inc. 1,3 50,000 1,193,500 - -------------------------------------------------------------------------------- Applied Materials, Inc. 3 43,600 568,108 - -------------------------------------------------------------------------------- Applied Micro Circuits Corp. 3 60,000 221,400 - -------------------------------------------------------------------------------- ASML Holding NV 3 91,000 760,760 - -------------------------------------------------------------------------------- Intel Corp. 1 198,000 3,082,860 - -------------------------------------------------------------------------------- KLA-Tencor Corp. 1,3 47,700 1,687,149 - -------------------------------------------------------------------------------- Lam Research Corp. 1,3 43,000 464,400 - -------------------------------------------------------------------------------- STMicroelectronics NV, NY Registered Shares 1 62,000 1,209,620 Market Value Shares See Note 1 - -------------------------------------------------------------------------------- Semiconductor Equipment & Products Continued Teradyne, Inc. 3 103,000 $ 1,340,030 - -------------------------------------------------------------------------------- Texas Instruments, Inc. 1 45,000 675,450 ------------ 11,203,277 - -------------------------------------------------------------------------------- Software--1.5% BEA Systems, Inc. 1,3 103,000 1,181,410 - -------------------------------------------------------------------------------- i2 Technologies, Inc. 3 123,000 141,450 - -------------------------------------------------------------------------------- Peoplesoft, Inc. 3 80,000 1,464,000 - -------------------------------------------------------------------------------- Rational Software Corp. 1,3 70,000 727,300 - -------------------------------------------------------------------------------- Red Hat, Inc. 3 111,000 656,010 - -------------------------------------------------------------------------------- Reynolds & Reynolds Co., Cl. A 43,000 1,095,210 - -------------------------------------------------------------------------------- Synopsys, Inc. 1,3 20,500 946,075 - -------------------------------------------------------------------------------- Veritas Software Corp. 3 31,700 495,154 ------------ 6,706,609 - -------------------------------------------------------------------------------- Materials--4.1% - -------------------------------------------------------------------------------- Chemicals--2.6% Dow Chemical Co. 1 30,000 891,000 - -------------------------------------------------------------------------------- Engelhard Corp. 95,000 2,123,250 - -------------------------------------------------------------------------------- Ferro Corp. 72,000 1,758,960 - -------------------------------------------------------------------------------- Hercules, Inc. 3 173,000 1,522,400 - -------------------------------------------------------------------------------- International Flavors & Fragrances, Inc. 1 64,000 2,246,400 - -------------------------------------------------------------------------------- Monsanto Co. 66,032 1,271,116 - -------------------------------------------------------------------------------- Praxair, Inc. 1 32,000 1,848,640 - -------------------------------------------------------------------------------- Sterling Chemicals, Inc. 3 401 14,035 ------------ 11,675,801 - -------------------------------------------------------------------------------- Metals & Mining--0.9% Alcoa, Inc. 58,000 1,321,240 - -------------------------------------------------------------------------------- Companhia Vale do Rio Doce, Sponsored ADR 68,800 1,892,000 - -------------------------------------------------------------------------------- GrafTech International Ltd. 3 170,000 1,013,200 ------------ 4,226,440 - -------------------------------------------------------------------------------- Paper & Forest Products--0.6% Georgia-Pacific Corp. 1 110,000 1,777,600 - -------------------------------------------------------------------------------- UPM-Kymmene Oyj 34,000 1,091,796 ------------ 2,869,396 - -------------------------------------------------------------------------------- Telecommunication Services--0.6% - -------------------------------------------------------------------------------- Diversified Telecommunication Services--0.1% Tele Norte Leste Participacoes SA (Telemar) 26,283,402 148,494 - -------------------------------------------------------------------------------- Tele Norte Leste Participacoes SA (Telemar), Preference 3,077,585 23,734 - -------------------------------------------------------------------------------- Telefonica SA, BDR 16,262 144,704 - -------------------------------------------------------------------------------- WorldCom, Inc./WorldCom Group 3 375,000 46,125 ------------ 363,057 9 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA STATEMENT OF INVESTMENTS Continued Market Value Shares See Note 1 - -------------------------------------------------------------------------------- Wireless Telecommunication Services--0.5% AT&T Wireless Services, Inc. 1,3 330,000 $ 1,864,500 - -------------------------------------------------------------------------------- Millicom International Cellular SA 3 170,000 302,600 - -------------------------------------------------------------------------------- Telesp Celular Participacoes SA 3 49,153,261 52,902 ------------- 2,220,002 - -------------------------------------------------------------------------------- Utilities--1.7% - -------------------------------------------------------------------------------- Electric Utilities--1.0% American Electric Power Co., Inc. 1 33,000 901,890 - -------------------------------------------------------------------------------- Edison International 1,3 67,000 793,950 - -------------------------------------------------------------------------------- Northeast Utilities Co. 86,000 1,304,620 - -------------------------------------------------------------------------------- Progress Energy, Inc. 28,000 1,213,800 - -------------------------------------------------------------------------------- Xcel Energy, Inc. 56,000 616,000 ------------- 4,830,260 - -------------------------------------------------------------------------------- Gas Utilities--0.3% El Paso Corp. 50,000 348,000 - -------------------------------------------------------------------------------- NiSource, Inc. 55,500 1,110,000 ------------- 1,458,000 - -------------------------------------------------------------------------------- Multi-Utilities--0.4% Energy East Corp. 65,000 1,435,850 - -------------------------------------------------------------------------------- NorthWestern Corp. 58,000 294,640 ------------- 1,730,490 ------------- Total Common Stocks (Cost $243,811,667) 246,615,436 - -------------------------------------------------------------------------------- Preferred Stocks--0.3% Qwest Trends Trust, 5.75% Cv. 2 43,000 528,470 - -------------------------------------------------------------------------------- Rouse Co. (The), $3.00 Cv., Series B 23,000 1,058,690 ------------- Total Preferred Stocks (Cost $2,957,015) 1,587,160 Units - -------------------------------------------------------------------------------- Rights, Warrants and Certificates--0.0% Applera Corp./Applied Biosystems Group Wts., Exp. 9/11/03 3,4 249 996 - -------------------------------------------------------------------------------- Covergent Communications, Inc. Wts., Exp. 4/1/08 3,4 1,000 10 - -------------------------------------------------------------------------------- HF Holdings, Inc. Wts., Exp. 9/27/09 3,4 2,593 259 - -------------------------------------------------------------------------------- Mexico Value Rts., Exp. 6/30/03 3,4 4,450,000 1,276 - -------------------------------------------------------------------------------- Sterling Chemicals, Inc. Wts., Exp. 12/31/07 3 651 -- - -------------------------------------------------------------------------------- Sun Healthcare Group, Inc. Wts., Exp. 2/28/05 3,4 1,241 620 - -------------------------------------------------------------------------------- United Mexican States Bonds, Series E Rts., Exp. 6/30/07 3,4 4,450,000 2,447 - -------------------------------------------------------------------------------- United Mexican States Collateralized Fixed Rate Par Bonds: Series B, 6.25%, 12/31/19 Rts., Exp. 6/30/04 3,4 4,450,000 16,688 Market Value Units See Note 1 - -------------------------------------------------------------------------------- Rights, Warrants and Certificates Continued United Mexican States Collateralized Fixed Rate Par Bonds: Continued Series C, 6.25%, 12/31/19 Rts., Exp. 6/30/05 3,4 4,450,000 $ 2,448 Series D, 6.25%, 12/31/19 Rts., Exp. 6/30/06 3,4 4,450,000 2,448 ------------- Total Rights, Warrants and Certificates (Cost $38,888) 27,192 Principal Amount - -------------------------------------------------------------------------------- Mortgage-Backed Obligations--13.6% Federal Home Loan Mortgage Corp., Gtd. Mtg. Pass-Through Participation Certificates, 7%, 5/1/29 $ 1,854,858 1,952,262 - -------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Home Equity Loan Structured Pass-Through Certificates, Series HOO2, Cl. A2, 1.861%, 12/15/06 1,300,000 1,294,008 - -------------------------------------------------------------------------------- Federal National Mortgage Assn.: 6%, 5/1/16 13,319,868 13,947,599 6.50%, 11/1/27-1/25/33 22,193,786 23,114,311 7%, 1/25/33 16,848,000 17,721,990 - -------------------------------------------------------------------------------- Federal National Mortgage Assn. Nts.: 5.125%, 2/13/04 1,750,000 1,823,783 7.125%, 1/15/30 400,000 495,268 - -------------------------------------------------------------------------------- Government National Mortgage Assn., 8%, 4/15/23 731,938 800,792 - -------------------------------------------------------------------------------- Washington Mutual Mortgage Securities Corp., Collateralized Mtg Obligations, Pass-Through Certificates, Series 2002-AR19, Cl. A-1, 1.771%, 1/25/33 1,550,000 1,550,000 ------------- Total Mortgage-Backed Obligations (Cost $61,251,297) 62,700,013 - -------------------------------------------------------------------------------- U.S. Government Obligations--11.5% Federal Home Loan Mortgage Corp. Unsec. Nts., 5.50%, 7/15/06 3,300,000 3,630,505 - -------------------------------------------------------------------------------- Federal National Mortgage Assn Unsec. Nts., 7.25%, 1/15/10-5/15/30 6,600,000 8,135,344 - -------------------------------------------------------------------------------- U.S. Treasury Bonds: 5.375%, 2/15/31 1,365,000 1,488,490 6%, 2/15/26 575,000 659,117 7.50%, 11/15/16 1,310,000 1,713,542 8.875%, 8/15/17 2,900,000 4,239,324 STRIPS, 6.32%, 8/15/25 5 5,465,000 1,658,944 STRIPS, 6.54%, 8/15/15 5 6,035,000 3,349,226 STRIPS, 7.10%, 11/15/18 5 13,600,000 6,067,803 STRIPS, 7.26%, 11/15/18 5 8,500,000 3,815,930 STRIPS, 7.31%, 8/15/19 5 15,300,000 6,496,763 10 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
Principal Market Value Amount See Note 1 - -------------------------------------------------------------------------------------- U.S. Government Obligations Continued U.S. Treasury Nts.: 4%, 11/15/12 $ 1,916,000 $ 1,943,694 5%, 8/15/11 5,000,000 5,484,380 6.25%, 2/15/07 3,800,000 4,360,948 ------------ Total U.S. Government Obligations (Cost $45,272,507) 53,044,010 - -------------------------------------------------------------------------------------- Foreign Government Obligations--0.2% Philippines (Republic of) Bonds, 8.60%, 6/15/27 4 (Cost $1,154,237) 1,150,000 934,375 - -------------------------------------------------------------------------------------- Non-Convertible Corporate Bonds and Notes--9.3% ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts., Series B, 10/15/93 400,000 412,063 - -------------------------------------------------------------------------------------- Albertson's, Inc., 7.45% Unsec Debs., 8/1/29 380,000 420,963 - -------------------------------------------------------------------------------------- American Cellular Corp., 9.50% Sr. Sub. Nts., 10/15/09 7 700,000 136,500 - -------------------------------------------------------------------------------------- American International Group, Inc./ SunAmerica Global Financing VI, 6.30% Sr. Sec. Nts., 5/10/11 2 1,000,000 1,104,031 - -------------------------------------------------------------------------------------- Amgen, Inc., 8.125% Unsec Debs., 4/1/97 91,000 110,878 - -------------------------------------------------------------------------------------- Amtran, Inc., 10.50% Sr. Nts., 8/1/04 500,000 210,000 - -------------------------------------------------------------------------------------- AT&T Corp., 8.50% Sr. Nts., 11/15/31 8,9 300,000 331,806 - -------------------------------------------------------------------------------------- AT&T Wireless Services, Inc., 7.50% Sr. Unsec. Nts., 5/1/07 835,000 860,994 - -------------------------------------------------------------------------------------- Bank of America Corp., 7.80% Jr Unsec. Sub. Nts., 2/15/10 400,000 476,472 - -------------------------------------------------------------------------------------- Blount, Inc., 13% Sr. Sub. Nts., 8/1/09 700,000 439,250 - -------------------------------------------------------------------------------------- Boeing Capital Corp., 6.50% Nts., 2/15/12 750,000 801,040 - -------------------------------------------------------------------------------------- Bristol-Myers Squibb Co., 5.75% Nts., 10/1/11 8 1,000,000 1,066,691 - -------------------------------------------------------------------------------------- Cambridge Industries, Inc., Liquidating Trust Interests, 7/15/07 7 309,823 -- - -------------------------------------------------------------------------------------- Chancellor Media Corp., 8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 4 1,000,000 1,048,750 - -------------------------------------------------------------------------------------- Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp., 0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11 6 400,000 142,000 - -------------------------------------------------------------------------------------- CIT Group, Inc., 7.75% Sr. Unsec Unsub. Nts., 4/2/12 1,000,000 1,125,044 - -------------------------------------------------------------------------------------- Citigroup, Inc., 6.875% Unsec Nts., 2/15/98 450,000 491,307 - -------------------------------------------------------------------------------------- Citizens Communications Co., 9.25% Sr. Nts., 5/15/11 440,000 524,995 - -------------------------------------------------------------------------------------- Coast Hotels & Casinos, Inc., 9.50% Sr. Unsec. Sub. Nts., 4/1/09 200,000 215,000 Principal Market Value Amount See Note 1 - -------------------------------------------------------------------------------------- Non-Convertible Corporate Bonds and Notes Continued Coca-Cola Co. (The), 7.375% Unsec Debs., 7/29/93 $ 360,000 $ 426,906 - -------------------------------------------------------------------------------------- Collins & Aikman Floorcoverings, Inc., 9.75% Sr. Sub. Nts., Series B, 2/15/10 200,000 201,000 - -------------------------------------------------------------------------------------- Conoco, Inc., 6.95% Sr. Unsec Nts., 4/15/29 400,000 454,810 - -------------------------------------------------------------------------------------- Credit Suisse First Boston (USA), Inc., 6.125% Nts., 11/15/11 740,000 773,427 - -------------------------------------------------------------------------------------- Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04 7 700,000 91,000 - -------------------------------------------------------------------------------------- Duke Energy Corp., 5.625% Nts., 11/30/12 330,000 329,955 - -------------------------------------------------------------------------------------- Dynegy Holdings, Inc., 8.75% Sr. Nts., 2/15/12 250,000 88,750 - -------------------------------------------------------------------------------------- FirstEnergy Corp., 7.375% Sr Unsub. Nts., Series C, 11/15/31 870,000 846,323 - -------------------------------------------------------------------------------------- Fleming Cos., Inc., 10.625% Sr Unsec. Sub. Nts., Series D, 7/31/07 100,000 65,500 - -------------------------------------------------------------------------------------- Ford Motor Co., 7.70% Unsec. Debs., 5/15/97 400,000 336,372 - -------------------------------------------------------------------------------------- Forest Oil Corp., 10.50% Sr. Unsec. Sub. Nts., 1/15/06 400,000 424,000 - -------------------------------------------------------------------------------------- France Telecom SA: 8.70% Sr. Unsec. Nts., 3/1/06 9 365,000 399,958 9.25% Sr. Unsec. Nts., 3/1/11 370,000 428,576 - -------------------------------------------------------------------------------------- Funding Corp./Beaver Valley Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 989,000 1,097,440 - -------------------------------------------------------------------------------------- General Electric Capital Corp., 7.25% Nts., Series A, 2/1/05 400,000 440,502 - -------------------------------------------------------------------------------------- General Motors Acceptance Corp., 6.875% Unsec. Unsub. Nts., 8/28/12 1,500,000 1,481,194 - -------------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The), 7.80% Sr. Unsec. Unsub. Nts., Series B, 1/28/10 400,000 466,072 - -------------------------------------------------------------------------------------- Graphic Packaging Corp., 8.625% Sub. Nts., 2/15/12 200,000 211,500 - -------------------------------------------------------------------------------------- Hornbeck-Leevac Marine Services, Inc., 10.625% Sr. Nts., 8/1/08 250,000 265,000 - -------------------------------------------------------------------------------------- Horseshoe Gaming LLC, 8.625% Sr. Sub. Nts., 5/15/09 400,000 427,000 - -------------------------------------------------------------------------------------- Household Finance Corp., 7% Nts., 5/15/12 715,000 784,492 - -------------------------------------------------------------------------------------- Huntsman Corp./ICI Chemical Co. plc, Zero Coupon Sr. Unsec. Disc Nts., 13.08%, 12/31/09 5 500,000 115,000 - -------------------------------------------------------------------------------------- Isle of Capri Casinos, Inc., 9% Sr. Sub. Nts., 3/15/12 300,000 313,500 - -------------------------------------------------------------------------------------- ISP Holdings, Inc., 10.625% Sr. Sec Nts., 12/15/09 250,000 218,750
11 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA STATEMENT OF INVESTMENTS Continued
Principal Market Value Amount See Note 1 - ------------------------------------------------------------------------------------ Non-Convertible Corporate Bonds and Notes Continued IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09 3,4,7 $ 400,000 $ 520 - ------------------------------------------------------------------------------------ J.P. Morgan Chase & Co., 6.75% Sub. Nts., 2/1/11 750,000 816,693 - ------------------------------------------------------------------------------------ K. Hovnanian Enterprises, Inc., 8.875% Sr. Sub. Nts., 4/1/12 700,000 672,000 - ------------------------------------------------------------------------------------ Kaiser Aluminum & Chemical Corp.: 10.875% Sr. Nts., Series B, 10/15/06 3,7 250,000 168,750 12.75% Sr. Sub. Nts., 2/1/03 3,7 800,000 64,000 - ------------------------------------------------------------------------------------ Kinder Morgan, Inc., 6.50% Nts., 9/1/12 2 445,000 465,890 - ------------------------------------------------------------------------------------ Kroger Co. (The), 6.75% Nts., 4/15/12 380,000 421,245 - ------------------------------------------------------------------------------------ Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 150,000 155,250 - ------------------------------------------------------------------------------------ Leap Wireless International, Inc.: 0%/14.50% Sr. Unsec. Disc. Nts., 4/15/10 6,7 300,000 28,500 12.50% Sr. Nts., 4/15/10 4,7 400,000 58,000 - ------------------------------------------------------------------------------------ Lockheed Martin Corp., 8.20% Nts., 12/1/09 500,000 618,748 - ------------------------------------------------------------------------------------ Lyondell Chemical Co.: 9.625% Sr. Sec. Nts., Series A, 5/1/07 150,000 144,750 9.875% Sec. Nts., Series B, 5/1/07 400,000 386,000 - ------------------------------------------------------------------------------------ MBNA America Bank NA, 6.625% Sub. Nts., 6/15/12 1,000,000 1,019,670 - ------------------------------------------------------------------------------------ MeriStar Hospitality Corp.: 8.75% Sr. Unsec. Sub. Nts., 8/15/07 500,000 337,500 9.125% Sr. Unsec. Nts., 1/15/11 700,000 612,500 - ------------------------------------------------------------------------------------ Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 324,000 - ------------------------------------------------------------------------------------ Mohegan Tribal Gaming Authority, 8% Sr. Sub. Nts., 4/1/12 400,000 419,000 - ------------------------------------------------------------------------------------ NiSource Finance Corp., 7.875% Sr Unsec. Nts., 11/15/10 630,000 693,413 - ------------------------------------------------------------------------------------ Omnipoint Corp., 11.50% Sr. Nts., 9/15/09 2 250,000 266,250 - ------------------------------------------------------------------------------------ Orbcomm Global LP (Escrow), 8/15/04 3,7 200,000 -- - ------------------------------------------------------------------------------------ Pathmark Stores, Inc., 8.75% Sr. Sub. Nts., 2/1/12 300,000 277,500 - ------------------------------------------------------------------------------------ Penn National Gaming, Inc., 8.875% Sr. Sub. Nts., 3/15/10 500,000 515,000 - ------------------------------------------------------------------------------------ Petco Animal Supplies, Inc., 10.75% Sr. Sub. Nts., 11/1/11 250,000 276,563 - ------------------------------------------------------------------------------------ Premier Parks, Inc., 9.75% Sr Nts., 6/15/07 500,000 487,500 - ------------------------------------------------------------------------------------ R&B Falcon Corp., 9.50% Sr. Unsec. Nts., 12/15/08 500,000 626,342 - ------------------------------------------------------------------------------------ Riverwood International Corp.: 10.625% Sr. Unsec. Nts., 8/1/07 500,000 520,000 10.875% Sr. Sub. Nts., 4/1/08 250,000 252,500 Principal Market Value Amount See Note 1 - ------------------------------------------------------------------------------------ Non-Convertible Corporate Bonds and Notes Continued Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 $ 750,000 $ 453,750 - ------------------------------------------------------------------------------------ Sinclair Broadcast Group, Inc., 8.75% Sr. Sub. Nts., 12/15/07 900,000 941,625 - ------------------------------------------------------------------------------------ Sprint Capital Corp., 8.75% Nts., 3/15/32 460,000 438,331 - ------------------------------------------------------------------------------------ Standard Pacific Corp., 9.25% Sr. Sub. Nts., 4/15/12 200,000 194,000 - ------------------------------------------------------------------------------------ Sterling Chemicals, Inc.: 10% Sr. Sec. Nts., 12/19/07 207,000 134,550 11.25% Sr. Sub. Nts., 8/15/06 3,7 335,000 -- - ------------------------------------------------------------------------------------ Sun International Hotels Ltd., 8.875% Sr. Unsec. Sub. Nts., 8/15/11 400,000 410,000 - ------------------------------------------------------------------------------------ TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 1,090,000 1,312,262 - ------------------------------------------------------------------------------------ Terex Corp., 9.25% Sr. Unsec. Sub. Nts., 7/15/11 250,000 229,063 - ------------------------------------------------------------------------------------ Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 500,000 632,187 - ------------------------------------------------------------------------------------ Time Warner, Inc., 9.125% Debs., 1/15/13 500,000 587,640 - ------------------------------------------------------------------------------------ Tritel PCS, Inc., 10.375% Sr. Sub. Nts., 1/15/11 262,000 281,650 - ------------------------------------------------------------------------------------ Triton PCS, Inc., 8.75% Sr. Unsec. Sub. Nts., 11/15/11 400,000 326,000 - ------------------------------------------------------------------------------------ Tyco International Group SA, 6.375% Nts., 10/15/11 750,000 702,627 - ------------------------------------------------------------------------------------ Union Carbide Corp., 6.25% Nts., 6/15/03 490,000 494,808 - ------------------------------------------------------------------------------------ United Pan-Europe Communications NV, 10.875% Sr. Unsec. Nts., Series B, 8/1/09 3,7 400,000 32,000 - ------------------------------------------------------------------------------------ United States Steel LLC, 10.75% Sr. Nts., 8/1/08 600,000 594,000 - ------------------------------------------------------------------------------------ Viacom, Inc., 7.70% Sr. Unsec Nts., 7/30/10 750,000 892,348 - ------------------------------------------------------------------------------------ Vodafone Group plc, 7.75% Unsec. Unsub. Nts., 2/15/10 400,000 472,548 - ------------------------------------------------------------------------------------ Walt Disney Co. (The), 6.375% Sr. Unsec. Nts., 3/1/12 1,000,000 1,095,689 - ------------------------------------------------------------------------------------ Waste Management, Inc., 7% Sr. Nts., 7/15/28 650,000 645,017 - ------------------------------------------------------------------------------------ Williams Scotsman, Inc., 9.875% Sr. Unsec. Nts., 6/1/07 100,000 93,000 - ------------------------------------------------------------------------------------ Wolverine Tube, Inc., 10.50% Sr. Nts., 4/1/09 500,000 512,500 - ------------------------------------------------------------------------------------ WorldCom, Inc., 6.95% Sr. Unsec Nts., 8/15/28 7 900,000 216,000
12 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA Principal Market Value Amount See Note 1 - -------------------------------------------------------------------------------- Non-Convertible Corporate Bonds and Notes Continued XO Communications, Inc., 0%/12.25% Sr. Unsec. Disc. Nts., 6/1/09 3,4,6,7 $ 350,000 $ 2,187 ----------- Total Non-Convertible Corporate Bonds and Notes (Cost $45,771,097) 42,926,677 - -------------------------------------------------------------------------------- Convertible Corporate Bonds and Notes--0.1% Gilat Satellite Networks Ltd., 4.25% Cv. Unsec. Sub. Nts., 3/15/05 4,7 (Cost $1,161,826) 1,500,000 270,000 - -------------------------------------------------------------------------------- Structured Notes--1.5% JPMorgan Chase Bank, High Yield Index Credit-Linked Trust Nts., 8.75%, 11/15/07 3,580,000 3,606,850 - -------------------------------------------------------------------------------- UBS AG, High Grade Credit-Linked Nts., 3.065%, 12/10/04 9 3,550,000 3,546,450 ----------- Total Structured Notes (Cost $7,042,564) 7,153,300 Principal Market Value Amount See Note 1 - -------------------------------------------------------------------------------- Joint Repurchase Agreements--18.3% 10 Undivided interest of 12.14% 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 $84,339,013 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 $84,334,000) $84,334,000 $ 84,334,000 - -------------------------------------------------------------------------------- Total Investments, at Value (Cost $492,795,098) 108.3% 499,592,163 - -------------------------------------------------------------------------------- Liabilities in Excess of Other Assets (8.3) (38,437,578) ---------------------------- Net Assets 100.0% $461,154,585 ============================ 13 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA STATEMENT OF INVESTMENTS Continued Footnotes to Statement of Investments 1. A sufficient amount of liquid assets has been designated to cover outstanding written options, as follows:
Contracts Expiration Exercise Premium Market Value Subject to Call Dates Price Received See Note 1 - ---------------------------------------------------------------------------------------------------------------------------------- AT&T Wireless Services, Inc. 720 1/20/04 $ 12.50 $ 69,838 $ 18,000 Abbott Laboratories 200 1/19/04 60.00 17,800 -- Affymetrix, Inc. 120 5/19/03 35.00 20,329 7,200 American Electric Power Co., Inc. 330 2/24/03 25.00 91,409 102,300 American International Group, Inc. 60 1/20/04 90.00 11,820 3,600 American International Group, Inc. 60 5/19/03 75.00 17,520 2,400 Analog Devices, Inc. 150 1/20/04 55.00 24,750 6,750 Anthem, Inc. 74 3/24/03 65.00 74,517 22,200 Bank of America Corp. 84 5/19/03 80.00 14,448 9,240 Bank of New York Co., Inc. (The) 66 1/20/04 40.00 7,722 660 BEA Systems, Inc. 300 1/20/04 25.00 26,700 18,000 Borg-Warner Automotive, Inc. 44 4/21/03 55.00 9,328 9,900 Cisco Systems, Inc. 200 1/20/04 25.00 15,800 8,000 Cooper Cameron Corp. 90 5/19/03 50.00 48,659 45,900 Covance, Inc. 440 5/19/03 25.00 82,279 99,000 Covance, Inc. 440 5/19/03 22.50 53,679 167,200 Cox Radio, Inc., Cl. A 11 5/19/03 30.00 1,507 605 Delta Air Lines, Inc. 22 1/20/04 30.00 2,134 990 Devon Energy Corp. 100 4/21/03 55.00 34,699 8,000 Dow Chemical Co. 150 1/20/04 35.00 29,485 30,000 EchoStar Communications Corp., Cl. A 220 1/20/04 35.00 27,528 27,500 Edison International 255 1/20/04 15.00 33,772 39,525 Edison International 85 7/21/03 15.00 8,355 5,100 Gap, Inc. (The) 450 1/20/04 20.00 43,424 74,250 Georgia-Pacific Corp. 110 4/21/03 17.50 15,070 14,300 GlobalSantaFe Corp. 230 4/21/03 30.00 32,660 9,200 Guidant Corp. 180 1/20/04 50.00 15,523 9,000 Hartford Financial Services Group, Inc. 150 3/24/03 55.00 23,550 3,750 Intel Corp. 360 1/20/04 30.00 33,839 19,800 International Business Machines Corp. 128 1/20/04 130.00 20,096 10,880 International Business Machines Corp. 128 4/21/03 90.00 17,536 26,880 International Flavors & Fragrances, Inc. 200 5/19/03 40.00 23,508 10,000 J.P. Morgan Chase & Co. 440 1/20/04 35.00 44,879 33,000 Johnson & Johnson 120 1/20/04 75.00 16,440 7,800 Juniper Networks, Inc. 120 1/20/04 20.00 12,541 4,800 KLA-Tencor Corp. 150 1/20/04 50.00 56,549 60,000 Lam Research Corp. 73 1/20/04 25.00 7,811 4,015 MGM Mirage, Inc. 90 3/24/03 40.00 15,986 2,250 Merrill Lynch & Co., Inc. 223 1/20/04 60.00 39,470 13,380 Merrill Lynch & Co., Inc. 95 4/21/03 45.00 12,065 9,500 Millennium Pharmaceuticals, Inc. 350 1/20/04 25.00 33,949 14,000 Millipore Corp. 100 4/21/03 40.00 17,580 8,000 Motorola, Inc. 420 1/20/04 15.00 51,239 18,900 Nike, Inc., Cl. B 115 1/20/04 60.00 29,555 17,825 Noble Corp. 126 1/21/03 50.00 27,342 -- Northrop Grumman Corp. 50 1/20/04 135.00 18,850 13,250 Omnicom Group, Inc. 107 4/21/03 75.00 52,108 23,540 Omnicom Group, Inc. 100 4/21/03 90.00 14,700 2,000 Philip Morris Cos., Inc. 155 3/24/03 47.50 16,974 3,875 Philip Morris Cos., Inc. 155 1/20/04 40.00 77,034 68,200 Praxair, Inc. 64 7/21/03 65.00 19,093 15,680 Rational Software Corp. 350 1/20/04 20.00 43,032 -- STMicroelectronics NV, NY Registered Shares 180 1/20/04 40.00 31,860 9,000 Synopsys, Inc. 105 6/23/03 55.00 59,548 29,400 Texas Instruments, Inc. 450 1/20/04 30.00 60,524 18,000 Titan Corp. (The) 360 4/21/03 15.00 48,120 12,600 Tyco International Ltd. 420 1/20/04 25.00 74,339 60,900 Viacom, Inc., Cl. B 300 1/20/04 60.00 84,821 36,000 Waters Corp. 175 5/19/03 35.00 23,100 -- Watson Pharmaceuticals, Inc. 320 5/19/03 30.00 45,439 64,000 Yahoo!, Inc. 270 1/20/04 30.00 49,774 29,700 Yahoo!, Inc. 250 4/21/03 20.00 29,245 25,000 ------------------------------- $ 2,063,251 $ 1,414,745 ===============================
14 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA 2. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $2,648,641 or 0.57% of the Fund's net assets as of December 31, 2002. 3. Non-income producing security. 4. Identifies issues considered to be illiquid--See Note 8 of Notes to Financial Statements. 5. Zero coupon bond reflects effective yield on the date of purchase. 6. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 7. Issuer is in default. 8. Securities with an aggregate market value of $1,232,594 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements. 9. Represents the current interest rate for a variable or increasing rate security. 10. The Fund may have elements of risk due to concentrated investments. Such concentrations may subject the Fund to additional risks. See accompanying Notes to Financial Statements. 15 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA STATEMENT OF ASSETS AND LIABILITIES December 31, 2002
- --------------------------------------------------------------------------------------------------------------------- Assets Investments, at value (including $84,334,000 in repurchase agreements) (cost $492,795,098) --see accompanying statement $499,592,163 - --------------------------------------------------------------------------------------------------------------------- Cash 689,631 - --------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest and dividends 1,225,126 Shares of beneficial interest sold 1,049,437 Daily variation on futures contracts 174,203 Other 6,182 -------------- Total assets 502,736,742 - --------------------------------------------------------------------------------------------------------------------- Liabilities Options written, at value (premiums received $2,063,251)--see accompanying statement 1,414,745 - --------------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased (including $39,116,427 purchased on a when-issued basis) 39,932,503 Shares of beneficial interest redeemed 204,747 Distribution and service plan fees 1,134 Trustees' compensation 869 Shareholder reports 767 Transfer and shareholder servicing agent fees 443 Other 26,949 -------------- Total liabilities 41,582,157 - --------------------------------------------------------------------------------------------------------------------- Net Assets $461,154,585 ============== - --------------------------------------------------------------------------------------------------------------------- Composition of Net Assets Par value of shares of beneficial interest $ 35,040 - --------------------------------------------------------------------------------------------------------------------- Additional paid-in capital 475,788,710 - --------------------------------------------------------------------------------------------------------------------- Undistributed net investment income 13,848,088 - --------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (34,291,622) - --------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 5,774,369 -------------- Net Assets $461,154,585 ============== - --------------------------------------------------------------------------------------------------------------------- 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 $458,848,361 and 34,864,257 shares of beneficial interest outstanding) $13.16 - --------------------------------------------------------------------------------------------------------------------- Service shares: Net asset value, redemption price per share and offering price per share (based on net assets of $2,306,224 and 175,560 shares of beneficial interest outstanding) $13.14
See accompanying Notes to Financial Statements. 16 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA STATEMENT OF OPERATIONS For the Year Ended December 31, 2002
- ------------------------------------------------------------------------------------------------------------ Investment Income Interest $ 16,670,343 - ------------------------------------------------------------------------------------------------------------ Dividends (net of foreign withholding taxes of $81,065) 4,330,350 ---------------- Total investment income 21,000,693 - ------------------------------------------------------------------------------------------------------------ Expenses Management fees 3,758,161 - ------------------------------------------------------------------------------------------------------------ Distribution and service plan fees--Service shares 1,719 - ------------------------------------------------------------------------------------------------------------ Transfer and shareholder servicing agent fees 10,475 - ------------------------------------------------------------------------------------------------------------ Custodian fees and expenses 28,535 - ------------------------------------------------------------------------------------------------------------ Trustees' compensation 17,125 - ------------------------------------------------------------------------------------------------------------ Other 43,768 ---------------- Total expenses 3,859,783 Less reduction to custodian expenses (4,706) ---------------- Net expenses 3,855,077 - ------------------------------------------------------------------------------------------------------------ Net Investment Income 17,145,616 - ------------------------------------------------------------------------------------------------------------ Realized and Unrealized Gain (Loss) Net realized gain (loss) on: Investments (including premiums on options exercised) (28,460,531) Closing of futures contracts 244,959 Closing and expiration of option contracts written 4,193,215 Foreign currency transactions (7,578,304) ---------------- Net realized loss (31,600,661) - ------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) on: Investments (57,226,471) Translation of assets and liabilities denominated in foreign currencies 10,804,486 ---------------- Net change (46,421,985) ---------------- Net realized and unrealized loss (78,022,646) - ------------------------------------------------------------------------------------------------------------ Net Decrease in Net Assets Resulting from Operations $(60,877,030) ----------------
See accompanying Notes to Financial Statements. 17 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 2002 2001 - ----------------------------------------------------------------------------------------------------------------------------- Operations Net investment income $ 17,145,616 $ 20,489,430 - ----------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) (31,600,661) 2,713,633 - ----------------------------------------------------------------------------------------------------------------------------- Net change in unrealized depreciation (46,421,985) (11,868,642) ----------------------------------- Net increase (decrease) in net assets resulting from operations (60,877,030) 11,334,421 - ----------------------------------------------------------------------------------------------------------------------------- Dividends and/or Distributions to Shareholders Dividends from net investment income: Non-Service shares (19,151,437) (22,752,705) Service shares -- -- - ----------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Non-Service shares (7,948,868) (30,390,350) Service shares -- -- - ----------------------------------------------------------------------------------------------------------------------------- Beneficial Interest Transactions Net increase (decrease) in net assets resulting from beneficial interest transactions: Non-Service shares (46,188,223) 45,543,527 Service shares 2,287,406 -- - ----------------------------------------------------------------------------------------------------------------------------- Net Assets Total increase (decrease) (131,878,152) 3,734,893 - ----------------------------------------------------------------------------------------------------------------------------- Beginning of period 593,032,737 589,297,844 ----------------------------------- End of period [including undistributed net investment income of $13,848,088 and $18,706,094, respectively] $ 461,154,585 $ 593,032,737 ===================================
See accompanying Notes to Financial Statements. 18 | OPPENHEIMER MULTIPLE STRATEGIES 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 $15.40 $16.55 $17.46 $17.05 $17.01 - ---------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .50 .53 .72 .82 .71 Net realized and unrealized gain (loss) (2.02) (.19) .38 1.04 .42 ------------------------------------------------------------- Total from investment operations (1.52) .34 1.10 1.86 1.13 - ---------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.51) (.64) (.82) (.59) (.16) Distributions from net realized gain (.21) (.85) (1.19) (.86) (.93) ------------------------------------------------------------- Total dividends and/or distributions to shareholders (.72) (1.49) (2.01) (1.45) (1.09) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.16 $15.40 $16.55 $17.46 $17.05 ============================================================= - ---------------------------------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 1 (10.40)% 2.22% 6.44% 11.80% 6.66% - ---------------------------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $458,848 $593,033 $589,298 $578,783 $622,333 - ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $517,516 $599,324 $566,724 $593,151 $640,131 - ---------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 2 Net investment income 3.31% 3.42% 4.36% 4.46% 4.05% Expenses 0.74% 0.76% 0.76% 0.73% 0.76% 3 - ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 42% 30% 42% 17% 43%
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. 19 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA FINANCIAL HIGHLIGHTS Continued Service shares Year Ended December 31, 2002 1 - ------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $14.51 - ------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .13 Net realized and unrealized loss (1.50) --------- Total from investment operations (1.37) - ------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- Distributions from net realized gain -- --------- Total dividends and/or distributions to shareholders -- - ------------------------------------------------------------------------------- Net asset value, end of period $13.14 ========= - ------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 (9.44)% - ------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $2,306 - ------------------------------------------------------------------------------- Average net assets (in thousands) $1,037 - ------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.30% Expenses 0.99% - ------------------------------------------------------------------------------- Portfolio turnover rate 42% 1. For the period from May 1, 2002 (inception of offering) to December 31, 2002. 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. 20 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA 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), an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund's investment objective is to seek a high total investment return, which includes current income and capital appreciation in the value of its shares. 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 ollowed 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). - -------------------------------------------------------------------------------- Structured Notes. The Fund invests in index-linked structured notes whose principal and/or interest payments depend on the performance of an underlying index. The structured notes are leveraged, which increases the volatility of each note's market value relative to the change in the underlying index. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. The Fund records a realized gain or loss when a structured note is sold or matures. As of December 31, 2002, the market value of these securities comprised 1.5% of the Fund's net assets, and resulted in unrealized gains in the current period of $110,736. - -------------------------------------------------------------------------------- Securities Purchased on a When-Issued Basis. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis can take place a month or more after the trade date. Normally the settlement date occurs within six months after the trade date; however, the Fund may, from time to time, purchase securities whose settlement date extends six months or more beyond trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Fund maintains segregated assets with a market value equal to or greater than the amount of its commitments. These transactions of securities on a when-issued basis may increase the volatility of the Fund's net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. As of December 31, 2002, the Fund had entered into when-issued purchase commitments of $39,116,427. In connection with its ability to purchase securities on a when-issued basis, the Fund may enter into forward roll transactions with respect to mortgage-related securities. Forward roll transactions require the sale of securities for delivery in the current month, and a simultaneous agreement with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The forward roll may not extend for a period of greater than one year. The Fund generally records the incremental difference between the forward purchase and sell of each forward roll as interest income. Risks to the Fund of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Fund to receive inferior securities to what was sold to the counterparty at redelivery; counterparty credit risk; and the potential pay down speed variance between the mortgage-related pools. 21 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Continued Security Credit Risk. The Fund invests in high-yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower-yielding, higher-rated fixed-income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of December 31, 2002, securities with an aggregate market value of $1,067,457, representing 0.23% of the Fund's net assets, were in default. - -------------------------------------------------------------------------------- Foreign Currency Translation. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- 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. As of December 31, 2002, the Fund had available for federal income tax purposes an unused capital loss carryforward as follows: Expiring ------------------------- 2010 $13,317,573 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 $17,327,000 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 $3,046,000 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 primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. 22 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA 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 $2,852,185. 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 $23,577,984 $32,313,114 Long-term capital gain 3,522,321 20,829,941 Return of capital -- -- ------------------------------- Total $27,100,305 $53,143,055 =============================== As of December 31, 2002, the components of distributable earnings on a tax basis were as follows: Undistributed net investment income $ 13,848,088 Accumulated net realized loss (34,291,622) Net unrealized appreciation 5,774,369 ------------- Total $(14,669,165) ============= - -------------------------------------------------------------------------------- Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 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 1 Year Ended December 31, 2001 Shares Amount Shares Amount - ----------------------------------------------------------------------------------------------------------------------- Non-Service shares Sold 3,369,152 $ 47,017,452 6,369,169 $ 100,976,185 Dividends and/or distributions reinvested 1,834,820 27,100,305 3,507,792 53,143,055 Redeemed (8,852,327) (120,305,980) (6,967,146) (108,575,713) ------------------------------------------------------------------- Net increase (decrease) (3,648,355) $ (46,188,223) 2,909,815 $ 45,543,527 =================================================================== - ----------------------------------------------------------------------------------------------------------------------- Service shares Sold 205,258 $ 2,669,841 -- $ -- Dividends and/or distributions reinvested -- -- -- -- Redeemed (29,698) (382,435) -- -- ------------------------------------------------------------------- Net increase (decrease) 175,560 $ 2,287,406 -- $ -- ===================================================================
1. For the year ended December 31, 2002, for Non-Service shares and for the period from May 1, 2002 (inception of offering) to December 31, 2002, for Service shares. 23 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 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 $195,967,629 and $251,811,866, respectively. As of December 31, 2002, unrealized appreciation (depreciation) based on cost of securities for federal income tax purposes of $493,923,072 was composed of: Gross unrealized appreciation $ 57,578,493 Gross unrealized depreciation (51,909,402) ------------ Net unrealized appreciation $ 5,669,091 ============ 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. - -------------------------------------------------------------------------------- Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a $19.75 per account fee. Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $5,000 for assets of less than $10 million and $10,000 for assets of $10 million or more. The Fund is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees up to an annual rate of 0.35% 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 $1,719. - -------------------------------------------------------------------------------- 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 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 foreign currency transactions. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. 24 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA - -------------------------------------------------------------------------------- 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 in the Statement of Operations as closing and expiration of futures contracts. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. As of December 31, 2002, the Fund had outstanding futures contracts as follows:
Unrealized Expiration Number of Valuation as of Appreciation Contract Description Dates Contracts December 31, 2002 (Depreciation) - ------------------------------------------------------------------------------------------------------------------- Contracts to Purchase U.S. Long Bonds 3/20/03 289 $32,566,688 $ (1,173,625) U.S. Treasury Nts., 5 yr. 3/27/03 285 32,276,250 (749,367) U.S. Treasury Nts., 10 yr. 3/20/03 26 2,991,219 (45,500) --------------- (1,968,492) --------------- Contracts to Sell U.S. Treasury Nts., 2 yr. 3/27/03 157 33,784,438 295,531 --------------- $(1,672,961) ===============
- -------------------------------------------------------------------------------- 7. Option Activity The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. 25 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- 7. Option Activity Continued 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. Realized 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, 2002 was as follows: Number of Amount of Contracts Premiums ------------------------------------------------------------------------- Options outstanding as of December 31, 2001 11,211 $ 2,712,380 Options written 22,306 4,031,794 Options closed or expired (19,720) (4,223,235) Options exercised (1,407) (457,688) ------------------------- Options outstanding as of December 31, 2002 12,390 $2,063,251 ------------------------- - -------------------------------------------------------------------------------- 8. 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 $2,341,024, which represents 0.51% of the Fund's net assets. 26 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- To the Board of Trustees and Shareholders of Oppenheimer Multiple Strategies Fund/VA: We have audited the accompanying statement of assets and liabilities of Oppenheimer Multiple Strategies 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 Multiple Strategies 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 27 | OPPENHEIMER MULTIPLE STRATEGIES 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 and distributions of $0.7163 per share were paid to Non-Service shareholders, on March 15, 2002, of which $0.0931 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 22.18% 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. 28 | OPPENHEIMER MULTIPLE STRATEGIES 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 1987) 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 1993) 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 2001May 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 1990) 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.
29 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
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.
30 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
- ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Evans, Levine, Rubinstein and Zack and Ms. Switzer, 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 or her earlier resignation, retirement, death or removal. George Evans, Vice President of the Manager (since October 1993) and of HarbourView Asset Management Corporation Vice President (since 2001) (since July 1994). An officer of 4 portfolios in the OppenheimerFunds complex. Age: 42 Michael S. Levine, Vice President (since June 1998) of the Manager; formerly Assistant Vice President and Portfolio Vice President (since 1998) Manager of the Manager (April 1996-June 1998); prior to joining the Manager in June 1994, he was a Age: 36 portfolio manager and research associate for Amas Securities, Inc. (February 1990-February 1994). An officer of 4 portfolios in the OppenheimerFunds complex. Richard H. Rubinstein, Senior Vice President (since October 1995) of the Manager; formerly a Vice President of the Manager Vice President (since 1991) (June 1990-October 1995). An officer of 2 portfolios in the OppenheimerFunds complex. Age: 53 Susan Switzer, Vice President of the Manager (since December 2000); Assistant Vice President of the Manager Vice President (since 2001) (December 1997-December 2000). Prior to joining the Manager, she was a portfolio manager at Age: 36 Neuberger Berman (November 1994-November 1997). An officer of 3 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 Financial of HarbourView Asset Management Corporation, Shareholder Services, Inc., Oppenheimer Real Asset and Accounting Officer Management Corporation, Shareholder Financial Services, Inc., Oppenheimer Partnership Holdings, (since 1999) Inc., OFI Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and Age: 43 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.
31 | OPPENHEIMER MULTIPLE STRATEGIES FUND/VA OPPENHEIMER MULTIPLE STRATEGIES FUND/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 and Maw Independent Trustees For more complete information about Oppenheimer Multiple Strategies 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. -----END PRIVACY-ENHANCED MESSAGE-----