-----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, AvmaUqZXseayYBrtp31rC85yRiebXH63sd5J9thLt+VXXAlDvA3viiESfHKlWz7/ ySrzsjbekgNEyuGywxgs5w== 0000935069-05-000306.txt : 20050225 0000935069-05-000306.hdr.sgml : 20050225 20050225152709 ACCESSION NUMBER: 0000935069-05-000306 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050225 DATE AS OF CHANGE: 20050225 EFFECTIVENESS DATE: 20050225 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-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04108 FILM NUMBER: 05641093 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-CSR 1 ra265_12015ncsr.txt RA265_12015NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4108 Oppenheimer Strategic Bond Fund/VA (Exact name of registrant as specified in charter) 6803 South Tucson Way, Centennial, Colorado 80112-3924 (Address of principal executive offices) (Zip code) Robert G. Zack, Esq. OppenheimerFunds, Inc. Two World Financial Center, New York, New York 10281-1008 (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 Date of fiscal year end: December 31 Date of reporting period: January 1, 2004 - December 31, 2004 ITEM 1. REPORTS TO STOCKHOLDERS. FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The Fund's performance during 2004 was driven primarily by good results from its investments in the emerging markets and U.S. high-yield corporate bonds, as well as by favorable movements in foreign currency exchange rates. The Fund's relatively heavy exposure to emerging-market bonds contributed positively to performance. We focused primarily on nations that either are reducing their external debt or making the transition from high rates of inflation to lower ones. For example, debt securities from Brazil proved particularly beneficial as the nation reformed its financial system and achieved a lower rate of inflation after many years of sharply rising prices. At the same time, Brazil's economy has benefited from greater global demand for basic materials. In another example, Russia has continued to emerge as a major force in the global oil industry, and has used some of the proceeds from its oil revenues to pay down its debt, instilling greater confidence among investors and rating agencies. The Fund's investments in the foreign currencies of major industrialized regions, including the euro and yen, fared well when the U.S. dollar weakened. We believe that the U.S. current account deficit and a ballooning U.S. federal budget deficit were important factors in the U.S. dollar's decline. In anticipation of the declining U.S. dollar, we increased the Fund's exposure to foreign bonds denominated in local currencies. As a result, the Fund achieved attractive returns from securities issued by the governments of Brazil, Russia and Turkey. Among high-yield corporate bonds, results were particularly strong early in the reporting period, when bonds in the "triple-C" range produced higher returns than more highly rated securities. The Fund especially benefited from its investments in the high-yield debt of companies in the telecommunications, energy, retail and basic materials industries. Later in the reporting period, however, we shifted our focus to corporate bonds with credit ratings in the "double-B" range, which historically have tended to perform well in the later stages of the credit cycle. However, we may have made this move too soon, because returns from bonds in this rating category continued to lag behind their lower-rated counterparts. Although the Fund's holdings of U.S. government securities contributed less positively than other areas, the Fund nonetheless benefited from its emphasis on mortgage-backed securities within the sector. Mortgage-backed securities from federal agencies fared better than U.S. Treasury securities as interest rates rose and fewer homeowners refinanced their mortgages. However, the Fund's performance was hindered by its duration positioning, or, a measure of how long its bonds would be repaid by their coupon payments and returns of principal, on average. Generally, the higher the duration, the greater a bond's price volatility. For much of the reporting period, we sought to limit the Fund's duration. While this stance helped preserve value during periodic market declines, it limited the Fund's participation in market rallies and was primarily responsible for producing returns than lagged behind industry averages for the reporting period overall. We have continued to maintain the Fund's average duration in a relatively short position in anticipation of higher interest rates. In addition, we have attempted to reduce the Fund's exposure to credit risk by focusing on "double-B" rated high-yield securities and better-quality bonds from the emerging markets. COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each share class of the Fund held until December 31, 2004. In the case of Non-Service shares, performance is measured over a ten fiscal year period. In the case of Service shares, performance is measured from inception of the class on March 19, 2001. Performance information does not reflect charges that apply to separate accounts investing in the Fund. If these charges were taken into account, performance would be lower. The graph assumes that all dividends and capital gains distributions were reinvested in additional shares. The Fund's performance is compared to the performance of the Lehman Brothers Aggregate Bond Index, an unmanaged index of U.S. corporate and government bonds, and to the Citigroup World Government Bond Index, an unmanaged index of debt securities of major foreign governments. Index performance reflects the reinvestment of income but does not consider the effect of transaction costs, and none of the data in the graphs shows the effect of taxes. 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 STRATEGIC BOND FUND/VA NON-SERVICE SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Strategic Bond Fund/VA (Non-Service) Lehman Brothers Aggregate Bond Index Citigroup World Government Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Strategic Citigroup Bond Fund/VA Lehman Brothers World Government (Non-Service) Aggregate Bond Index Bond Index 12/31/1994 10,000 10,000 10,000 03/31/1995 10,175 10,504 11,093 06/30/1995 10,775 11,144 11,685 09/30/1995 11,070 11,363 11,562 12/31/1995 11,533 11,847 11,904 03/31/1996 11,721 11,637 11,680 06/30/1996 12,010 11,704 11,728 09/30/1996 12,476 11,920 12,048 12/31/1996 12,925 12,278 12,335 03/31/1997 12,919 12,209 11,824 06/30/1997 13,437 12,657 12,183 09/30/1997 13,888 13,078 12,338 12/31/1997 14,050 13,463 12,363 03/31/1998 14,401 13,672 12,460 06/30/1998 14,514 13,992 12,708 09/30/1998 14,203 14,583 13,767 12/31/1998 14,457 14,632 14,256 03/31/1999 14,477 14,560 13,705 06/30/1999 14,477 14,432 13,233 09/30/1999 14,507 14,530 13,833 12/31/1999 14,866 14,512 13,647 03/31/2000 15,030 14,832 13,671 06/30/2000 15,127 15,091 13,651 09/30/2000 15,290 15,546 13,293 12/31/2000 15,257 16,199 13,864 03/31/2001 15,567 16,691 13,442 06/30/2001 15,443 16,785 13,232 09/30/2001 15,339 17,559 14,178 12/31/2001 15,997 17,567 13,727 03/31/2002 16,247 17,584 13,506 06/30/2002 16,323 18,233 15,079 09/30/2002 16,398 19,069 15,662 12/31/2002 17,188 19,369 16,403 03/31/2003 17,802 19,638 16,912 06/30/2003 18,887 20,130 17,569 09/30/2003 19,450 20,100 17,916 12/31/2003 20,294 20,164 18,849 03/31/2004 20,699 20,700 19,200 06/30/2004 20,318 20,194 18,561 09/30/2004 21,038 20,839 19,170 12/31/2004 22,054 21,038 20,800
AVERAGE ANNUAL TOTAL RETURNS OF NON-SERVICE SHARES OF THE FUND AT 12/31/04 1-Year 8.67% 5-Year 8.21% 10-Year 8.23% SERVICE SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Strategic Bond Fund/VA (Non-Service) Lehman Brothers Aggregate Bond Index Citigroup World Government Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Strategic Citigroup Bond Fund/VA Lehman Brothers World Government (Service) Aggregate Bond Index Bond Index 03/19/2001 10,000 10,000 10,000 03/31/2001 9,914 10,000 10,000 06/30/2001 9,871 10,056 9,843 09/30/2001 9,784 10,520 10,548 12/31/2001 10,194 10,525 10,212 03/31/2002 10,326 10,535 10,047 06/30/2002 10,373 10,924 11,218 09/30/2002 10,419 11,425 11,652 12/31/2002 10,910 11,604 12,203 03/31/2003 11,287 11,766 12,582 06/30/2003 11,960 12,060 13,070 09/30/2003 12,284 12,043 13,328 12/31/2003 12,782 12,081 14,022 03/31/2004 13,022 12,402 14,284 06/30/2004 12,786 12,099 13,808 09/30/2004 13,231 12,485 14,261 12/31/2004 13,860 12,605 15,473
AVERAGE ANNUAL TOTAL RETURNS OF SERVICE SHARES OF THE FUND AT 12/31/04 1-Year 8.43% 5-Year N/A Since Inception (3/19/01) 9.01% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, CALL US AT 1.800.981.2871. THE FUND'S TOTAL RETURNS SHOULD NOT BE EXPECTED TO BE THE SAME AS THE RETURNS OF OTHER FUNDS, WHETHER OR NOT BOTH FUNDS HAVE THE SAME PORTFOLIO MANAGERS AND/OR SIMILAR NAMES. THE FUND'S TOTAL RETURNS DO NOT INCLUDE THE CHARGES ASSOCIATED WITH THE SEPARATE ACCOUNT PRODUCTS THAT OFFER THIS FUND. SUCH PERFORMANCE WOULD HAVE BEEN LOWER IF SUCH CHARGES WERE TAKEN INTO ACCOUNT. 5 | OPPENHEIMER STRATEGIC BOND FUND/VA FUND EXPENSES - -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended December 31, 2004. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any charges associated with the separate accounts that offer this Fund. Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these separate account charges were included, your costs would have been higher. BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (7/1/04) (12/31/04) DECEMBER 31, 2004 - -------------------------------------------------------------------------------- Non-Service shares Actual $ 1,000.00 $ 1,085.40 $ 3.83 - -------------------------------------------------------------------------------- Non-Service shares Hypothetical 1,000.00 1,021.47 3.72 - -------------------------------------------------------------------------------- Service shares Actual 1,000.00 1,084.00 5.15 - -------------------------------------------------------------------------------- Service shares Hypothetical 1,000.00 1,020.21 4.99 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended December 31, 2004 are as follows: CLASS EXPENSE RATIOS - -------------------------------------- Non-Service shares 0.73% - -------------------------------------- Service shares 0.98 6 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS December 31, 2004 - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES--2.4% - -------------------------------------------------------------------------------- Arbor I Ltd., Catastrophe Linked Nts., Series 2004-4, 16.49%, 3/15/06 1 $ 250,000 $ 253,774 - -------------------------------------------------------------------------------- Bank One Auto Securitization Trust, Automobile Receivable Certificates, Series 2003-1, Cl. A2, 1.29%, 8/21/06 212,619 212,242 - -------------------------------------------------------------------------------- BMW Vehicle Owner Trust, Automobile Loan Certificates, Series 2004-A, Cl. A2, 1.88%, 10/25/06 716,519 714,221 - -------------------------------------------------------------------------------- Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts., Series 2004-2, Cl. A3, 3.58%, 1/15/09 740,000 739,075 - -------------------------------------------------------------------------------- Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates: Series 2003-C, Cl. AF1, 2.14%, 7/25/18 71,469 71,389 Series 2004-A, Cl. AF1, 2.03%, 6/25/19 136,318 135,794 Series 2004-D, Cl. AF1, 2.98%, 4/25/20 2 338,237 337,140 - -------------------------------------------------------------------------------- Chase Funding Mortgage Loan Asset-Backed Certificates, Home Equity Mtg. Obligations: Series 2002-4, Cl. 1A3, 3.44%, 4/25/23 109,997 110,004 Series 2003-1, Cl. 1A3, 3.14%, 7/25/23 302,706 302,548 Series 2003-4, Cl. 1A1, 2.538%, 9/25/17 1 53,909 53,938 Series 2003-4, Cl. 1A2, 2.138%, 7/25/18 280,000 279,060 Series 2004-1, Cl. 2A1, 2.528%, 9/25/21 1 486,551 486,864 - -------------------------------------------------------------------------------- Chase Manhattan Auto Owner Trust, Automobile Loan Pass-Through Certificates: Series 2002-A, Cl. A4, 4.24%, 9/15/08 152,203 153,155 Series 2003-B, Cl. A2, 1.28%, 3/15/06 58,362 58,330 - -------------------------------------------------------------------------------- CIT Equipment Collateral, Equipment Receivable-Backed Nts., Series 2004-DFS, Cl. A2, 2.66%, 11/20/06 2 550,000 547,659 - -------------------------------------------------------------------------------- CIT Group Home Equity Loan Trust, Home Equity Loan Asset-Backed Certificates, Series 2003-1, Cl. A2, 2.35%, 4/20/27 292,505 291,952 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES Continued - -------------------------------------------------------------------------------- Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series 2002-A3, Cl. A3, 4.40%, 5/15/07 $ 530,000 $ 533,661 - -------------------------------------------------------------------------------- CitiFinancial Mortgage Securities, Inc., Home Equity Collateralized Mtg. Obligations: Series 2003-2, Cl. AF1, 2.518%, 5/25/33 1 32,335 32,356 Series 2003-3, Cl. AF1, 2.538%, 8/25/33 1 144,250 144,346 - -------------------------------------------------------------------------------- Consumer Credit Reference Index Securities Program, Credit Card Asset-Backed Certificates, Series 2002-B, Cl. FX, 10.421%, 3/22/07 2 500,000 514,941 - -------------------------------------------------------------------------------- DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates: Series 2003-A, Cl. A2, 1.52%, 12/8/05 177,134 177,116 Series 2003-B, Cl. A2, 1.61%, 7/10/06 561,254 560,311 Series 2004-B, Cl. A2, 2.48%, 2/8/07 2 600,000 598,561 Series 2004-C, Cl. A2, 2.62%, 6/8/07 1,040,000 1,036,808 - -------------------------------------------------------------------------------- Embarcadero Aircraft Securitization Trust, Airplane Receivable Nts., Series 2000-A, Cl. B, 0.678%, 8/15/25 2,3,4 1,820,063 569 - -------------------------------------------------------------------------------- Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates, Series 2004-A, Cl. A2, 2.13%, 10/15/06 1,120,000 1,115,639 - -------------------------------------------------------------------------------- Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts., Series 2003-3, Cl. A1, 1.50%, 1/15/08 389,176 387,801 - -------------------------------------------------------------------------------- Honda Auto Receivables Owner Trust, Automobile Receivable Obligations: Series 2003-3, Cl. A2, 1.52%, 4/21/06 419,992 419,289 Series 2003-4, Cl. A2, 1.58%, 7/17/06 524,914 523,743 - -------------------------------------------------------------------------------- Household Automotive Trust, Automobile Loan Certificates, Series 2003-2, Cl. A2, 1.56%, 12/18/06 192,376 191,996 - -------------------------------------------------------------------------------- M&I Auto Loan Trust, Automobile Loan Certificates: Series 2002-1, Cl. A3, 2.49%, 10/22/07 229,259 229,227 Series 2003-1, Cl. A2, 1.60%, 7/20/06 371,164 370,628 - -------------------------------------------------------------------------------- National City Auto Receivables Trust, Automobile Receivable Obligations, Series 2004-A, Cl. A2, 1.50%, 2/15/07 431,428 429,910 7 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES Continued - -------------------------------------------------------------------------------- NC Finance Trust, Collateralized Mtg. Obligations, Series 1999-I, Cl. ECFD, 8.75%, 1/25/29 2 $ 66,744 $ 17,812 - -------------------------------------------------------------------------------- Nissan Auto Lease Trust, Automobile Lease Obligations: Series 2003-A, Cl. A2, 1.69%, 12/15/05 35,559 35,559 Series 2004-A, Cl. A2, 2.55%, 1/15/07 480,000 479,674 - -------------------------------------------------------------------------------- Nissan Auto Receivables Owner Trust, Automobile Receivable Nts.: Series 2002-A, Cl. A4, 4.28%, 10/16/06 120,752 121,361 Series 2003-B, Cl. A3, 1.51%, 8/15/07 125,776 124,783 Series 2004-A, Cl. A2, 1.40%, 7/17/06 499,348 497,341 - -------------------------------------------------------------------------------- Option One Mortgage Loan Trust, Home Equity Mtg. Obligations, Series 2004-3, Cl. A2, 2.568%, 11/25/34 1,2 326,595 326,805 - -------------------------------------------------------------------------------- Popular ABS Mortgage Pass-Through Trust, Home Equity Pass-Through Certificates, Series 2004-5, Cl. A F2, 3.735%, 11/10/34 2 200,000 199,334 - -------------------------------------------------------------------------------- Sequoia Capital Ltd., Catastrophe Nts., Series 2004-2, 7.24%, 3/15/05 1 250,000 249,931 - -------------------------------------------------------------------------------- Toyota Auto Receivables Owner Trust, Automobile Mtg.-Backed Obligations: Series 2002-B, Cl. A3, 3.76%, 6/15/06 38,998 39,054 Series 2003-B, Cl. A2, 1.43%, 2/15/06 162,898 162,799 - -------------------------------------------------------------------------------- USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.: Series 2002-1, Cl. A3, 2.41%, 10/16/06 102,245 102,242 Series 2004-1, Cl. A2, 1.43%, 9/15/06 1,196,193 1,192,385 Series 2004-2, Cl. A2, 2.41%, 2/15/07 610,000 608,073 Series 2004-3, Cl. A2, 2.79%, 6/15/07 490,000 489,033 - -------------------------------------------------------------------------------- Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities, Series 2004-A, Cl. A2, 2.47%, 1/22/07 640,000 637,075 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES Continued - -------------------------------------------------------------------------------- Volkswagen Auto Loan Enhanced Trust, Automobile Loan Receivable Certificates: Series 2003-1, Cl. A2, 1.11%, 12/20/05 $ 73,599 $ 73,574 Series 2003-2, Cl. A2, 1.55%, 6/20/06 283,939 283,387 - -------------------------------------------------------------------------------- Wachovia Auto Owner Trust, Automobile Receivable Nts., Series 2004-B, Cl. A2, 2.40%, 5/21/07 460,000 458,107 - -------------------------------------------------------------------------------- Wells Fargo Home Equity Trust, Collateralized Mtg. Obligations, Series 2004-2, Cl. AI1B, 2.94%, 9/25/18 946,271 941,898 - -------------------------------------------------------------------------------- Whole Auto Loan Trust, Automobile Loan Receivable Certificates: Series 2003-1, Cl. A2A, 1.40%, 4/15/06 383,197 382,479 Series 2003-1, Cl. A3B, 1.99%, 5/15/07 220,000 218,151 Series 2004-1, Cl. A2A, 2.59%, 5/15/07 620,000 617,718 --------------- Total Asset-Backed Securities (Cost $22,179,442) 20,272,622 - -------------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS--12.7% - -------------------------------------------------------------------------------- Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates, Series 1997-D4, Cl. B1, 7.525%, 4/14/29 375,000 433,282 - -------------------------------------------------------------------------------- Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2004-6, Cl. A3, 4.512%, 12/10/42 560,000 560,000 - -------------------------------------------------------------------------------- Bank of America Mortgage Securities, Inc., Collateralized Mtg. Obligations Pass-Through Certificates: Series 2004-2, Cl. 2A1, 6.50%, 7/20/32 982,015 1,003,277 Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 785,464 816,147 Series 2004-E, Cl. 2A9, 3.712%, 6/25/34 497,824 498,138 Series 2004-G, Cl. 2A1, 2.469%, 8/25/34 368,414 367,688 - -------------------------------------------------------------------------------- CIT Equipment Collateral, Equipment Receivable- Backed Nts., Series 2003-EF1, Cl. A2, 1.49%, 12/20/05 38,995 39,003 8 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS Continued - -------------------------------------------------------------------------------- Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations, Series 2004-J9, Cl. 1A1, 2.598%, 10/25/34 1 $ 765,604 $ 766,485 - -------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp.: 5%, 1/1/35 5 9,609,000 9,542,938 5.50%, 1/1/35 5 3,040,000 3,088,452 6%, 9/1/24 3,647,046 3,792,091 7%, 3/1/31-11/1/34 4,646,138 4,926,953 11%, 11/1/14 63,381 69,407 - -------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations, Pass-Through Participation Certificates, Series 151, Cl. F, 9%, 5/15/21 108,068 108,128 - -------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Series 1669, Cl. G, 6.50%, 2/15/23 145,350 146,508 Series 2055, Cl. ZM, 6.50%, 5/15/28 366,469 381,155 Series 2080, Cl. Z, 6.50%, 8/15/28 227,788 234,885 Series 2387, Cl. PD, 6%, 4/15/30 491,475 509,443 Series 2466, Cl. PD, 6.50%, 4/15/30 139,825 140,498 Series 2498, Cl. PC, 5.50%, 10/15/14 60,326 60,843 Series 2500, Cl. FD, 2.903%, 3/15/32 1 138,846 139,391 Series 2526, Cl. FE, 2.803%, 6/15/29 1 170,408 171,021 Series 2551, Cl. FD, 2.803%, 1/15/33 1 136,801 137,739 Series 2551, Cl. TA, 4.50%, 2/15/18 59,590 59,552 - -------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security: Series 177, Cl. B, (1.91)%, 7/1/26 6 430,500 79,803 Series 192, Cl. IO, 3.27%, 2/1/28 6 112,605 20,926 Series 200, Cl. IO, 2.89%, 1/1/29 6 137,998 26,456 Series 205, Cl. IO, (0.22)%, 9/1/29 6 648,115 121,500 Series 208, Cl. IO, (29.18)%, 6/1/30 6 741,029 136,045 Series 2074, Cl. S, 11.86%, 7/17/28 6 144,882 18,659 Series 2079, Cl. S, 10.47%, 7/17/28 6 225,939 29,433 Series 2526, Cl. SE, 17.17%, 6/15/29 6 318,589 25,898 - -------------------------------------------------------------------------------- Federal National Mortgage Assn.: 4.50%, 1/1/20 5 3,175,000 3,165,078 5%, 1/1/20-1/1/35 5 5,784,000 5,802,086 5.50%, 3/1/33-1/1/34 5,067,193 5,150,261 5.50%, 1/1/35 5 15,257,000 15,490,615 6%, 9/1/24 1,095,238 1,139,933 6%, 1/1/35 5 5,145,000 5,320,249 6.50%, 5/1/29-10/1/30 349,551 367,350 6.50%, 1/1/35 5 5,741,000 6,020,874 7%, 12/1/23-8/1/34 11,386,535 12,074,521 7%, 8/1/28-1/1/35 5 4,961,590 5,258,944 7.50%, 8/1/25-2/1/27 303,017 325,469 8.50%, 7/1/32 30,386 33,011 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS Continued - -------------------------------------------------------------------------------- Federal National Mortgage Assn., Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Trust 1998-63, Cl. PG, 6%, 3/25/27 $ 134,095 $ 134,735 Trust 2001-50, Cl. NE, 6%, 8/25/30 263,368 267,008 Trust 2001-70, Cl. LR, 6%, 9/25/30 257,913 262,970 Trust 2001-72, Cl. NH, 6%, 4/25/30 206,421 211,102 Trust 2001-74, Cl. PD, 6%, 5/25/30 87,676 88,865 Trust 2002-50, Cl. PD, 6%, 9/25/27 143,345 143,441 Trust 2002-77, Cl. WF, 2.81%, 12/18/32 1 219,585 220,883 Trust 2002-94, Cl. MA, 4.50%, 8/25/09 389,325 390,178 Trust 2003-81, Cl. PA, 5%, 2/25/12 110,657 111,064 Trust 2004-101, Cl. BG, 5%, 1/25/20 630,000 635,513 - -------------------------------------------------------------------------------- Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Interest-Only Stripped Mtg.-Backed Security: Trust 319, Cl. 2, (3.08)% 2/1/32 6 280,066 53,832 Trust 2002-28, Cl. SA, 12.58%, 4/25/32 6 171,247 17,021 Trust 2002-38, Cl. SO, 19.60%, 4/25/32 6 941,721 75,715 Trust 2002-48, Cl. S, 10.91%, 7/25/32 6 274,141 28,629 Trust 2002-52, Cl. SL, 11.27%, 9/25/32 6 172,075 18,084 Trust 2002-56, Cl. SN, 13.38%, 7/25/32 6 376,704 39,455 Trust 2002-77, Cl. IS, 15.90%, 12/18/32 6 1,604,414 169,157 - -------------------------------------------------------------------------------- Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Trust 214, Cl. 2, 1.30%, 3/1/23 6 1,743,262 332,038 Trust 221, Cl. 2, (1.23)%, 5/1/23 6 197,058 38,107 Trust 240, Cl. 2, 3.35%, 9/1/23 6 340,010 64,752 Trust 301, Cl. 2, (3.70)%, 4/1/29 6 841,291 159,680 Trust 313, Cl. 2, (29.08)%, 7/1/31 6 930,965 179,140 Trust 321, Cl. 2, (3.53)%, 3/1/32 6 1,238,418 246,105 Trust 324, Cl. 2, (9.92)%, 6/1/32 6 2,154,476 438,653 Trust 333, Cl. 2, 2.31%, 3/1/33 6 817,230 176,743 Trust 2001-63, Cl. SD, 17.40%, 12/18/31 6 295,586 31,275 Trust 2001-68, Cl. SC, 13.63%, 11/25/31 6 217,386 23,651 Trust 2001-81, Cl. S, 13.68%, 1/25/32 6 297,295 36,260 Trust 2002-9, Cl. MS, 10.62%, 3/25/32 6 367,130 40,046 Trust 2002-77, Cl. SH, 21.15%, 12/18/32 6 371,337 37,605 9 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS Continued - -------------------------------------------------------------------------------- First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates, Series 1997-CHL1, Cl. D, 7.863%, 4/29/39 1,2 $ 350,000 $ 356,617 - -------------------------------------------------------------------------------- First Union National Bank/ Lehman Brothers/Bank of America Commercial Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%, 11/18/35 360,000 387,274 - -------------------------------------------------------------------------------- GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2004-C3, Cl. A2, 4.433%, 7/10/39 390,000 395,179 - -------------------------------------------------------------------------------- GMAC Commercial Mortgage Securities, Inc., Commercial Mtg. Obligations, Series 2004-C3, Cl. A4, 4.547%, 12/10/41 360,000 360,947 - -------------------------------------------------------------------------------- GMAC Commercial Mortgage Securities, Inc., Commercial Mtg. Pass-Through Certificates, Series 1997-C1, Cl. A3, 6.869%, 7/15/29 294,379 311,620 - -------------------------------------------------------------------------------- GMAC Commercial Mortgage Securities, Inc., Mtg. Pass-Through Certificates, Series 1998-C1, Cl. F, 7.089%, 5/15/30 1 1,800,000 1,883,750 - -------------------------------------------------------------------------------- Government National Mortgage Assn.: 4.625%, 11/20/25 1 18,008 18,430 7%, 3/15/28-7/15/28 1,148,877 1,223,374 7.50%, 2/15/27 158,177 170,305 8%, 11/15/25-5/15/26 148,485 161,741 - -------------------------------------------------------------------------------- Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Series 1998-6, Cl. SA, 8.73%, 3/16/28 6 275,939 33,487 Series 1998-19, Cl. SB, 10.70%, 7/16/28 6 461,648 60,289 Series 2001-21, Cl. SB, 14.94%, 1/16/27 6 2,222,960 212,607 - -------------------------------------------------------------------------------- GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates: Series 2004-C1, Cl. A1, 3.659%, 10/10/28 407,183 402,757 Series 2004-GG2, Cl. A3, 4.602%, 8/10/38 250,000 255,071 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS Continued - -------------------------------------------------------------------------------- GSR Mortgage Loan Trust, Collateralized Mtg. Obligations, Series 04-12, Cl. 3A1, 4.593%, 12/25/34 1,2 $ 1,176,093 $ 1,177,713 - -------------------------------------------------------------------------------- Mastr Alternative Loan Trust, Pass-Through Collateralized Mtg. Obligations, Series 2004-6, Cl. 10A1, 6%, 7/25/34 1,125,260 1,161,934 - -------------------------------------------------------------------------------- Mastr Seasoned Securities Trust, Collateralized Mtg. Obligations, Series 2004-2, Cl. PT65, 6.50%, 12/1/34 5 1,625,000 1,673,496 - -------------------------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates, Series 1995-C2, Cl. D, 7.545%, 6/15/21 1 165,632 169,720 - -------------------------------------------------------------------------------- Morgan Stanley Capital I Trust, Commercial Mtg. Pass-Through Certificates: Series 1996-C1, Cl. F, 7.472%, 2/15/28 1,7 162,744 150,727 Series 1997-XL1, Cl. G, 7.695%, 10/3/30 390,000 258,472 - -------------------------------------------------------------------------------- Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 420,000 454,560 - -------------------------------------------------------------------------------- Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15 556,000 640,926 - -------------------------------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg. Pass-Through Certificates: Series 1996-B, Cl. 1, 4.357%, 4/25/26 1,2 5,768 5,325 Series 1996-C1, Cl. F, 8.384%, 1/20/28 1,2 1,000,000 823,125 - -------------------------------------------------------------------------------- Washington Mutual Mortgage Securities Corp., Collateralized Mtg. Pass-Through Certificates, Series 2003-AR12, Cl. A2, 2.446%, 2/25/34 1 9,652 9,658 - -------------------------------------------------------------------------------- Wells Fargo Mortgage Backed Securities Trust, Collateralized Mtg. Obligations: Series 2004-DD, Cl. 2 A1, 4.548%, 1/25/35 1,290,000 1,292,116 Series 2004-N, Cl. A10, 3.803%, 8/25/34 2 966,317 969,495 Series 2004-W, Cl. A2, 4.635%, 11/25/34 1 575,342 576,930 --------------- Total Mortgage-Backed Obligations (Cost $109,143,597) 108,869,487 10 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS--8.8% - -------------------------------------------------------------------------------- Federal Home Loan Bank Unsec. Bonds, 2.75%, 10/15/06 $ 5,135,000 $ 5,096,575 - -------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp. Nts., 3.75%, 7/15/09 [EUR] 1,090,000 1,521,140 - -------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp. Unsec. Nts., 6.875%, 9/15/10 4,420,000 5,051,901 - -------------------------------------------------------------------------------- Federal National Mortgage Assn. Unsec. Nts.: 1.80%, 5/27/05 1,390,000 1,386,226 2.50%, 6/15/06 1,325,000 1,313,765 3.01%, 6/2/06 1,400,000 1,394,277 4.25%, 7/15/07 6,465,000 6,604,437 6.625%, 9/15/09 8,000,000 8,941,696 7.25%, 1/15/10-5/15/30 5,765,000 6,733,930 - -------------------------------------------------------------------------------- Resolution Funding Corp. Federal Book Entry Principal Strips, 5.85%, 1/15/21 8 1,220,000 535,562 - -------------------------------------------------------------------------------- Tennessee Valley Authority Bonds: 7.125%, 5/1/30 330,000 411,820 Series A, 6.79%, 5/23/12 9,663,000 11,143,024 - -------------------------------------------------------------------------------- U.S. Treasury Bonds: 5.50%, 8/15/28 1,034,000 1,119,467 7.25%, 5/15/16 1,670,000 2,090,893 8.875%, 8/15/17 9 1,630,000 2,310,398 9.25%, 2/15/16 208,000 296,977 STRIPS, 4.20%, 2/15/11 8 900,000 708,919 STRIPS, 4.60%, 2/15/16 8 491,000 295,829 - -------------------------------------------------------------------------------- U.S. Treasury Nts.: 2.50%, 9/30/06-10/31/06 14,025,000 13,903,978 2.75%, 8/15/07 10,11 525,000 519,401 2.75%, 7/31/06 9 3,839,000 3,827,756 --------------- Total U.S. Government Obligations (Cost $75,011,468) 75,207,971 - -------------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS--29.9% - -------------------------------------------------------------------------------- ARGENTINA--0.8% Argentina (Republic of) Bonds: 1.98%, 8/3/12 1 6,465,000 5,438,849 2.352%, 5/3/05 1 56,000 55,064 Series PRE8, 2%, 1/3/10 2,3,4 [ARP] 1,980,000 997,161 Series PR12, 2%, 1/3/16 2,3,4 [ARP] 1,335,300 574,999 - -------------------------------------------------------------------------------- Argentina (Republic of) Disc. Bonds, 3/31/23 2,3,4 260,000 146,900 - -------------------------------------------------------------------------------- Buenos Aires (Province of) Bonds, Bonos de Consolidacion de Deudas, Series PBA1, 4/1/07 2,3,4 [ARP] 59,785 24,123 --------------- 7,237,096 - -------------------------------------------------------------------------------- AUSTRALIA--0.8% Queensland Treasury Corp. Unsec. Nts., Series 09G, 6%, 7/14/09 [AUD] 8,300,000 6,670,330 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- AUSTRIA--0.9% Austria (Republic of) Bonds, 6.25%, 7/15/27 [EUR] 3,480,000 $ 6,113,012 - -------------------------------------------------------------------------------- Austria (Republic of) Nts., Series 98-1, 5%, 1/15/08 [EUR] 1,095,000 1,586,512 --------------- 7,699,524 - -------------------------------------------------------------------------------- BELGIUM--1.4% Belgium (Kingdom of) Bonds: 5%, 9/28/11 [EUR] 540,000 806,734 Series 19, 6.50%, 3/31/05 [EUR] 1,180,000 1,620,114 Series 26, 6.25%, 3/28/07 [EUR] 2,170,000 3,184,063 Series 28, 5.75%, 3/28/08 [EUR] 755,000 1,120,134 Series 32, 3.75%, 3/28/09 [EUR] 2,905,000 4,070,238 Series 35, 5.75%, 9/28/10 [EUR] 1,050,000 1,616,175 --------------- 12,417,458 - -------------------------------------------------------------------------------- BRAZIL--2.2% Brazil (Federal Republic of) Bonds: 8.875%, 10/14/19 1,030,000 1,088,195 10.50%, 7/14/14 725,000 860,938 Series 15 yr., 3.125%, 4/15/09 1 13,236 13,170 - -------------------------------------------------------------------------------- Brazil (Federal Republic of) Debt Capitalization Bonds, Series 20 yr., 8%, 4/15/14 7,252,993 7,429,785 - -------------------------------------------------------------------------------- Brazil (Federal Republic of) Nts., 12%, 4/15/10 4,015,000 4,978,600 - -------------------------------------------------------------------------------- Brazil (Federal Republic of) Unsec. Unsub. Bonds: 10%, 8/7/11 760,000 884,640 11%, 8/17/40 1,905,000 2,262,664 Cl. B, 8.875%, 4/15/24 958,000 996,320 --------------- 18,514,312 - -------------------------------------------------------------------------------- BULGARIA--0.2% Bulgaria (Republic of) Bonds: 8.25%, 1/15/15 800,000 1,004,000 8.25%, 1/15/15 7 800,000 1,004,000 --------------- 2,008,000 - -------------------------------------------------------------------------------- COLOMBIA--0.5% Colombia (Republic of) Nts., 11.75%, 3/1/10 [COP] 3,755,000,000 1,640,708 - -------------------------------------------------------------------------------- Colombia (Republic of) Unsec. Unsub. Bonds, 8.375%, 2/15/27 615,000 599,625 - -------------------------------------------------------------------------------- Colombia (Republic of) Unsec. Unsub. Nts., 11.375%, 1/31/08 [EUR] 1,125,000 1,829,100 --------------- 4,069,433 - -------------------------------------------------------------------------------- DENMARK--0.3% Denmark (Kingdom of) Nts., 4%, 8/15/08 [DKK] 12,375,000 2,344,727 - -------------------------------------------------------------------------------- DOMINICAN REPUBLIC--0.1% Dominican Republic Bonds, Series REGS, 9.04%, 1/23/13 720,000 610,200 11 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- ECUADOR--0.2% Ecuador (Republic of) Unsec. Bonds, 8%, 8/15/30 1 $ 1,810,000 $ 1,570,175 - -------------------------------------------------------------------------------- EL SALVADOR--0.1% El Salvador (Republic of) Bonds, 7.625%, 9/21/34 7 590,000 610,650 - -------------------------------------------------------------------------------- FINLAND--0.0% Finland (Republic of) Sr. Unsec. Unsub. Bonds, 2.75%, 7/4/06 [EUR] 220,000 300,721 - -------------------------------------------------------------------------------- FRANCE--2.2% France (Government of) Obligations Assimilables du Tresor Bonds: 5.50%, 10/25/07 [EUR] 1,080,000 1,577,061 5.50%, 10/25/10 [EUR] 6,085,000 9,266,867 5.75%, 10/25/32 [EUR] 3,300,000 5,555,232 - -------------------------------------------------------------------------------- France (Government of) Treasury Nts.: 3 yr., 3.50%, 1/12/05 [EUR] 1,460,000 1,985,308 5 yr., 4.75%, 7/12/07 [EUR] 120,000 171,593 --------------- 18,556,061 - -------------------------------------------------------------------------------- GERMANY--2.6% Germany (Republic of) Bonds: 2%, 6/17/05 [EUR] 2,120,000 2,880,169 5.375%, 1/4/10 [EUR] 1,285,000 1,928,635 Series 01, 5%, 7/4/11 [EUR] 3,685,000 5,494,692 Series 140, 4.50%, 8/17/07 [EUR] 1,395,000 1,983,756 Series 143, 3.50%, 10/10/08 [EUR] 7,470,000 10,374,944 --------------- 22,662,196 - -------------------------------------------------------------------------------- GREECE--1.9% Greece (Republic of) Bonds: 3.50%, 4/18/08 [EUR] 1,055,000 1,462,521 4.60%, 5/20/13 [EUR] 1,545,000 2,234,250 5.35%, 5/18/11 [EUR] 6,735,000 10,152,575 - -------------------------------------------------------------------------------- Greece (Republic of) Sr. Unsub. Bonds, 4.65%, 4/19/07 [EUR] 1,610,000 2,285,355 --------------- 16,134,701 - -------------------------------------------------------------------------------- GUATEMALA--0.0% Guatemala (Republic of) Nts.: 10.25%, 11/8/11 7 250,000 295,938 10.25%, 11/8/11 95,000 112,456 --------------- 408,394 - -------------------------------------------------------------------------------- IRELAND--0.2% Ireland (Republic of) Treasury Bonds, 3.25%, 4/18/09 [EUR] 1,045,000 1,434,620 - -------------------------------------------------------------------------------- ISRAEL--0.1% United States (Government of) Gtd. Israel Aid Bonds, 5.50%, 12/4/23 960,000 1,006,320 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- ITALY--1.7% Italy (Republic of) Treasury Bonds: Buoni del Tesoro Poliennali, 4%, 3/1/05 [EUR] 520,000 $ 708,916 Buoni del Tesoro Poliennali, 4.50%, 3/1/07 [EUR] 1,150,000 1,626,444 Buoni del Tesoro Poliennali, 5%, 10/15/07 [EUR] 5,080,000 7,324,121 Buoni del Tesoro Poliennali, 5%, 2/1/12 [EUR] 1,030,000 1,535,690 Buoni del Tesoro Poliennali, 5.25%, 12/15/05 [EUR] 2,590,000 3,611,989 --------------- 14,807,160 - -------------------------------------------------------------------------------- IVORY COAST--0.0% Ivory Coast (Government of) Past Due Interest Bonds, 3/29/18 2,3,4 [FRF] 2,194,500 76,737 - -------------------------------------------------------------------------------- JAPAN--2.0% Japan (Government of) Bonds, 5 yr., Series 14, 0.40%, 6/20/06 [JPY] 1,719,000,000 16,864,301 - -------------------------------------------------------------------------------- KOREA, REPUBLIC OF SOUTH--0.2% Korea (Republic of) Nts.: 4.25%, 6/1/13 780,000 749,174 8.875%, 4/15/08 1,170,000 1,359,615 --------------- 2,108,789 - -------------------------------------------------------------------------------- MEXICO--0.8% United Mexican States Bonds: 7.50%, 4/8/33 930,000 1,006,725 8.30%, 8/15/31 400,000 469,800 Series MI10, 8%, 12/19/13 [MXN] 9,290,000 745,424 Series M20, 8%, 12/7/23 [MXN] 23,040,000 1,672,890 - -------------------------------------------------------------------------------- United Mexican States Nts., 7.50%, 1/14/12 1,300,000 1,477,450 - -------------------------------------------------------------------------------- United Mexican States Unsec. Unsub. Nts., Series 6 BR, 6.75%, 6/6/06 [JPY] 155,000,000 1,649,078 --------------- 7,021,367 - -------------------------------------------------------------------------------- NEW ZEALAND--0.1% New Zealand (Government of) Bonds, 7%, 7/15/09 12 [NZD] 945,000 708,711 - -------------------------------------------------------------------------------- NIGERIA--0.1% Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20 275,000 258,500 - -------------------------------------------------------------------------------- Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 234,574 203,111 --------------- 461,611 12 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- PANAMA--0.8% Panama (Republic of) Bonds: 7.25%, 3/15/15 $ 3,030,000 $ 3,166,350 8.125%, 4/28/34 805,000 853,300 9.375%, 1/16/23 2,215,000 2,569,400 --------------- 6,589,050 - -------------------------------------------------------------------------------- PERU--0.3% Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 5%, 3/7/17 1 1,760,000 1,698,400 - -------------------------------------------------------------------------------- Peru (Republic of) Sr. Nts., 4.53%, 2/28/16 8 1,464,785 884,525 --------------- 2,582,925 - -------------------------------------------------------------------------------- PHILIPPINES--0.1% Philippines (Republic of) Bonds, 8.375%, 2/15/11 438,000 439,382 - -------------------------------------------------------------------------------- POLAND--1.3% Poland (Republic of) Bonds: Series 0K0805, 5.26%, 8/12/05 8 [PLZ] 17,265,000 5,558,069 Series DS0509, 6%, 5/24/09 [PLZ] 10,840,000 3,604,407 Series DS1013, 5%, 10/24/13 [PLZ] 4,640,000 1,458,191 Series WS0922, 5.75%, 9/23/22 [PLZ] 1,000,000 337,184 --------------- 10,957,851 - -------------------------------------------------------------------------------- PORTUGAL--0.7% Portugal (Republic of) Obrig Do Tes Medio Prazo Nts., 4.875%, 8/17/07 [EUR] 1,620,000 2,324,085 - -------------------------------------------------------------------------------- Portugal (Republic of) Obrig Do Tes Medio Prazo Unsec. Unsub. Nts., 5.85%, 5/20/10 [EUR] 2,450,000 3,771,268 --------------- 6,095,353 - -------------------------------------------------------------------------------- RUSSIA--1.3% Aries Vermoegensverwaltungs GmbH Credit Linked Nts., 9.60%, 10/25/14 1,950,000 2,410,190 - -------------------------------------------------------------------------------- Aries Vermoegensverwaltungs GmbH Unsub. Nts., Series B, 7.75%, 10/25/09 2 [EUR] 700,000 1,084,681 - -------------------------------------------------------------------------------- Ministry Finance of Russia Debs., Series VI, 3%, 5/14/06 2 1,980,000 1,947,934 - -------------------------------------------------------------------------------- Russian Federation Unsec. Unsub. Bonds, 5%, 3/31/30 1,7 3,065,000 3,172,275 - -------------------------------------------------------------------------------- Russian Federation Unsub. Nts., 5%, 3/31/30 1 2,735,875 2,821,303 --------------- 11,436,383 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- SOUTH AFRICA--0.4% South Africa (Republic of) Bonds: Series R157, 13.50%, 9/15/15 [ZAR] 7,300,000 $ 1,790,648 Series R186, 10.50%, 12/21/26 [ZAR] 2,960,000 693,472 Series R203, 8.25%, 9/15/17 [ZAR] 3,000,000 539,828 Series R204, 8%, 12/21/18 [ZAR] 3,175,000 560,505 --------------- 3,584,453 - -------------------------------------------------------------------------------- SPAIN--1.6% Spain (Kingdom of) Bonds: Bonos y Obligacion del Estado, 5.35%, 10/31/11 [EUR] 3,695,000 5,630,267 Bonos y Obligacion del Estado, 5.75%, 7/30/32 [EUR] 2,530,000 4,247,319 - -------------------------------------------------------------------------------- Spain (Kingdom of) Treasury Bills, 2.10%, 2/18/05 8 [EUR] 2,730,000 3,700,725 --------------- 13,578,311 - -------------------------------------------------------------------------------- SWEDEN--0.2% Sweden (Kingdom of) Bonds, Series 1043, 5%, 1/28/09 [SEK] 10,760,000 1,733,975 - -------------------------------------------------------------------------------- THE NETHERLANDS--0.7% Netherlands (Kingdom of the) Bonds: 5%, 7/15/11 [EUR] 1,615,000 2,410,536 5.50%, 1/15/28 [EUR] 2,340,000 3,779,878 --------------- 6,190,414 - -------------------------------------------------------------------------------- TURKEY--0.4% Turkey (Republic of) Nts., 7.25%, 3/15/15 3,105,000 3,205,913 - -------------------------------------------------------------------------------- UNITED KINGDOM--1.9% United Kingdom Treasury Nts., 4%, 3/7/09 [GBP] 8,670,000 16,354,251 - -------------------------------------------------------------------------------- VENEZUELA--0.8% Venezuela (Republic of) Nts.: 3.09%, 4/20/11 1 750,000 682,500 8.50%, 10/8/14 1,285,000 1,365,698 10.75%, 9/13/13 4,280,000 5,120,592 --------------- 7,168,790 --------------- Total Foreign Government Obligations (Cost $227,294,778) 256,220,645 13 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- LOAN PARTICIPATIONS--0.6% - -------------------------------------------------------------------------------- Algeria (Republic of) Loan Participation Nts., 2.183%, 3/4/10 1,2 $ 427,167 $ 420,759 - -------------------------------------------------------------------------------- Deutsche Bank AG: Indonesia (Republic of) Rupiah Loan Participation Nts., 2.636%, 1/25/06 1 1,490,000 1,470,779 - -------------------------------------------------------------------------------- Indonesia (Republic of) Rupiah Loan Participation Nts., 2.636%, 3/21/05 1 1,330,000 1,331,530 OAO Gazprom Loan Participation Nts., 6.50%, 8/4/05 2 1,520,000 1,552,224 --------------- Total Loan Participations (Cost $4,679,244) 4,775,292 - -------------------------------------------------------------------------------- CORPORATE BONDS AND NOTES--28.0% - -------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--8.0% - -------------------------------------------------------------------------------- AUTO COMPONENTS--0.6% ArvinMeritor, Inc., 8.75% Sr. Unsec. Unsub. Nts., 3/1/12 700,000 812,000 - -------------------------------------------------------------------------------- Collins & Aikman Floorcoverings, Inc., 9.75% Sr. Sub. Nts., Series B, 2/15/10 200,000 216,000 - -------------------------------------------------------------------------------- Cooper Standard Automotive Group: 7% Sr. Nts., 12/15/12 7 90,000 91,800 8.375% Sr. Sub. Nts., 12/15/14 7 425,000 426,063 - -------------------------------------------------------------------------------- Dana Corp., 10.125% Nts., 3/15/10 2 200,000 226,716 - -------------------------------------------------------------------------------- Dura Operating Corp.: 9% Sr. Sub. Nts., Series B, 5/1/09 [EUR] 200,000 258,257 9% Sr. Unsec. Sub. Nts., Series D, 5/1/09 500,000 497,500 - -------------------------------------------------------------------------------- Eagle-Picher, Inc., 9.75% Sr. Nts., 9/1/13 300,000 301,500 - -------------------------------------------------------------------------------- Goodyear Tire & Rubber Co. (The), 7.857% Nts., 8/15/11 500,000 510,000 - -------------------------------------------------------------------------------- Metaldyne Corp.: 10% Sr. Nts., 11/1/13 7 200,000 191,000 11% Sr. Sub. Nts., 6/15/12 300,000 250,500 - -------------------------------------------------------------------------------- Stoneridge, Inc., 11.50% Sr. Nts., 5/1/12 500,000 583,750 - -------------------------------------------------------------------------------- Tenneco Automotive, Inc.: 8.625% Sr. Sub. Nts., 11/15/14 7 500,000 522,500 10.25% Sr. Sec. Nts., Series B, 7/15/13 150,000 177,750 - -------------------------------------------------------------------------------- United Components, Inc., 9.375% Sr. Sub. Nts., 6/15/13 200,000 218,000 --------------- 5,283,336 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--2.2% Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 $ 100,000 $ 98,500 - -------------------------------------------------------------------------------- Aztar Corp., 9% Sr. Unsec. Sub. Nts., 8/15/11 850,000 941,375 - -------------------------------------------------------------------------------- Boyd Gaming Corp., 8.75% Sr. Sub. Nts., 4/15/12 300,000 335,250 - -------------------------------------------------------------------------------- Carrols Corp., 9% Sr. Sub. Nts., 1/15/13 7 130,000 135,200 - -------------------------------------------------------------------------------- Domino's, Inc., 8.25% Sr. Unsec. Sub. Nts., 7/1/11 547,000 600,333 - -------------------------------------------------------------------------------- Gaylord Entertainment Co., 8% Sr. Nts., 11/15/13 300,000 325,500 - -------------------------------------------------------------------------------- Hilton Hotels Corp., 7.625% Nts., 12/1/12 400,000 468,482 - -------------------------------------------------------------------------------- Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 325,000 332,313 - -------------------------------------------------------------------------------- Intrawest Corp., 7.50% Sr. Unsec. Nts., 10/15/13 625,000 667,969 - -------------------------------------------------------------------------------- Isle of Capri Casinos, Inc.: 7% Sr. Unsec. Sub. Nts., 3/1/14 400,000 410,000 9% Sr. Sub. Nts., 3/15/12 500,000 553,750 - -------------------------------------------------------------------------------- John Q. Hammons Hotels, Inc., 8.875% Sr. Nts., Series B, 5/15/12 300,000 340,500 - -------------------------------------------------------------------------------- La Quinta Properties, Inc., 7% Sr. Sec. Nts., 8/15/12 250,000 265,625 - -------------------------------------------------------------------------------- Mandalay Resort Group, 10.25% Sr. Unsec. Sub. Nts., Series B, 8/1/07 650,000 737,750 - -------------------------------------------------------------------------------- MGM Mirage, Inc.: 8.375% Sr. Unsec. Sub. Nts., 2/1/11 600,000 679,500 9.75% Sr. Unsec. Sub. Nts., 6/1/07 350,000 390,250 - -------------------------------------------------------------------------------- Mohegan Tribal Gaming Authority: 6.375% Sr. Sub. Nts., 7/15/09 250,000 258,125 8% Sr. Sub. Nts., 4/1/12 200,000 218,000 - -------------------------------------------------------------------------------- NCL Corp., 10.625% Sr. Nts., 7/15/14 7 300,000 301,500 - -------------------------------------------------------------------------------- Park Place Entertainment Corp.: 7.875% Sr. Sub. Nts., 3/15/10 200,000 226,250 9.375% Sr. Unsec. Sub. Nts., 2/15/07 800,000 884,000 - -------------------------------------------------------------------------------- Pinnacle Entertainment, Inc., 8.25% Sr. Unsec. Sub. Nts., 3/15/12 700,000 747,250 - -------------------------------------------------------------------------------- Premier Cruise Ltd., 11% Sr. Nts., 3/15/08 2,3,4 250,000 -- - -------------------------------------------------------------------------------- Royal Caribbean Cruises Ltd., 8.75% Sr. Unsub. Nts., 2/2/11 300,000 355,875 - -------------------------------------------------------------------------------- Six Flags, Inc.: 8.875% Sr. Unsec. Nts., 2/1/10 1,234,000 1,255,595 9.625% Sr. Nts., 6/1/14 19,000 19,190 9.75% Sr. Nts., 4/15/13 100,000 102,000 14 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE Continued Starwood Hotels & Resorts Worldwide, Inc., 7.875% Sr. Nts., 5/1/12 $ 900,000 $ 1,032,750 - -------------------------------------------------------------------------------- Station Casinos, Inc.: 6.50% Sr. Unsec. Sub. Nts., 2/1/14 800,000 826,000 9.875% Sr. Unsec. Sub. Nts., 7/1/10 1,000,000 1,057,500 - -------------------------------------------------------------------------------- Sun International Hotels Ltd., 8.875% Sr. Unsec. Sub. Nts., 8/15/11 700,000 768,250 - -------------------------------------------------------------------------------- Universal City Development Partners Ltd., 11.75% Sr. Nts., 4/1/10 500,000 593,125 - -------------------------------------------------------------------------------- Vail Resorts, Inc., 6.75% Sr. Sub. Nts., 2/15/14 500,000 511,250 - -------------------------------------------------------------------------------- Venetian Casino Resort LLC/ Las Vegas Sands, Inc., 11% Sec. Nts., 6/15/10 400,000 458,500 - -------------------------------------------------------------------------------- Wynn Las Vegas LLC/ Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14 7 1,800,000 1,791,000 --------------- 18,688,457 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES--0.6% Beazer Homes USA, Inc., 8.375% Sr. Nts., 4/15/12 400,000 442,000 - -------------------------------------------------------------------------------- Blount, Inc., 8.875% Sr. Sub. Nts., 8/1/12 350,000 381,500 - -------------------------------------------------------------------------------- D.R. Horton, Inc.: 9.375% Sr. Unsec. Sub. Nts., 3/15/11 400,000 444,000 9.75% Sr. Sub. Nts., 9/15/10 400,000 486,000 - -------------------------------------------------------------------------------- KB Home: 8.625% Sr. Sub. Nts., 12/15/08 250,000 283,750 9.50% Sr. Unsec. Sub. Nts., 2/15/11 400,000 442,000 - -------------------------------------------------------------------------------- Meritage Corp., 9.75% Sr. Unsec. Nts., 6/1/11 350,000 388,500 - -------------------------------------------------------------------------------- Sealy Mattress Co., 8.25% Sr. Sub. Nts., 6/15/14 450,000 479,250 - -------------------------------------------------------------------------------- Standard Pacific Corp., 9.25% Sr. Sub. Nts., 4/15/12 200,000 233,000 - -------------------------------------------------------------------------------- WCI Communities, Inc., 9.125% Sr. Sub. Nts., 5/1/12 300,000 334,500 - -------------------------------------------------------------------------------- William Lyon Homes, Inc., 10.75% Sr. Nts., 4/1/13 400,000 451,500 - -------------------------------------------------------------------------------- Williams Scotsman, Inc., 9.875% Sr. Unsec. Nts., 6/1/07 800,000 804,000 --------------- 5,170,000 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- MEDIA--3.8% Adelphia Communications Corp.: 7.875% Sr. Unsec. Nts., 5/1/09 3,4 $ 350,000 $ 327,250 10.25% Sr. Unsec. Nts., 11/1/06 3,4 400,000 391,000 10.25% Sr. Unsec. Sub. Nts., 6/15/11 3,4 200,000 203,500 10.875% Sr. Unsec. Nts., 10/1/10 3,4 400,000 398,000 - -------------------------------------------------------------------------------- Allbritton Communications Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/12 600,000 624,000 - -------------------------------------------------------------------------------- AMC Entertainment, Inc.: 8% Sr. Unsec. Sub. Nts., 3/1/14 650,000 650,000 9.50% Sr. Unsec. Sub. Nts., 2/1/11 360,000 373,950 - -------------------------------------------------------------------------------- American Media Operations, Inc.: 8.875% Sr. Unsec. Sub. Nts., 1/15/11 150,000 160,313 10.25% Sr. Unsec. Sub. Nts., Series B, 5/1/09 400,000 423,500 - -------------------------------------------------------------------------------- Block Communications, Inc., 9.25% Sr. Sub. Nts., 4/15/09 400,000 438,000 - -------------------------------------------------------------------------------- Carmike Cinemas, Inc., 7.50% Sr. Sub. Nts., 2/15/14 500,000 514,375 - -------------------------------------------------------------------------------- Charter Communications Holdings LLC/ Charter Communications Holdings Capital Corp.: 0%/11.75% Sr. Unsec. Sub. Disc. Nts., 5/15/11 13 925,000 684,500 8.375% Sr. Nts., Second Lien, 4/30/14 7 3,450,000 3,657,000 - -------------------------------------------------------------------------------- Cinemark USA, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/13 300,000 343,875 - -------------------------------------------------------------------------------- Cinemark, Inc., 0%/9.75% Sr. Unsec. Disc. Nts., 3/15/14 13 500,000 380,000 - -------------------------------------------------------------------------------- Corus Entertainment, Inc., 8.75% Sr. Sub. Nts., 3/1/12 300,000 330,750 - -------------------------------------------------------------------------------- CSC Holdings, Inc., 7.625% Sr. Unsec. Unsub. Nts., Series B, 4/1/11 1,100,000 1,190,750 - -------------------------------------------------------------------------------- Dex Media East LLC/ Dex Media East Finance Co., 9.875% Sr. Unsec. Nts., 11/15/09 200,000 228,750 - -------------------------------------------------------------------------------- Dex Media West LLC, 5.875% Sr. Nts., 11/15/11 7 900,000 900,000 - -------------------------------------------------------------------------------- Dex Media West LLC/ Dex Media West Finance Co.: 8.50% Sr. Nts., 8/15/10 300,000 335,250 9.875% Sr. Sub. Nts., 8/15/13 586,000 678,295 - -------------------------------------------------------------------------------- Dex Media, Inc., 8% Unsec. Nts., 11/15/13 1,350,000 1,468,125 - -------------------------------------------------------------------------------- DirecTV Holdings LLC/ DirecTV Financing Co., Inc., 8.375% Sr. Unsec. Nts., 3/15/13 1,800,000 2,027,250 15 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- MEDIA Continued EchoStar DBS Corp.: 6.625% Sr. Nts., 10/1/14 7 $ 800,000 $ 814,000 9.125% Sr. Nts., 1/15/09 1,075,000 1,187,875 - -------------------------------------------------------------------------------- Emmis Operating Co., 6.875% Sr. Unsec. Sub. Nts., 5/15/12 600,000 630,750 - -------------------------------------------------------------------------------- Entravision Communications Corp., 8.125% Sr. Sub. Nts., 3/15/09 400,000 429,000 - -------------------------------------------------------------------------------- Granite Broadcasting Corp., 9.75% Sr. Sec. Nts., 12/1/10 619,000 594,240 - -------------------------------------------------------------------------------- Insight Midwest LP/ Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09 200,000 210,500 - -------------------------------------------------------------------------------- Lin Television Corp., 6.50% Sr. Sub. Nts., 5/15/13 400,000 413,500 - -------------------------------------------------------------------------------- LodgeNet Entertainment Corp., 9.50% Sr. Sub. Debs., 6/15/13 200,000 222,000 - -------------------------------------------------------------------------------- Mediacom LLC/ Mediacom Capital Corp., 9.50% Sr. Unsec. Nts., 1/15/13 769,000 775,729 - -------------------------------------------------------------------------------- MediaNews Group, Inc., 6.375% Sr. Sub. Nts., 4/1/14 800,000 796,000 - -------------------------------------------------------------------------------- News America Holdings, Inc., 8.875% Sr. Debs., 4/26/23 625,000 814,644 - -------------------------------------------------------------------------------- PanAmSat Corp., 9% Sr. Nts., 8/15/14 7 1,000,000 1,121,250 - -------------------------------------------------------------------------------- PRIMEDIA, Inc.: 8% Sr. Nts., 5/15/13 900,000 930,375 8.875% Sr. Unsec. Nts., 5/15/11 19,000 20,188 - -------------------------------------------------------------------------------- R.H. Donnelley Financial Corp. I, 10.875% Sr. Sub. Nts., 12/15/12 7 400,000 477,000 - -------------------------------------------------------------------------------- Radio One, Inc., 8.875% Sr. Unsec. Sub. Nts., Series B, 7/1/11 600,000 656,250 - -------------------------------------------------------------------------------- Rainbow National Services LLC, 8.75% Sr. Nts., 9/1/12 7 800,000 882,000 - -------------------------------------------------------------------------------- Rogers Cable, Inc., 6.75% Sr. Sec. Second Priority Nts., 3/15/15 7 250,000 256,875 - -------------------------------------------------------------------------------- Shaw Communications, Inc., 8.54% Debs., 9/30/27 [CAD] 340,000 283,771 - -------------------------------------------------------------------------------- Sinclair Broadcast Group, Inc.: 8% Sr. Unsec. Sub. Nts., 3/15/12 1,050,000 1,120,875 8.75% Sr. Sub. Nts., 12/15/11 300,000 328,125 - -------------------------------------------------------------------------------- Spanish Broadcasting System, Inc., 9.625% Sr. Unsec. Sub. Nts., 11/1/09 800,000 842,000 - -------------------------------------------------------------------------------- Vertis, Inc., 9.75% Sr. Sec. Nts., 4/1/09 200,000 218,000 - -------------------------------------------------------------------------------- WMG Holdings Corp.: 0%/9.50% Sr. Disc. Nts., 12/15/14 7,13 1,000,000 643,750 6.905% Sr. Nts., 12/15/11 1,7 400,000 405,000 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- MEDIA Continued WRC Media, Inc./ Weekly Reader Corp./ CompassLearning, Inc., 12.75% Sr. Sub. Nts., 11/15/09 $ 500,000 $ 478,125 --------------- 32,280,255 - -------------------------------------------------------------------------------- MULTILINE RETAIL--0.1% Saks, Inc.: 8.25% Sr. Unsec. Nts., 11/15/08 700,000 770,000 9.875% Nts., 10/1/11 200,000 238,000 --------------- 1,008,000 - -------------------------------------------------------------------------------- SPECIALTY RETAIL--0.4% Asbury Automotive Group, Inc., 9% Sr. Sub. Nts., 6/15/12 300,000 316,500 - -------------------------------------------------------------------------------- Atlantic Broadband Finance LLC, 9.375% Sr. Sub. Nts., 1/15/14 7 250,000 243,125 - -------------------------------------------------------------------------------- AutoNation, Inc., 9% Sr. Unsec. Nts., 8/1/08 500,000 573,750 - -------------------------------------------------------------------------------- Boise Cascade LLC/ Boise Cascade Finance Corp., 7.125% Sr. Sub. Nts., 10/15/14 7 450,000 478,125 - -------------------------------------------------------------------------------- Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 400,000 402,000 - -------------------------------------------------------------------------------- Finlay Fine Jewelry Corp., 8.375% Sr. Unsec. Nts., 6/1/12 400,000 434,000 - -------------------------------------------------------------------------------- Hollywood Entertainment Corp., 9.625% Sr. Sub. Nts., 3/15/11 300,000 319,500 - -------------------------------------------------------------------------------- Petco Animal Supplies, Inc., 10.75% Sr. Sub. Nts., 11/1/11 200,000 235,000 - -------------------------------------------------------------------------------- Rent-A-Center, Inc., 7.50% Sr. Unsec. Sub. Nts., Series B, 5/1/10 150,000 156,188 --------------- 3,158,188 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS--0.3% Invista, Inc., 9.25% Sr. Nts., 5/1/12 7 900,000 1,008,000 - -------------------------------------------------------------------------------- Levi Strauss & Co.: 9.75% Sr. Nts., 1/15/15 7 500,000 497,500 12.25% Sr. Nts., 12/15/12 600,000 670,500 - -------------------------------------------------------------------------------- Oxford Industries, Inc., 8.875% Sr. Nts., 6/1/11 250,000 269,688 - -------------------------------------------------------------------------------- Russell Corp., 9.25% Sr. Nts., 5/1/10 200,000 215,500 --------------- 2,661,188 - -------------------------------------------------------------------------------- CONSUMER STAPLES--1.0% - -------------------------------------------------------------------------------- BEVERAGES--0.1% Constellation Brands, Inc., 8.125% Sr. Sub. Nts., 1/15/12 300,000 327,375 16 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING--0.2% Great Atlantic & Pacific Tea Co., Inc. (The), 9.125% Sr. Nts., 12/15/11 $ 419,000 $ 394,908 - -------------------------------------------------------------------------------- Ingles Markets, Inc., 8.875% Sr. Unsec. Sub. Nts., 12/1/11 19,000 20,425 - -------------------------------------------------------------------------------- Jean Coutu Group (PJC), Inc. (The): 7.625% Sr. Nts., 8/1/12 7 250,000 265,625 8.50% Sr. Sub. Nts., 8/1/14 7 600,000 618,000 - -------------------------------------------------------------------------------- Real Time Data Co., 11% Disc. Nts., 5/31/09 2,3,4,14 142,981 -- - -------------------------------------------------------------------------------- Rite Aid Corp.: 8.125% Sr. Sec. Nts., 5/1/10 450,000 478,125 9.50% Sr. Sec. Nts., 2/15/11 200,000 220,500 --------------- 1,997,583 - -------------------------------------------------------------------------------- FOOD PRODUCTS--0.6% American Seafoods Group LLC, 10.125% Sr. Sub. Nts., 4/15/10 200,000 215,000 - -------------------------------------------------------------------------------- Burns Philp Capital Property Ltd., 9.75% Sr. Unsec. Sub. Nts., 7/15/12 450,000 497,250 - -------------------------------------------------------------------------------- Chiquita Brands International, Inc., 7.50% Sr. Nts., 11/1/14 2 150,000 152,625 - -------------------------------------------------------------------------------- Del Monte Corp., 8.625% Sr. Sub. Nts., 12/15/12 400,000 450,000 - -------------------------------------------------------------------------------- Doane Pet Care Co.: 9.75% Sr. Unsec. Sub. Nts., 5/15/07 400,000 396,000 10.75% Sr. Nts., 3/1/10 460,000 494,500 - -------------------------------------------------------------------------------- Dole Food Co., Inc.: 8.625% Sr. Nts., 5/1/09 400,000 437,000 8.875% Sr. Unsec. Nts., 3/15/11 200,000 218,500 - -------------------------------------------------------------------------------- Hines Nurseries, Inc., 10.25% Sr. Unsec. Sub. Nts., 10/1/11 200,000 219,500 - -------------------------------------------------------------------------------- Pinnacle Foods Holding Corp.: 8.25% Sr. Sub. Nts., 12/1/13 7 40,000 38,300 8.25% Sr. Sub. Nts., 12/1/13 7 400,000 383,000 - -------------------------------------------------------------------------------- Smithfield Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 400,000 430,000 - -------------------------------------------------------------------------------- United Biscuits Finance plc, 10.75% Sr. Sub. Nts., 4/15/11 2 [GBP] 400,000 787,160 --------------- 4,718,835 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS--0.1% Church & Dwight Co., Inc., 6% Sr. Sub. Nts., 12/15/12 7 300,000 306,750 - -------------------------------------------------------------------------------- Playtex Products, Inc.: 8% Sr. Sec. Nts., 3/1/11 500,000 548,750 9.375% Sr. Unsec. Sub. Nts., 6/1/11 200,000 214,500 --------------- 1,070,000 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- PERSONAL PRODUCTS--0.0% Elizabeth Arden, Inc., 7.75% Sr. Unsec. Sub. Nts., 1/15/14 $ 175,000 $ 186,375 - -------------------------------------------------------------------------------- ENERGY--3.1% - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--0.3% Dresser, Inc., 9.375% Sr. Sub. Nts., 4/15/11 300,000 330,000 - -------------------------------------------------------------------------------- Hanover Compress Co., 8.625% Sr. Nts., 12/15/10 300,000 329,250 - -------------------------------------------------------------------------------- Hanover Equipment Trust 2001A, 8.50% Sr. Sec. Nts., Series A, 9/1/08 500,000 540,000 - -------------------------------------------------------------------------------- Hornbeck Offshore Services, Inc., 6.125% Sr. Nts., 12/1/14 7 350,000 353,500 - -------------------------------------------------------------------------------- Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 575,000 595,125 - -------------------------------------------------------------------------------- Petroleum Helicopters, Inc., 9.375% Sr. Nts., 5/1/09 200,000 220,000 - -------------------------------------------------------------------------------- Universal Compression, Inc., 7.25% Sr. Unsec. Sub. Nts., 5/15/10 2 400,000 429,000 --------------- 2,796,875 - -------------------------------------------------------------------------------- OIL & GAS--2.8% Chesapeake Energy Corp.: 6.375% Sr. Nts., 6/15/15 7 250,000 258,125 6.875% Sr. Unsec. Nts., 1/15/16 672,000 707,280 - -------------------------------------------------------------------------------- El Paso Corp., 7.875% Sr. Unsec. Nts., 6/15/12 1,519,000 1,596,849 - -------------------------------------------------------------------------------- El Paso Energy Corp., 7.625% Nts., 7/15/11 200,000 208,000 - -------------------------------------------------------------------------------- El Paso Production Holding Co., 7.75% Sr. Unsec. Nts., 6/1/13 1,200,000 1,263,000 - -------------------------------------------------------------------------------- EXCO Resources, Inc., 7.25% Sr. Nts., 1/15/11 400,000 430,000 - -------------------------------------------------------------------------------- Forest Oil Corp., 7.75% Sr. Nts., 5/1/14 300,000 327,750 - -------------------------------------------------------------------------------- Frontier Oil Corp., 6.625% Sr. Nts., 10/1/11 7 200,000 205,000 - -------------------------------------------------------------------------------- Gazprom International SA, 7.201% Sr. Unsec. Bonds, 2/1/20 4,110,000 4,377,376 - -------------------------------------------------------------------------------- MarkWest Energy Partners LP/ MarkWest Energy Finance Corp., 6.875% Sr. Nts., 11/1/14 7 150,000 153,000 - -------------------------------------------------------------------------------- Newfield Exploration Co.: 6.625% Sr. Unsec. Sub. Nts., 9/1/14 7 600,000 637,500 8.375% Sr. Sub. Nts., 8/15/12 500,000 562,500 - -------------------------------------------------------------------------------- Pemex Project Funding Master Trust: 8.50% Unsub. Nts., 2/15/08 420,000 474,600 9.125% Unsec. Unsub. Nts., 10/13/10 610,000 732,915 - -------------------------------------------------------------------------------- Plains Exploration & Production Co., 7.125% Sr. Nts., 6/15/14 300,000 328,500 17 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- OIL & GAS Continued Premcor Refining Group, Inc.: 6.75% Sr. Nts., 5/1/14 $ 350,000 $ 373,625 9.50% Sr. Nts., 2/1/13 900,000 1,048,500 - -------------------------------------------------------------------------------- Range Resources Corp., 7.375% Sr. Sub. Nts., 7/15/13 200,000 215,500 - -------------------------------------------------------------------------------- Southern Natural Gas Co., 8% Sr. Unsub. Nts., 3/1/32 2 300,000 328,875 - -------------------------------------------------------------------------------- Stone Energy Corp., 6.75% Sr. Sub. Nts., 12/15/14 7 170,000 170,425 - -------------------------------------------------------------------------------- Tengizchevroil LLP, 6.124% Nts., 11/15/14 7 1,520,000 1,531,400 - -------------------------------------------------------------------------------- Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 1,800,000 1,993,500 - -------------------------------------------------------------------------------- Tesoro Petroleum Corp.: 8% Sr. Sec. Nts., 4/15/08 1,000,000 1,092,500 9.625% Sr. Sub. Nts., 4/1/12 19,000 21,945 - -------------------------------------------------------------------------------- Whiting Petroleum Corp., 7.25% Sr. Sub. Nts., 5/1/12 400,000 420,000 - -------------------------------------------------------------------------------- Williams Cos., Inc. (The): 7.125% Nts., 9/1/11 800,000 878,000 7.625% Nts., 7/15/19 1,000,000 1,105,000 8.75% Unsec. Nts., 3/15/32 1,400,000 1,615,250 - -------------------------------------------------------------------------------- XTO Energy, Inc., 7.50% Sr. Nts., 4/15/12 500,000 585,943 --------------- 23,642,858 - -------------------------------------------------------------------------------- FINANCIALS--1.2% - -------------------------------------------------------------------------------- CAPITAL MARKETS--0.3% American Color Graphics, Inc., 10% Sr. Sec. Nts., 6/15/10 200,000 169,750 - -------------------------------------------------------------------------------- BCP Caylux Holdings Luxembourg SCA, 9.625% Sr. Sub. Nts., 6/15/14 7 1,250,000 1,415,625 - -------------------------------------------------------------------------------- Berry Plastics Corp., 10.75% Sr. Sub. Nts., 7/15/12 750,000 862,500 --------------- 2,447,875 - -------------------------------------------------------------------------------- COMMERCIAL BANKS--0.1% Bank Plus Corp., 12% Sr. Nts., 7/18/07 7,000 7,525 - -------------------------------------------------------------------------------- BankUnited Capital Trust, 10.25% Capital Securities, 12/31/26 100,000 108,750 - -------------------------------------------------------------------------------- Inter-American Development Bank, 6.26% Nts., 12/8/09 1 [BRR] 920,000 347,252 - -------------------------------------------------------------------------------- Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/10 2,3,4 90,000 563 - -------------------------------------------------------------------------------- Western Financial Bank, 9.625% Unsec. Sub. Debs., 5/15/12 500,000 572,500 --------------- 1,036,590 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES--0.4% Affinia Group, Inc., 9% Sr. Sub. Nts., 11/30/14 7 $ 200,000 $ 209,500 - -------------------------------------------------------------------------------- Global Cash Access LLC/ Global Cash Finance Corp., 8.75% Sr. Sub. Nts., 3/15/12 2 275,000 297,688 - -------------------------------------------------------------------------------- Helix 04 Ltd., 7.96% Sec. Nts., 6/30/09 1 1,000,000 1,003,950 - -------------------------------------------------------------------------------- Pemex Project Funding Master Trust, 7.375% Unsec. Unsub. Nts., 12/15/14 740,000 824,360 - -------------------------------------------------------------------------------- Redwood Capital V Ltd., 6.71% Nts., 1/9/07 1,2 750,000 750,000 - -------------------------------------------------------------------------------- SBS Agro Finance BV, 10.25% Bonds, 7/21/00 2,3,4 339,000 -- - -------------------------------------------------------------------------------- Universal City Florida: 7.20% Sr. Nts., 5/1/10 1,2 130,000 135,850 8.375% Sr. Nts., 5/1/10 2 130,000 135,525 --------------- 3,356,873 - -------------------------------------------------------------------------------- INSURANCE--0.0% Arbor I Ltd., 17.99% Nts., 6/15/06 1,7 500,000 518,756 - -------------------------------------------------------------------------------- REAL ESTATE--0.4% American Casino & Entertainment Properties LLC, 7.85% Sr. Sec. Nts., 2/1/12 500,000 533,750 - -------------------------------------------------------------------------------- Felcor Lodging LP, 9% Sr. Nts., 6/1/11 425,000 483,438 - -------------------------------------------------------------------------------- Foundation RE Ltd., 6.40% Nts., 11/24/08 1,2 500,000 501,363 - -------------------------------------------------------------------------------- HMH Properties, Inc., 7.875% Sr. Nts., Series B, 8/1/08 202,000 208,565 - -------------------------------------------------------------------------------- Host Marriott LP, 9.50% Sr. Nts., 1/15/07 400,000 440,000 - -------------------------------------------------------------------------------- MeriStar Hospitality Corp., 9.125% Sr. Unsec. Nts., 1/15/11 1,019,000 1,105,615 --------------- 3,272,731 - -------------------------------------------------------------------------------- HEALTH CARE--1.9% - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--0.2% Fisher Scientific International, Inc., 8.125% Sr. Sub. Nts., 5/1/12 261,000 291,015 - -------------------------------------------------------------------------------- HMP Equity Holdings Corp., 16.25% Sr. Disc. Nts., 5/15/08 8 900,000 599,625 - -------------------------------------------------------------------------------- Inverness Medical Innovations, Inc., 8.75% Sr. Sub. Nts., 2/15/12 2 350,000 367,500 18 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES Continued Sybron Dental Specialties, Inc., 8.125% Sr. Sub. Nts., 6/15/12 $ 300,000 $ 328,500 - -------------------------------------------------------------------------------- Universal Hospital Services, Inc., 10.125% Sr. Unsec. Nts., 11/1/11 300,000 313,500 --------------- 1,900,140 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--1.6% Alderwoods Group, Inc., 7.75% Sr. Nts., 9/15/12 7 450,000 488,250 - -------------------------------------------------------------------------------- AmeriPath, Inc., 10.50% Sr. Unsec. Sub. Nts., 4/1/13 300,000 320,250 - -------------------------------------------------------------------------------- Beverly Enterprises, Inc., 7.875% Sr. Sub. Nts., 6/15/14 2 300,000 323,250 - -------------------------------------------------------------------------------- Community Health Systems, Inc., 6.50% Sr. Sub. Nts., 12/15/12 7 400,000 405,000 - -------------------------------------------------------------------------------- Extendicare Health Services, Inc.: 6.875% Sr. Sub. Nts., 5/1/14 300,000 307,500 9.50% Sr. Unsec. Sub. Nts., 7/1/10 300,000 337,500 - -------------------------------------------------------------------------------- Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 900,000 978,750 - -------------------------------------------------------------------------------- Fresenius Medical Care Capital Trust III, 7.375% Nts., 2/1/08 [DEM] 25,000 19,068 - -------------------------------------------------------------------------------- Fresenius Medical Care Capital Trust IV, 7.875% Trust Preferred Nts., 6/15/11 600,000 672,000 - -------------------------------------------------------------------------------- Genesis HealthCare Corp., 8% Sr. Sub. Nts., 10/15/13 200,000 218,000 - -------------------------------------------------------------------------------- HCA, Inc.: 6.30% Sr. Unsec. Nts., 10/1/12 1,400,000 1,422,044 6.375% Nts., 1/15/15 1,350,000 1,357,954 - -------------------------------------------------------------------------------- HealthSouth Corp.: 7.625% Nts., 6/1/12 1,000,000 1,010,000 10.75% Sr. Unsec. Sub. Nts., 10/1/08 19,000 20,140 - -------------------------------------------------------------------------------- Magellan Health Services, Inc., 9.375% Sr. Unsec. Nts., Series A, 11/15/08 653,675 714,957 - -------------------------------------------------------------------------------- Medquest, Inc., 11.875% Sr. Unsec. Sub. Nts., Series B, 8/15/12 2 600,000 708,000 - -------------------------------------------------------------------------------- NDCHealth Corp., 10.50% Sr. Unsec. Sub. Nts., 12/1/12 250,000 270,000 - -------------------------------------------------------------------------------- PacifiCare Health Systems, Inc., 10.75% Sr. Unsec. Unsub. Nts., 6/1/09 585,000 678,600 - -------------------------------------------------------------------------------- Quintiles Transnational Corp., 10% Sr. Sub. Nts., 10/1/13 2 300,000 337,500 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES Continued Tenet Healthcare Corp.: 6.375% Sr. Nts., 12/1/11 $ 744,000 $ 693,780 7.375% Nts., 2/1/13 19,000 18,525 9.875% Sr. Nts., 7/1/14 7 950,000 1,040,250 - -------------------------------------------------------------------------------- Triad Hospitals, Inc.: 7% Sr. Nts., 5/15/12 200,000 211,500 7% Sr. Sub. Nts., 11/15/13 500,000 513,750 - -------------------------------------------------------------------------------- US Oncology, Inc.: 9% Sr. Nts., 8/15/12 7 300,000 336,750 10.75% Sr. Sub. Nts., 8/15/14 7 300,000 348,750 --------------- 13,752,068 - -------------------------------------------------------------------------------- PHARMACEUTICALS--0.1% Valeant Pharmaceuticals International, Inc., 7% Sr. Nts., 12/15/11 350,000 365,750 - -------------------------------------------------------------------------------- INDUSTRIALS--2.6% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE--0.4% Alliant Techsystems, Inc., 8.50% Sr. Unsec. Sub. Nts., 5/15/11 300,000 330,000 - -------------------------------------------------------------------------------- BE Aerospace, Inc.: 8.50% Sr. Unsec. Nts., 10/1/10 200,000 221,000 8.875% Sr. Unsec. Sub. Nts., 5/1/11 219,000 229,950 - -------------------------------------------------------------------------------- L-3 Communications Corp.: 5.875% Sr. Sub. Nts., 1/15/15 7 700,000 701,750 7.625% Sr. Sub. Nts., 6/15/12 300,000 330,750 - -------------------------------------------------------------------------------- Rexnord Corp., 10.125% Sr. Unsec. Sub. Nts., 12/15/12 350,000 397,250 - -------------------------------------------------------------------------------- TD Funding Corp., 8.375% Sr. Sub. Nts., 7/15/11 400,000 431,000 - -------------------------------------------------------------------------------- TRW Automotive, Inc.: 9.375% Sr. Nts., 2/15/13 223,000 259,795 11% Sr. Sub. Nts., 2/15/13 194,000 234,740 - -------------------------------------------------------------------------------- Vought Aircraft Industries, Inc., 8% Sr. Nts., 7/15/11 200,000 195,500 --------------- 3,331,735 - -------------------------------------------------------------------------------- AIRLINES--0.1% America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 450,000 451,125 - -------------------------------------------------------------------------------- ATA Holdings Corp., 13% Sr. Unsec. Nts., 2/1/09 3,4 735,000 422,625 --------------- 873,750 - -------------------------------------------------------------------------------- BUILDING PRODUCTS--0.1% Associated Materials, Inc., 9.75% Sr. Sub. Nts., 4/15/12 200,000 224,500 - -------------------------------------------------------------------------------- Goodman Global Holding Co., Inc., 7.875% Sr. Sub. Nts., 12/15/12 7 170,000 169,150 19 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- BUILDING PRODUCTS Continued Jacuzzi Brands, Inc., 9.625% Sr. Sec. Nts., 7/1/10 $ 311,000 $ 346,765 - -------------------------------------------------------------------------------- North America Energy Partners, Inc., 8.75% Sr. Unsec. Nts., 12/1/11 150,000 153,750 --------------- 894,165 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--0.7% Allied Waste North America, Inc.: 7.875% Sr. Nts., 4/15/13 400,000 412,000 8.50% Sr. Sub. Nts., 12/1/08 900,000 958,500 8.875% Sr. Nts., Series B, 4/1/08 800,000 860,000 9.25% Sr. Sec. Debs., Series B, 9/1/12 950,000 1,033,125 - -------------------------------------------------------------------------------- Cenveo Corp., 7.875% Sr. Sub. Nts., 12/1/13 1,000,000 935,000 - -------------------------------------------------------------------------------- Corrections Corp. of America: 7.50% Sr. Nts., 5/1/11 200,000 214,750 9.875% Sr. Nts., 5/1/09 300,000 334,500 - -------------------------------------------------------------------------------- Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 2 150,000 151,875 - -------------------------------------------------------------------------------- Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 384,000 387,360 - -------------------------------------------------------------------------------- Mail-Well I Corp., 9.625% Sr. Nts., 3/15/12 2 400,000 441,000 - -------------------------------------------------------------------------------- Protection One, Inc./ Protection One Alarm Monitoring, Inc., 7.375% Sr. Unsec. Nts., 8/15/05 400,000 406,000 - -------------------------------------------------------------------------------- Synagro Technologies, Inc., 9.50% Sr. Sub. Nts., 4/1/09 200,000 219,000 --------------- 6,353,110 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING--0.1% Integrated Electrical Services, Inc., 9.375% Sr. Sub. Nts., Series C, 2/1/09 405,000 382,725 - -------------------------------------------------------------------------------- URS Corp.: 11.50% Sr. Unsec. Nts., 9/15/09 97,000 112,035 12.25% Sr. Sub. Nts., Series B, 5/1/09 2 19,000 20,330 --------------- 515,090 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--0.2% Belden & Blake Corp., 8.75% Sr. Sec. Nts., 7/15/12 2 325,000 331,500 - -------------------------------------------------------------------------------- Dayton Superior Corp., 13% Sr. Unsec. Sub. Nts., 6/15/09 200,000 209,000 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT Continued General Cable Corp., 9.50% Sr. Nts., 11/15/10 $ 200,000 $ 227,000 - -------------------------------------------------------------------------------- Tennessee Gas Pipeline Co., 7% Sr. Unsec. Debs., 10/15/28 500,000 503,750 --------------- 1,271,250 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--0.0% Great Lakes Dredge & Dock Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/13 120,000 109,800 - -------------------------------------------------------------------------------- MACHINERY--0.5% AGCO Corp., 9.50% Sr. Unsec. Nts., 5/1/08 800,000 856,000 - -------------------------------------------------------------------------------- Douglas Dynamics LLC, 7.75% Sr. Nts., 1/15/12 7 300,000 305,625 - -------------------------------------------------------------------------------- Dresser-Rand Group, Inc., 7.375% Sr. Sub. Nts., 11/1/14 7 100,000 102,500 - -------------------------------------------------------------------------------- Manitowoc Co., Inc. (The), 10.50% Sr. Sub. Nts., 8/1/12 500,000 577,500 - -------------------------------------------------------------------------------- Milacron Escrow Corp., 11.50% Sr. Sec. Nts., 5/15/11 2 600,000 639,000 - -------------------------------------------------------------------------------- Navistar International Corp., 7.50% Sr. Nts., 6/15/11 400,000 431,000 - -------------------------------------------------------------------------------- NMHG Holding Co., 10% Sr. Nts., 5/15/09 300,000 333,000 - -------------------------------------------------------------------------------- SPX Corp., 7.50% Sr. Nts., 1/1/13 600,000 654,000 - -------------------------------------------------------------------------------- Terex Corp., 9.25% Sr. Unsec. Sub. Nts., 7/15/11 400,000 451,000 - -------------------------------------------------------------------------------- Trinity Industries, Inc., 6.50% Sr. Nts., 3/15/14 300,000 301,500 --------------- 4,651,125 - -------------------------------------------------------------------------------- MARINE--0.1% CP Ships Ltd., 10.375% Sr. Nts., 7/15/12 600,000 695,250 - -------------------------------------------------------------------------------- Millenium Seacarriers, Inc., 12% Sr. Sec. Nts., 7/15/05 2,3,4 250,000 6,025 - -------------------------------------------------------------------------------- Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07 2,3,4 175,000 132,344 --------------- 833,619 - -------------------------------------------------------------------------------- ROAD & RAIL--0.2% Kansas City Southern Railway Co. (The), 7.50% Sr. Nts., 6/15/09 400,000 422,000 - -------------------------------------------------------------------------------- Stena AB: 7% Sr. Nts., 12/1/16 7 800,000 796,000 7.50% Sr. Unsec. Nts., 11/1/13 387,000 407,318 9.625% Sr. Nts., 12/1/12 250,000 283,750 --------------- 1,909,068 20 | OPPENHEIMER STRATEGIC BOND FUND/ VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS--0.1% United Rentals, Inc., 7% Sr. Sub. Nts., 2/15/14 $ 900,000 $ 846,000 - -------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE--0.1% Horizon Lines LLC, 9% Nts., 11/1/12 7 300,000 324,000 - -------------------------------------------------------------------------------- Worldspan LP/ Worldspan Financial Corp., 9.625% Sr. Nts., 6/15/11 400,000 400,000 --------------- 724,000 - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--0.9% - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--0.1% Lucent Technologies, Inc., 6.45% Unsec. Debs., 3/15/29 500,000 455,000 - -------------------------------------------------------------------------------- Orion Network Systems, Inc., 12.50% Sr. Unsub. Disc. Nts., 1/15/07 2,3,4 675,000 354,375 --------------- 809,375 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS--0.0% Seagate Technology Hdd Holdings, 8% Sr. Nts., 5/15/09 200,000 217,000 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.3% Flextronics International Ltd., 6.25% Sr. Sub. Nts., 11/15/14 7 1,100,000 1,094,500 - -------------------------------------------------------------------------------- Ingram Micro, Inc., 9.875% Sr. Unsec. Sub. Nts., 8/15/08 700,000 764,750 - -------------------------------------------------------------------------------- LCE Acquisition Corp., 9% Sr. Sub. Nts., 8/1/14 7 425,000 462,188 - -------------------------------------------------------------------------------- Sensus Metering System, Inc., 8.625% Sr. Unsec. Sub. Nts., 12/15/13 450,000 463,500 --------------- 2,784,938 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--0.0% Exodus Communications, Inc., 10.75% Sr. Nts., 12/15/09 2,3,4 [EUR] 338,620 4,603 - -------------------------------------------------------------------------------- Globix Corp., 11% Sr. Nts., 5/1/08 14 42,888 39,671 - -------------------------------------------------------------------------------- NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10 2,3,4 200,173 -- - -------------------------------------------------------------------------------- PSINet, Inc., 10.50% Sr. Unsec. Nts., 12/1/06 2,3,4 [EUR] 100,000 5,437 --------------- 49,711 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- IT SERVICES--0.1% Iron Mountain, Inc., 7.75% Sr. Sub. Nts., 1/15/15 $ 400,000 $ 408,000 - -------------------------------------------------------------------------------- Titan Corp. (The), 8% Sr. Sub. Nts., 5/15/11 100,000 107,000 --------------- 515,000 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.4% AMI Semiconductor, Inc., 10.75% Sr. Unsec. Sub. Nts., 2/1/13 389,000 459,020 - -------------------------------------------------------------------------------- Amkor Technology, Inc.: 7.75% Sr. Nts., 5/15/13 200,000 189,000 9.25% Sr. Unsec. Sub. Nts., 2/15/08 250,000 256,875 - -------------------------------------------------------------------------------- Freescale Semiconductor, Inc., 7.125% Sr. Unsec. Nts., 7/15/14 600,000 654,000 - -------------------------------------------------------------------------------- Huntsman International LLC, 7.375% Sr. Sub. Nts., 1/1/15 7 1,100,000 1,108,250 - -------------------------------------------------------------------------------- MagnaChip Semiconductor Ltd., 8% Sr. Sub. Nts., 12/15/14 7 87,000 91,133 - -------------------------------------------------------------------------------- Micron Technology, Inc., 6.50% Sub. Nts., 9/30/05 1,000,000 995,000 --------------- 3,753,278 - -------------------------------------------------------------------------------- MATERIALS--4.1% - -------------------------------------------------------------------------------- CHEMICALS--1.3% Compass Minerals Group, Inc., 10% Sr. Sub. Nts., 8/15/11 450,000 508,500 - -------------------------------------------------------------------------------- Crompton Corp., 9.875% Sr. Nts., 8/1/12 7 350,000 402,500 - -------------------------------------------------------------------------------- Equistar Chemicals LP/ Equistar Funding Corp.: 8.75% Sr. Unsec. Nts., 2/15/09 400,000 450,000 10.125% Sr. Unsec. Nts., 9/1/08 19,000 21,993 10.625% Sr. Unsec. Nts., 5/1/11 900,000 1,048,500 - -------------------------------------------------------------------------------- Huntsman Co. LLC: 11.625% Sr. Unsec. Nts., 10/15/10 19,000 22,563 11.75% Sr. Nts., 7/15/12 7 700,000 831,250 - -------------------------------------------------------------------------------- Huntsman Corp./ ICI Chemical Co. plc: 13.09% Sr. Unsec. Disc. Nts., 12/31/09 8 600,000 339,000 10.125% Sr. Unsec. Sub. Nts., 7/1/09 [EUR] 124,000 177,396 10.125% Sr. Unsec. Sub. Nts., 7/1/09 853,000 902,048 - -------------------------------------------------------------------------------- Huntsman International LLC, 9.875% Sr. Nts., 3/1/09 850,000 937,125 - -------------------------------------------------------------------------------- IMC Global, Inc., 10.875% Sr. Unsec. Nts., 8/1/13 2 19,000 23,845 - -------------------------------------------------------------------------------- Innophos, Inc., 8.875% Sr. Sub. Nts., 8/15/14 2 400,000 434,000 21 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- CHEMICALS Continued ISP Holdings, Inc., 10.625% Sr. Sec. Nts., 12/15/09 $ 200,000 $ 222,500 - -------------------------------------------------------------------------------- KI Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 11/15/14 7,13 350,000 225,750 - -------------------------------------------------------------------------------- Lyondell Chemical Co.: 9.50% Sec. Nts., 12/15/08 19,000 20,710 9.625% Sr. Sec. Nts., Series A, 5/1/07 200,000 221,000 9.875% Sec. Nts., Series B, 5/1/07 980,000 1,031,450 - -------------------------------------------------------------------------------- Millennium America, Inc., 9.25% Sr. Unsec. Sub. Nts., 6/15/08 100,000 114,250 - -------------------------------------------------------------------------------- PCI Chemicals Canada, 10% Sr. Sec. Nts., 12/31/08 113,061 120,410 - -------------------------------------------------------------------------------- Pioneer Cos., Inc., 6.05% Sr. Sec. Nts., 12/31/06 1 35,804 37,773 - -------------------------------------------------------------------------------- PolyOne Corp.: 8.875% Sr. Unsec. Nts., 5/1/12 1,200,000 1,311,000 10.625% Sr. Unsec. Nts., 5/15/10 19,000 21,470 - -------------------------------------------------------------------------------- Resolution Performance Products LLC: 8% Sr. Sec. Nts., 12/15/09 250,000 270,000 13.50% Sr. Unsec. Sub. Nts., 11/15/10 100,000 109,250 - -------------------------------------------------------------------------------- Rhodia SA, 10.25% Sr. Unsec. Nts., 6/1/10 550,000 621,500 - -------------------------------------------------------------------------------- Rockwood Specialties Group, Inc., 7.50% Sr. Sub. Nts., 11/15/14 7 200,000 208,500 - -------------------------------------------------------------------------------- Sterling Chemicals, Inc., 10% Sr. Sec. Nts., 12/19/07 14 170,473 171,325 - -------------------------------------------------------------------------------- Westlake Chemical Corp., 8.75% Sr. Nts., 7/15/11 260,000 295,100 --------------- 11,100,708 - -------------------------------------------------------------------------------- CONSTRUCTION MATERIALS--0.0% Texas Industries, Inc., 10.25% Sr. Unsec. Nts., 6/15/11 400,000 470,000 - -------------------------------------------------------------------------------- CONTAINERS & PACKAGING--1.1% Crown Euro Holdings SA: 9.50% Sr. Sec. Nts., 3/1/11 500,000 572,500 10.875% Sr. Sec. Nts., 3/1/13 200,000 237,500 - -------------------------------------------------------------------------------- Graham Packaging Co., Inc.: 8.50% Sr. Nts., 10/15/12 7 200,000 211,000 9.875% Sub. Nts., 10/15/14 7 300,000 321,750 - -------------------------------------------------------------------------------- Graphic Packaging International Corp.: 8.50% Sr. Nts., 8/15/11 500,000 548,750 9.50% Sr. Sub. Nts., 8/15/13 350,000 399,875 - -------------------------------------------------------------------------------- Jefferson Smurfit Corp.: 7.50% Sr. Unsec. Unsub. Nts., 6/1/13 300,000 321,750 8.25% Sr. Unsec. Nts., 10/1/12 250,000 273,750 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- CONTAINERS & PACKAGING Continued MDP Acquisitions plc, 9.625% Sr. Nts., 10/1/12 $ 400,000 $ 448,000 - -------------------------------------------------------------------------------- Owens-Brockway Glass Container, Inc.: 7.75% Sr. Sec. Nts., 5/15/11 450,000 489,375 8.25% Sr. Unsec. Nts., 5/15/13 419,000 462,995 8.75% Sr. Sec. Nts., 11/15/12 1,000,000 1,132,500 8.875% Sr. Sec. Nts., 2/15/09 200,000 218,250 - -------------------------------------------------------------------------------- Pliant Corp., 0%/11.125% Sr. Sec. Disc. Nts., 6/15/09 13 400,000 371,500 - -------------------------------------------------------------------------------- Solo Cup Co., 8.50% Sr. Sub. Nts., 2/15/14 500,000 522,500 - -------------------------------------------------------------------------------- Stone Container Corp.: 8.375% Sr. Nts., 7/1/12 850,000 930,750 9.25% Sr. Unsec. Nts., 2/1/08 200,000 222,000 9.75% Sr. Unsec. Nts., 2/1/11 600,000 660,000 - -------------------------------------------------------------------------------- Stone Container Finance Co. of Canada II, 7.375% Sr. Unsec. Nts., 7/15/14 300,000 321,000 - -------------------------------------------------------------------------------- TriMas Corp., 9.875% Sr. Unsec. Sub. Nts., 6/15/12 2 500,000 532,500 --------------- 9,198,245 - -------------------------------------------------------------------------------- METALS & MINING--1.1% AK Steel Corp.: 7.75% Sr. Unsec. Nts., 6/15/12 219,000 226,665 7.875% Sr. Unsec. Nts., 2/15/09 500,000 511,875 - -------------------------------------------------------------------------------- Arch Western Finance LLC, 6.75% Sr. Nts., 7/1/13 400,000 415,000 - -------------------------------------------------------------------------------- Asia Aluminum Holdings Ltd., 8% Sr. Sec. Nts., 12/23/11 2 925,000 938,875 - -------------------------------------------------------------------------------- California Steel Industries, Inc., 6.125% Sr. Nts., 3/15/14 400,000 399,000 - -------------------------------------------------------------------------------- Century Aluminum Co., 7.50% Sr. Nts., 8/15/14 7 600,000 642,000 - -------------------------------------------------------------------------------- Foundation PA Coal Co., 7.25% Sr. Nts., 8/1/14 7 250,000 267,500 - -------------------------------------------------------------------------------- IMCO Recycling, Inc., 10.375% Sr. Sec. Nts., 10/15/10 300,000 342,000 - -------------------------------------------------------------------------------- International Steel Group, Inc., 6.50% Sr. Nts., 4/15/14 200,000 215,500 - -------------------------------------------------------------------------------- International Utility Structures, Inc., 13% Unsec. Sub. Nts., 2/1/08 2,3,4 71,000 -- - -------------------------------------------------------------------------------- Ispat Inland ULC, 9.75% Sr. Sec. Nts., 4/1/14 585,000 725,400 - -------------------------------------------------------------------------------- Jorgensen (Earle M.) Co., 9.75% Sr. Sec. Nts., 6/1/12 500,000 565,000 22 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- METALS & MINING Continued Kaiser Aluminum & Chemical Corp., 10.875% Sr. Nts., Series B, 10/15/06 3,4 $ 500,000 $ 443,750 - -------------------------------------------------------------------------------- Koppers Industry, Inc., 9.875% Sr. Sec. Nts., 10/15/13 300,000 343,500 - -------------------------------------------------------------------------------- Massey Energy Co., 6.625% Sr. Nts., 11/15/10 200,000 210,000 - -------------------------------------------------------------------------------- Metallurg, Inc., 11% Sr. Nts., 12/1/07 500,000 437,500 - -------------------------------------------------------------------------------- Oregon Steel Mills, Inc., 10% Sr. Nts., 7/15/09 400,000 447,000 - -------------------------------------------------------------------------------- Peabody Energy Corp., 6.875% Sr. Unsec. Nts., Series B, 3/15/13 400,000 435,000 - -------------------------------------------------------------------------------- Steel Dynamics, Inc., 9.50% Sr. Nts., 3/15/09 200,000 220,000 - -------------------------------------------------------------------------------- UCAR Finance, Inc., 10.25% Sr. Nts., 2/15/12 2 300,000 344,250 - -------------------------------------------------------------------------------- United States Steel Corp.: 9.75% Sr. Nts., 5/15/10 336,000 384,720 10.75% Sr. Nts., 8/1/08 519,000 613,718 --------------- 9,128,253 - -------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS--0.6% Abitibi-Consolidated, Inc., 8.55% Nts., 8/1/10 200,000 217,750 - -------------------------------------------------------------------------------- Appleton Papers, Inc., 8.125% Sr. Nts., 6/15/11 300,000 324,750 - -------------------------------------------------------------------------------- Buckeye Technologies, Inc., 8.50% Sr. Nts., 10/1/13 100,000 109,000 - -------------------------------------------------------------------------------- Fort James Corp., 6.875% Sr. Nts., 9/15/07 500,000 533,750 - -------------------------------------------------------------------------------- Georgia-Pacific Corp.: 8.125% Sr. Unsec. Nts., 5/15/11 1,050,000 1,212,750 9.375% Sr. Unsec. Nts., 2/1/13 800,000 936,000 - -------------------------------------------------------------------------------- Inland Fiber Group LLC, 9.625% Sr. Unsec. Nts., 11/15/07 2,3,4 300,000 136,500 - -------------------------------------------------------------------------------- Norske Skog Canada Ltd., 7.375% Sr. Unsec. Nts., 3/1/14 300,000 314,250 - -------------------------------------------------------------------------------- Riverside Forest Products Ltd., 7.875% Sr. Unsec. Sub. Nts., 3/1/14 300,000 331,500 - -------------------------------------------------------------------------------- Tekni-Plex, Inc.: 8.75% Sr. Sec. Nts., 11/15/13 7 669,000 669,000 12.75% Sr. Unsec. Sub. Nts., Series B, 6/15/10 200,000 191,000 - -------------------------------------------------------------------------------- Tembec Industries, Inc., 8.50% Sr. Unsec. Nts., 2/1/11 19,000 19,190 - -------------------------------------------------------------------------------- Western Forest Products, Inc., 15% Sec. Nts., 7/28/09 7,14 187,000 211,778 --------------- 5,207,218 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--3.2% - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--1.3% American Tower Corp.: 7.125% Sr. Unsec. Nts., 10/15/12 7 $ 250,000 $ 256,875 9.375% Sr. Nts., 2/1/09 5 133,000 141,313 - -------------------------------------------------------------------------------- Citizens Communications Co., 6.25% Sr. Nts., 1/15/13 700,000 708,750 - -------------------------------------------------------------------------------- Crown Castle International Corp., 7.50% Sr. Nts., 12/1/13 400,000 432,000 - -------------------------------------------------------------------------------- MCI, Inc.: 6.908% Sr. Unsec. Nts., 5/1/07 1 468,000 480,285 7.688% Sr. Unsec. Nts., 5/1/09 1 1,150,000 1,193,125 - -------------------------------------------------------------------------------- PSINet, Inc., 11% Sr. Nts., 8/1/09 2,3,4 265,814 3,987 - -------------------------------------------------------------------------------- Qwest Capital Funding, Inc., 7.90% Unsec. Nts., 8/15/10 819,000 831,285 - -------------------------------------------------------------------------------- Qwest Communications International, Inc., 7.25% Sr. Nts., 2/15/11 7 300,000 309,000 - -------------------------------------------------------------------------------- Qwest Corp., 9.125% Nts., 3/15/12 7 800,000 928,000 - -------------------------------------------------------------------------------- Qwest Services Corp.: 14% Nts., 12/15/10 1,7 2,700,000 3,260,250 14.50% Nts., 12/15/14 7 1,000,000 1,270,000 - -------------------------------------------------------------------------------- Teligent, Inc., 11.50% Sr. Nts., 12/1/07 2,3,4 500,000 -- - -------------------------------------------------------------------------------- Telus Corp., 7.50% Nts., 6/1/07 790,000 858,810 - -------------------------------------------------------------------------------- Time Warner Telecom LLC/ Time Warner Telecom, Inc., 9.75% Sr. Nts., 7/15/08 300,000 305,250 - -------------------------------------------------------------------------------- Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10 2,3,4 250,000 -- --------------- 10,978,930 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--1.9% Alamosa Delaware, Inc.: 8.50% Sr. Nts., 1/31/12 400,000 439,000 11% Sr. Unsec. Nts., 7/31/10 19,000 22,468 12.50% Sr. Unsec. Nts., 2/1/11 50,000 56,750 - -------------------------------------------------------------------------------- American Cellular Corp., 10% Sr. Nts., Series B, 8/1/11 575,000 495,938 - -------------------------------------------------------------------------------- American Tower Corp., 7.50% Sr. Nts., 5/1/12 400,000 422,000 - -------------------------------------------------------------------------------- American Tower Escrow Corp., 12.25% Sr. Sub. Disc. Nts., 8/1/08 8 800,000 602,000 - -------------------------------------------------------------------------------- AT&T Corp.: 9.05% Sr. Unsec. Nts., 11/15/11 1 1,000,000 1,156,250 9.75% Sr. Nts., 11/15/31 1 500,000 599,375 - -------------------------------------------------------------------------------- CellNet Data Systems, Inc., Sr. Unsec. Disc. Nts., 10/1/07 2,3,4 400,000 -- 23 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES Continued Centennial Cellular Operating Co. LLC/Centennial Communications Corp., 10.125% Sr. Nts., 6/15/13 $ 1,050,000 $ 1,183,875 - -------------------------------------------------------------------------------- Crown Castle International Corp., 10.75% Sr. Nts., 8/1/11 1,000,000 1,090,000 - -------------------------------------------------------------------------------- Dobson Cellular Systems, 8.375% Sec. Nts., 11/1/11 7 130,000 134,875 - -------------------------------------------------------------------------------- Dobson Communications Corp.: 8.875% Sr. Nts., 10/1/13 219,000 154,943 10.875% Sr. Unsec. Nts., 7/1/10 600,000 468,000 - -------------------------------------------------------------------------------- IWO Escrow Co., Sr. Sec. Nts., 1/15/12 1,5,7 110,000 111,375 - -------------------------------------------------------------------------------- Nextel Communications, Inc., 7.375% Sr. Nts., 8/1/15 3,080,000 3,403,400 - -------------------------------------------------------------------------------- Nextel Partners, Inc., 12.50% Sr. Nts., 11/15/09 342,000 389,025 - -------------------------------------------------------------------------------- Rogers Wireless Communications, Inc.: 7.50% Sr. Sec. Nts., 3/15/15 7 450,000 477,000 8% Sr. Sub. Nts., 12/15/12 7 400,000 425,000 - -------------------------------------------------------------------------------- Rural Cellular Corp.: 8.25% Sr. Sec. Nts., 3/15/12 275,000 292,188 9.625% Sr. Sub. Nts., Series B, 5/15/08 500,000 477,500 9.75% Sr. Sub. Nts., 1/15/10 519,000 472,290 9.875% Sr. Nts., 2/1/10 300,000 306,750 - -------------------------------------------------------------------------------- SBA Communications Corp., 8.50% Sr. Nts., 12/1/12 7 550,000 563,750 - -------------------------------------------------------------------------------- SBA Telecommunications, Inc./ SBA Communications Corp., 0%/9.75% Sr. Disc. Nts., 12/15/11 13 1,169,000 990,728 - -------------------------------------------------------------------------------- Triton PCS, Inc., 8.50% Sr. Unsec. Nts., 6/1/13 550,000 533,500 - -------------------------------------------------------------------------------- UbiquiTel Operating Co., 9.875% Sr. Nts., 3/1/11 600,000 676,500 - -------------------------------------------------------------------------------- US Unwired, Inc., 10% Sr. Sec. Nts., 6/15/12 250,000 283,125 - -------------------------------------------------------------------------------- Western Wireless Corp., 9.25% Sr. Unsec. Nts., 7/15/13 469,000 512,383 --------------- 16,739,988 - -------------------------------------------------------------------------------- UTILITIES--2.0% - -------------------------------------------------------------------------------- ELECTRIC UTILITIES--1.3% AES Corp. (The), 8.75% Sr. Sec. Nts., 5/15/13 7 700,000 798,875 - -------------------------------------------------------------------------------- Caithness Coso Funding Corp., 9.05% Sr. Sec. Nts., Series B, 12/15/09 293,438 324,249 - -------------------------------------------------------------------------------- Calpine Corp., 7.625% Sr. Nts., 4/15/06 200,000 197,500 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- ELECTRIC UTILITIES Continued CenterPoint Energy, Inc., 7.25% Sr. Nts., Series B, 9/1/10 $ 200,000 $ 223,330 - -------------------------------------------------------------------------------- CITGO Trustees Cayman Ltd., 8.50% Nts., 12/21/14 2 610,000 611,525 - -------------------------------------------------------------------------------- CMS Energy Corp.: 7.50% Sr. Nts., 1/15/09 19,000 20,330 7.75% Sr. Nts., 8/1/10 200,000 219,750 8.50% Sr. Nts., 4/15/11 250,000 285,313 9.875% Sr. Unsec. Nts., 10/15/07 900,000 1,010,250 - -------------------------------------------------------------------------------- CMS Energy X-TRAS Pass-Through Trust I, 7% Sr. Unsec. Pass-Through Certificates, 1/15/05 300,000 300,000 - -------------------------------------------------------------------------------- Funding Corp./ Beaver Valley Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 199,000 235,818 - -------------------------------------------------------------------------------- Midwest Generation LLC, 8.75% Sr. Sec. Nts., 5/1/34 1,850,000 2,109,000 - -------------------------------------------------------------------------------- Mirant Americas Generation LLC, 7.625% Sr. Unsec. Nts., 5/1/06 3,4 200,000 216,000 - -------------------------------------------------------------------------------- MSW Energy Holdings II LLC/ MSW Energy Finance Co. II, Inc., 7.375% Sr. Sec. Nts., Series B, 9/1/10 350,000 369,250 - -------------------------------------------------------------------------------- MSW Energy Holdings LLC/ MSW Energy Finance Co., Inc., 8.50% Sr. Sec. Nts., 9/1/10 200,000 220,000 - -------------------------------------------------------------------------------- NRG Energy, Inc., 8% Sr. Sec. Nts., 12/15/13 7 1,100,000 1,204,500 - -------------------------------------------------------------------------------- Reliant Energy, Inc., 6.75% Sr. Sec. Nts., 12/15/14 400,000 399,500 - -------------------------------------------------------------------------------- Reliant Resources, Inc.: 9.25% Sr. Sec. Nts., 7/15/10 669,000 749,280 9.50% Sr. Sec. Nts., 7/15/13 900,000 1,027,125 - -------------------------------------------------------------------------------- Teco Energy, Inc., 7.20% Unsec. Unsub. Nts., 5/1/11 600,000 660,000 - -------------------------------------------------------------------------------- Texas Genco LLC, 6.875% Sr. Nts., 12/15/14 7 550,000 571,313 --------------- 11,752,908 - -------------------------------------------------------------------------------- GAS UTILITIES--0.1% AmeriGas Partners LP/ AmeriGas Eagle Finance Corp., 8.875% Sr. Unsec. Nts., Series B, 5/20/11 500,000 547,500 - -------------------------------------------------------------------------------- SEMCO Energy, Inc., 7.125% Sr. Nts., 5/15/08 150,000 161,291 --------------- 708,791 24 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- MULTI-UTILITIES & UNREGULATED POWER--0.6% AES Red Oak LLC, 8.54% Sr. Sec. Bonds, Series A, 11/30/19 $ 562,854 $ 634,617 - -------------------------------------------------------------------------------- Consumers Energy Co., 7.375% Nts., 9/15/23 250,000 258,610 - -------------------------------------------------------------------------------- Dynegy Holdings, Inc.: 6.875% Sr. Unsec. Unsub. Nts., 4/1/11 850,000 822,375 8.75% Sr. Nts., 2/15/12 1,669,000 1,756,623 10.125% Sr. Sec. Nts., 7/15/13 7 800,000 920,000 - -------------------------------------------------------------------------------- Mirant Mid-Atlantic LLC, 8.625% Sec. Pass-Through Certificates, Series A, 6/30/12 429,280 476,770 - -------------------------------------------------------------------------------- NorthWestern Corp., 5.875% Sr. Sec. Nts., 11/1/14 7 90,000 92,517 --------------- 4,961,512 --------------- Total Corporate Bonds and Notes (Cost $228,184,438) 240,328,675 SHARES - -------------------------------------------------------------------------------- PREFERRED STOCKS--0.3% - -------------------------------------------------------------------------------- AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg. 2,4,14 4,253 -- - -------------------------------------------------------------------------------- Doane Pet Care Co., 14.25% Jr. Sub. Exchange Debs., Non-Vtg. 2,4 5,000 261,250 - -------------------------------------------------------------------------------- Dobson Communications Corp., 6% Cv., Series F (converts into Dobson Communications Corp., Cl. A common stock), Non-Vtg. 7 550 38,549 - -------------------------------------------------------------------------------- e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg. 2,4,14 216 22 - -------------------------------------------------------------------------------- Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg. 2,4 5,000 436,250 - -------------------------------------------------------------------------------- ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg. 2,4,14 151 -- - -------------------------------------------------------------------------------- Paxson Communications Corp.: 14.25% Cum. Jr. Exchangeable, Non-Vtg. 2,14 43 317,125 14.25% Cum. Jr. Exchangeable, Non-Vtg. 2,4,14 1 5,790 - -------------------------------------------------------------------------------- Pennsylvania Real Estate Investment Trust, 11% 2,000 121,000 - -------------------------------------------------------------------------------- PTV, Inc., 10% Cum., Series A, Non-Vtg 7 24 - -------------------------------------------------------------------------------- Rural Cellular Corp., 11.375% Cum., Series B, Non-Vtg. 2,4,14 630 489,825 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- PREFERRED STOCKS Continued Sovereign Real Estate Investment Trust, 12% Non-Cum., Series A 2 4,600 $ 698,050 --------------- Total Preferred Stocks (Cost $2,471,559) 2,367,885 - -------------------------------------------------------------------------------- COMMON STOCKS--2.8% - -------------------------------------------------------------------------------- AboveNet, Inc. 4 72 2,304 - -------------------------------------------------------------------------------- ACE Ltd. 4,100 175,275 - -------------------------------------------------------------------------------- Aegis Group plc 84,740 175,708 - -------------------------------------------------------------------------------- Aetna, Inc. 1,400 174,650 - -------------------------------------------------------------------------------- All Nippon Airways Co. Ltd. 48,000 167,229 - -------------------------------------------------------------------------------- Allstate Corp. 3,300 170,676 - -------------------------------------------------------------------------------- Anadarko Petroleum Corp. 2,510 162,673 - -------------------------------------------------------------------------------- Apache Corp. 3,300 166,881 - -------------------------------------------------------------------------------- Apple Computer, Inc. 4 2,700 173,880 - -------------------------------------------------------------------------------- Arriva plc 17,920 185,785 - -------------------------------------------------------------------------------- Ashland, Inc. 2,900 169,302 - -------------------------------------------------------------------------------- Autodesk, Inc. 5,000 189,750 - -------------------------------------------------------------------------------- BAE Systems plc 35,850 158,650 - -------------------------------------------------------------------------------- Bear Stearns Cos., Inc. (The) 1,600 163,696 - -------------------------------------------------------------------------------- Beverly Hills Bancorp, Inc. 6,273 63,357 - -------------------------------------------------------------------------------- Black & Decker Corp. 2,000 176,660 - -------------------------------------------------------------------------------- Broadwing Corp. 688 6,268 - -------------------------------------------------------------------------------- Burlington Resources, Inc. 3,900 169,650 - -------------------------------------------------------------------------------- Cebridge Connections Holding LLC 4 529 -- - -------------------------------------------------------------------------------- Celesio AG 2,194 178,037 - -------------------------------------------------------------------------------- Centex Corp. 3,200 190,656 - -------------------------------------------------------------------------------- Charles River Laboratories International, Inc. 4 2,660 122,387 - -------------------------------------------------------------------------------- Chesapeake Energy Corp. 416 6,864 - -------------------------------------------------------------------------------- ChevronTexaco Corp. 3,200 168,032 - -------------------------------------------------------------------------------- Chubu Electric Power Co., Inc. 7,300 175,251 - -------------------------------------------------------------------------------- CIGNA Corp. 2,200 179,454 - -------------------------------------------------------------------------------- CNP Assurances SA 2,480 177,649 - -------------------------------------------------------------------------------- ConocoPhillips 1,900 164,977 - -------------------------------------------------------------------------------- Conseco, Inc. 4 13,986 279,021 - -------------------------------------------------------------------------------- Continental AG 2,750 174,749 - -------------------------------------------------------------------------------- Corus Group plc 4 161,310 156,398 - -------------------------------------------------------------------------------- Countrywide Financial Corp. 4,900 181,349 - -------------------------------------------------------------------------------- Covad Communications Group, Inc. 4 16,528 35,535 - -------------------------------------------------------------------------------- Criimi MAE, Inc. 4 71,447 1,150,297 - -------------------------------------------------------------------------------- Crunch Equity Holdings, Cl. A 2,4 120 156,133 - -------------------------------------------------------------------------------- Cummins, Inc. 2,100 175,959 25 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- COMMON STOCKS Continued - -------------------------------------------------------------------------------- Dainippon Ink & Chemicals, Inc. 74,000 $ 170,430 - -------------------------------------------------------------------------------- Devon Energy Corp. 4,200 163,464 - -------------------------------------------------------------------------------- Dillard's, Inc., Cl. A 6,400 171,968 - -------------------------------------------------------------------------------- Dobson Communications Corp., Cl. A 4 24,300 41,796 - -------------------------------------------------------------------------------- E.ON AG 1,992 181,898 - -------------------------------------------------------------------------------- Energy Select Sector SPDR Fund 18,200 658,840 - -------------------------------------------------------------------------------- EOG Resources, Inc. 2,300 164,128 - -------------------------------------------------------------------------------- Equinix, Inc. 4 1,887 80,650 - -------------------------------------------------------------------------------- Financial Select Sector SPDR Fund 21,600 659,448 - -------------------------------------------------------------------------------- Freddie Mac 2,400 176,880 - -------------------------------------------------------------------------------- Friends Provident plc 54,940 162,438 - -------------------------------------------------------------------------------- General Motors Corp. 4,400 176,264 - -------------------------------------------------------------------------------- Geotek Communications, Inc., Series B, Escrow Shares 2,4,15 210 -- - -------------------------------------------------------------------------------- Globix Corp. 4 6,880 24,768 - -------------------------------------------------------------------------------- Heidelberger Zement AG 2,960 179,362 - -------------------------------------------------------------------------------- Hokkaido Electric Power Co. 8,800 173,046 - -------------------------------------------------------------------------------- Horizon Natural Resources Co. 2,4 6,667 -- - -------------------------------------------------------------------------------- Humana, Inc. 4 6,400 190,016 - -------------------------------------------------------------------------------- ICO Global Communication Holdings Ltd. 4 6,016 3,068 - -------------------------------------------------------------------------------- Imerys SA 2,210 185,493 - -------------------------------------------------------------------------------- iPCS, Inc. 4 8,548 260,714 - -------------------------------------------------------------------------------- Janus Capital Group, Inc. 10,100 169,781 - -------------------------------------------------------------------------------- Japan Real Estate Investment Corp. 20 168,635 - -------------------------------------------------------------------------------- Karstadt Quelle AG 16,370 169,107 - -------------------------------------------------------------------------------- Kawasaki Kisen Kaisha Ltd. 25,000 161,344 - -------------------------------------------------------------------------------- KB Home 1,800 187,920 - -------------------------------------------------------------------------------- Klepierre 1,960 173,568 - -------------------------------------------------------------------------------- Lafarge SA 1,790 172,747 - -------------------------------------------------------------------------------- Leap Wireless International, Inc. 4 1,714 46,278 - -------------------------------------------------------------------------------- Lehman Brothers Holdings, Inc. 2,000 174,960 - -------------------------------------------------------------------------------- Lincoln National Corp. 3,500 163,380 - -------------------------------------------------------------------------------- Lloyds TSB Group plc 20,870 189,523 - -------------------------------------------------------------------------------- Loews Corp. 2,400 168,720 - -------------------------------------------------------------------------------- Louisiana-Pacific Corp. 6,200 165,788 - -------------------------------------------------------------------------------- MAN AG 4,423 169,718 - -------------------------------------------------------------------------------- Marathon Oil Corp. 4,500 169,245 - -------------------------------------------------------------------------------- MBIA, Inc. 2,700 170,856 - -------------------------------------------------------------------------------- MCI, Inc. 1,629 32,841 - -------------------------------------------------------------------------------- Merck KGaA 2,902 198,410 - -------------------------------------------------------------------------------- MetLife, Inc. 4,200 170,142 - -------------------------------------------------------------------------------- Mitsui O.S.K. Lines Ltd. 27,000 162,047 - -------------------------------------------------------------------------------- Nippon Building Fund, Inc. 19 162,057 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- COMMON STOCKS Continued - -------------------------------------------------------------------------------- Nippon Yusen Kabushiki Kaisha 32,000 $ 172,382 - -------------------------------------------------------------------------------- Norfolk Southern Corp. 4,700 170,093 - -------------------------------------------------------------------------------- Novar plc 54,100 195,529 - -------------------------------------------------------------------------------- NSK Ltd. 36,000 180,931 - -------------------------------------------------------------------------------- NTL, Inc. 4 7,842 572,152 - -------------------------------------------------------------------------------- Nucor Corp. 3,200 167,488 - -------------------------------------------------------------------------------- Occidental Petroleum Corp. 3,000 175,080 - -------------------------------------------------------------------------------- Orbital Sciences Corp. 4 745 8,813 - -------------------------------------------------------------------------------- Peninsular & Oriental Steam Navigation Co. 29,210 166,839 - -------------------------------------------------------------------------------- PG&E Corp. 4 5,200 173,056 - -------------------------------------------------------------------------------- Phelps Dodge Corp. 1,800 178,056 - -------------------------------------------------------------------------------- Pilkington plc 82,360 173,935 - -------------------------------------------------------------------------------- Pioneer Cos., Inc. 4 7,312 151,724 - -------------------------------------------------------------------------------- Prandium, Inc. 2,4 24,165 266 - -------------------------------------------------------------------------------- Premier Holdings Ltd. 2,4 18,514 -- - -------------------------------------------------------------------------------- Prudential Financial, Inc. 3,300 181,368 - -------------------------------------------------------------------------------- Pulte Homes, Inc. 2,910 185,658 - -------------------------------------------------------------------------------- Rakuten, Inc. 20 22,913 - -------------------------------------------------------------------------------- Rakuten, Inc. 4 180 161,608 - -------------------------------------------------------------------------------- RMC Group plc 10,440 170,172 - -------------------------------------------------------------------------------- Rolls-Royce Group plc 33,400 158,388 - -------------------------------------------------------------------------------- RWE AG 3,155 174,110 - -------------------------------------------------------------------------------- Ryder Systems, Inc. 3,100 148,087 - -------------------------------------------------------------------------------- SABMiller plc 10,200 169,197 - -------------------------------------------------------------------------------- Safeco Corp. 3,400 177,616 - -------------------------------------------------------------------------------- Sears Roebuck & Co. 3,200 163,296 - -------------------------------------------------------------------------------- Sega Sammy Holdings, Inc. 4 3,200 175,817 - -------------------------------------------------------------------------------- Sempra Energy 4,600 168,728 - -------------------------------------------------------------------------------- Severn Trent plc 9,880 183,427 - -------------------------------------------------------------------------------- Showa Shell Sekiyu K.K 18,380 167,352 - -------------------------------------------------------------------------------- Societe Generale, Cl. A 1,720 174,057 - -------------------------------------------------------------------------------- Star Gas Partners LP 187 1,393 - -------------------------------------------------------------------------------- Sterling Chemicals, Inc. 2,4 716 26,671 - -------------------------------------------------------------------------------- Suedzucker AG 8,314 173,241 - -------------------------------------------------------------------------------- Suez SA 7,140 190,413 - -------------------------------------------------------------------------------- Sunoco, Inc. 2,100 171,591 - -------------------------------------------------------------------------------- Tate & Lyle plc 17,860 162,103 - -------------------------------------------------------------------------------- Technip SA 1,000 184,858 - -------------------------------------------------------------------------------- Telewest Global, Inc. 4 31,828 559,536 - -------------------------------------------------------------------------------- Telus Corp. 269 7,774 - -------------------------------------------------------------------------------- Tohoku Electric Power Co. 9,430 169,330 - -------------------------------------------------------------------------------- TonenGeneral Sekiyu K.K 17,870 162,708 - -------------------------------------------------------------------------------- Total SA, B Shares 760 166,561 - -------------------------------------------------------------------------------- Toys R Us, Inc. 4 8,400 171,948 26 | OPPENHEIMER STRATEGIC BOND FUND/VA VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- COMMON STOCKS Continued - -------------------------------------------------------------------------------- Transocean, Inc. 4 4,400 $ 186,516 - -------------------------------------------------------------------------------- TUI AG 7,536 178,746 - -------------------------------------------------------------------------------- TVMAX Holdings, Inc. 2,4 1,000 5,950 - -------------------------------------------------------------------------------- TXU Corp. 2,800 180,768 - -------------------------------------------------------------------------------- Unibail 1,180 185,733 - -------------------------------------------------------------------------------- United States Steel Corp. 3,300 169,125 - -------------------------------------------------------------------------------- United Utilities plc 15,620 188,930 - -------------------------------------------------------------------------------- UnitedGlobalCom, Inc., Cl. A 4 58,063 560,889 - -------------------------------------------------------------------------------- Unocal Corp. 3,900 168,636 - -------------------------------------------------------------------------------- Utilities Select Sector SPDR Fund 24,200 673,970 - -------------------------------------------------------------------------------- Valero Energy Corp. 3,900 177,060 - -------------------------------------------------------------------------------- Viatel Holding Ltd. (Bermuda) 2,4 2,251 2,701 - -------------------------------------------------------------------------------- Vinci 1,360 182,640 - -------------------------------------------------------------------------------- Western Forest Products, Inc. 4 38,252 212,307 - -------------------------------------------------------------------------------- WRC Media Corp. 2,4 1,082 22 - -------------------------------------------------------------------------------- XO Communications, Inc. 4 1,100 3,344 --------------- Total Common Stocks (Cost $21,237,672) 23,790,482 UNITS - -------------------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES--0.0% - -------------------------------------------------------------------------------- American Tower Corp. Wts., Exp. 8/1/08 4,7 800 184,400 - -------------------------------------------------------------------------------- ASAT Finance LLC Wts., Exp. 11/1/06 2,4 250 2 - -------------------------------------------------------------------------------- Citigroup, Inc. Litigation Wts., Exp. 12/31/50 4 2,404 3,414 - -------------------------------------------------------------------------------- COLO.com, Inc. Wts., Exp. 3/15/10 2,4 400 4 - -------------------------------------------------------------------------------- Concentric Network Corp. Wts., Exp. 12/15/07 2,4 100 -- - -------------------------------------------------------------------------------- Covergent Communications, Inc. Wts., Exp. 4/1/08 2,4 400 4 - -------------------------------------------------------------------------------- HF Holdings, Inc. Wts., Exp. 9/27/09 2,4 530 5 - -------------------------------------------------------------------------------- Horizon PCS, Inc. Wts., Exp. 10/1/10 2,4 1,000 -- - -------------------------------------------------------------------------------- Huntsman Co. LLC Wts., Exp. 5/15/11 2,4 300 141,150 - -------------------------------------------------------------------------------- ICG Communications, Inc. Wts., Exp. 9/15/05 2,4 825 8 - -------------------------------------------------------------------------------- ICO Global Communication Holdings Ltd. Wts.: Exp. 5/16/06 2,4 1,509 8 Exp. 5/16/06 2,4 2 -- - -------------------------------------------------------------------------------- Imperial Credit Industries, Inc. Wts., Exp. 1/31/08 2,4 2,135 -- - -------------------------------------------------------------------------------- Insilco Corp. Wts., Exp. 8/15/07 2,4 270 -- VALUE UNITS SEE NOTE 1 - -------------------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES Continued - -------------------------------------------------------------------------------- iPCS, Inc. Wts., Exp. 6/15/10 2,4 300 $ 3 - -------------------------------------------------------------------------------- Leap Wireless International, Inc. Wts., Exp. 4/15/10 2,4 275 3 - -------------------------------------------------------------------------------- Long Distance International, Inc. Wts., Exp. 4/13/08 2,4 200 -- - -------------------------------------------------------------------------------- Loral Space & Communications Ltd. Wts., Exp. 1/15/07 2,4 150 2 - -------------------------------------------------------------------------------- Millenium Seacarriers, Inc. Wts., Exp. 7/15/05 2,4 250 3 - -------------------------------------------------------------------------------- Ntelos, Inc. Wts., Exp. 8/15/10 2,4 450 5 - -------------------------------------------------------------------------------- Pathmark Stores, Inc. Wts., Exp. 9/19/10 4 5,710 1,142 - -------------------------------------------------------------------------------- PLD Telekom, Inc. Wts., Exp. 6/1/06 2,4 300 3 - -------------------------------------------------------------------------------- Sterling Chemicals, Inc. Wts., Exp. 12/19/08 2,4 1,165 5,432 - -------------------------------------------------------------------------------- Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/15/20 2,4 3,256 -- - -------------------------------------------------------------------------------- Verado Holdings, Inc., Cl. B Wts., Exp. 4/15/08 4 175 119 - -------------------------------------------------------------------------------- XO Communications, Inc., Cl. A Wts., Exp. 1/16/10 4 2,204 1,488 - -------------------------------------------------------------------------------- XO Communications, Inc., Cl. B Wts., Exp. 1/16/10 4 1,653 793 - -------------------------------------------------------------------------------- XO Communications, Inc., Cl. C Wts., Exp. 1/16/10 4 1,653 645 --------------- Total Rights, Warrants and Certificates (Cost $80,050) 338,633 PRINCIPAL AMOUNT - -------------------------------------------------------------------------------- STRUCTURED NOTES--10.2% - -------------------------------------------------------------------------------- Citigroup Global Markets Holdings, Inc.: Brazilian Real Unsec. Credit Linked Nts., 0.93%, 1/14/05 $ 1,982,615 2,319,858 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 3/15/07 [COP] 3,860,150,000 2,002,175 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 1,800,000,000 939,374 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 1,200,000,000 626,250 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 5 [COP] 1,034,000,000 536,533 Colombia (Republic of) Unsec. Credit Linked Nts., 3.12%, 11/20/09 2,920,000 2,959,128 27 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- STRUCTURED NOTES Continued - -------------------------------------------------------------------------------- Citigroup Global Markets Holdings, Inc.: Continued Dominican Republic Peso Unsec. Credit Linked Nts., 24.05%, 3/21/05 [DOP] 21,604,000 $ 711,287 Dominican Republic Peso Unsec. Credit Linked Nts., 24.32%, 3/7/05 [DOP] 20,810,000 698,398 Peruvian Sol Unsec. Linked Nts., 1.466%, 1/14/05 [PEN] 4,200,000 1,356,450 Ukraine Hryvnia Unsec. Credit Linked Nts., 7.50%, 5/6/05 2 [UAH] 3,980,000 749,529 - -------------------------------------------------------------------------------- Credit Suisse First Boston Corp. (Cayman): Russia (Government of) Linked Bonds, Series 24, 15%, 9/2/05 [RUR] 22,279,000 861,189 Russia (Government of) Linked Bonds, Series 26, 15%, 3/11/05 [RUR] 22,587,000 838,872 - -------------------------------------------------------------------------------- Credit Suisse First Boston International, OAO Gazprom Credit Linked Nts., 8.11%, 1/21/07 [RUR] 28,065,000 1,058,573 - -------------------------------------------------------------------------------- Credit Suisse First Boston, Inc.: (Nassau Branch), Turkey (Republic of) Credit Linked Nts., 20%, 10/18/07 352,000 387,633 (Nassau Branch), Turkey (Republic of) Credit Linked Nts., Series EM 868, 27.50%, 8/25/05 2,125,000 1,881,220 (Nassau Branch), Turkey (Republic of) Credit Linked Nts., Series EM 872, 23.57%, 10/20/05 1 396,000 425,904 (Nassau Branch), Turkey (Republic of) Credit Linked Nts., Series EM 880, 20%, 10/18/07 1,190,000 1,450,705 (Nassau Branch), Turkey (Republic of) Credit Linked Nts., Series NA S 316, 24.45%, 2/23/06 607,000 488,435 (USA), U.S. Dollar/South African Rand Linked Nts., Series FBi 43, 1.468%, 5/23/22 825,000 784,080 - -------------------------------------------------------------------------------- Deutsche Bank AG: European Investment Bank Credit Bonds, 5.65%, 1/19/10 5 705,000 533,897 Indonesia (Republic of) Credit Linked Nts., 14.25%, 6/22/13 942,000 1,146,885 Indonesia (Republic of) Credit Linked Nts., 14.25%, 6/22/13 938,000 1,142,015 Korea (Republic of) Credit Bonds, 2.49%, 6/20/09 3,900,000 3,945,240 Moscow (City of) Linked Nts., 10%, 5/27/05 [RUR] 13,440,000 498,080 Moscow (City of) Linked Nts., 15%, 9/2/05 [RUR] 30,255,000 1,170,046 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- STRUCTURED NOTES Continued - -------------------------------------------------------------------------------- Deutsche Bank AG: Continued Nigeria (Federal Republic of) Naira Linked Nts., 13.25%, 3/17/05 [NGN] 97,403,000 $ 710,460 Nigeria (Federal Republic of) Naira Linked Nts., 13.75%, 3/3/05 [NGN] 65,974,000 484,338 Nigeria (Republic of) Credit Linked Nts., 13.90%, 2/24/05 [NGN] 119,040,000 876,149 OAO Gazprom I Credit Nts., 6.20%, 10/20/07 790,000 841,076 OAO Gazprom II Credit Nts., 5.95%, 4/20/07 790,000 831,663 Romania (The State of) Leu Linked Nts., 11.49%, 12/4/06 [ROL] 7,886,400,000 274,045 Russian Federation Linked Nts., 8.40%, 12/2/09 [RUR] 19,221,000 698,266 Ukraine (Republic of) Credit Linked Nts., 6.54%, 8/5/11 4,070,000 4,389,292 Ukraine (Republic of) Hryvnia Credit Linked Nts., 0%, 12/17/05 [UAH] 1,469,000 276,274 Ukraine (Republic of) Hryvnia Credit Linked Nts., 11.70%, 5/31/06 [UAH] 1,727,000 325,089 - -------------------------------------------------------------------------------- Dow Jones CDX High Yield Index Pass-Through Certificates: Series 3-1, 7.75%, 12/29/09 7,16 13,200,000 13,587,750 Series 3-3, 8%, 12/29/09 7,16 12,700,000 13,041,313 - -------------------------------------------------------------------------------- Lehman Brothers International: Turkey (Republic of) Treasury Bills Total Return Linked Nts., 20%, 10/17/07 1,260,000 1,512,630 Turkey (Republic of) Treasury Bills Total Return Linked Nts., 24.20%, 8/25/05 1,165,000 1,003,182 Turkey (Republic of) Treasury Bills Total Return Linked Nts., 28.25%, 5/26/05 1,261,309 1,277,580 - -------------------------------------------------------------------------------- Lehman Brothers Special Financing, Inc., High Yield Index Linked Nts., 1.017%, 1/1/05 16 10,000,000 10,145,251 - -------------------------------------------------------------------------------- Morgan Stanley Capital Services, Inc., Venezuela (Republic of) Credit Bonds, 5%, 9/20/09 1,665,000 1,844,587 - -------------------------------------------------------------------------------- Pioneer 2002 Ltd. Sec. Catastrophe Linked Nts.: Series 2002-1, Cl. E-A, 6.74%, 6/15/06 1 750,000 758,199 Series 2003-II, Cl. A, 8.49%, 6/15/06 1,7 500,000 512,183 28 | OPPENHEIMER STRATEGIC BOND FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- STRUCTURED NOTES Continued - -------------------------------------------------------------------------------- Pioneer 2002 Ltd. Sec Catastrophe Linked Nts.: Continued Series 2003-II, Cl. B, 7.49%, 6/15/06 1,7 $ 500,000 $ 510,214 Series 2003-II, Cl. C, 8.24%, 6/15/06 1,7 500,000 508,153 - -------------------------------------------------------------------------------- Swiss Re Capital Markets Corp./ Oak Capital Ltd. Catastrophe Linked Nts., 7.24%, 6/15/07 1,2 250,000 256,949 - -------------------------------------------------------------------------------- Swiss Re Capital Markets Corp./ Pioneer 2002 Ltd. Sec Catastrophe Linked Nts., Series 2002, Cl. A-A, 8.49%, 6/15/06 1,7 250,000 254,995 - -------------------------------------------------------------------------------- UBS AG: Israel (State of) Shekel Linked Nts., 7.50%, 4/5/14 [ILS] 4,792,700 1,195,040 OAO Gazprom III Credit Nts., 4.71%, 7/5/06 1,980,000 2,085,757 --------------- Total Structured Notes (Cost $82,684,631) 87,712,191 DATE STRIKE CONTRACTS - -------------------------------------------------------------------------------- OPTIONS PURCHASED--0.0% - -------------------------------------------------------------------------------- Brazilian Real Call 4 1/19/05 $ 2.80 1,175,000 10,575 - -------------------------------------------------------------------------------- Turkish Lira Put 4 1/6/05 1.00 1,150,000 575 - -------------------------------------------------------------------------------- U.S. Treasury Bonds, 5.375%, 2/15/31 Call 4 1/18/05 109.285% 35,720 125,598 --------------- Total Options Purchased (Cost $427,865) 136,748 - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--10.0% 17 - -------------------------------------------------------------------------------- Undivided interest of 5.96% in joint repurchase agreement (Principal Amount/Value $1,443,703,000, with a maturity value of $1,443,962,867) with UBS Warburg LLC, 2.16%, dated 12/31/04, to be repurchased at $86,039,484 on 1/3/05, collateralized by Federal National Mortgage Assn., 5%--6%, 4/1/34--10/1/34, with a value of $1,474,609,071 (Cost $86,024,000) 86,024,000 86,024,000 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $859,418,744) $ 906,044,631 - -------------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--1.7% - -------------------------------------------------------------------------------- ASSET-BACKED FLOATING SECURITY--0.1% Whitehawk CDO Funding Corp., 2.56%, 3/15/05 18 $ 1,000,000 1,000,000 - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--1.5% Undivided interest of 5.96% in joint repurchase agreement (Principal Amount/Value $155,205,723, with a maturity value of $155,232,367) with Credit Suisse First Boston LLC, 2.06%, dated 12/31/04, to be repurchased at $9,252,431 on 1/3/05, collateralized by AA Corporate Bonds, 0%-15.73%, 1/1/06-7/16/44, with a value of $158,312,640 18 9,250,843 9,250,843 - -------------------------------------------------------------------------------- Undivided interest of 0.39% in joint repurchase agreement (Principal Amount/Value $2,800,000,000, with a maturity value of $2,800,550,669) with Nomura Securities, 2.36%, dated 12/31/04, to be repurchased at $3,827,941 on 1/3/05, collateralized by U.S. Government Mortgage Agencies, 2.58%-7.50%, 1/15/08-10/15/44, with a value of $2,908,566,289 18 3,827,188 3,827,188 --------------- 13,078,031 - -------------------------------------------------------------------------------- YANKEE FLOATING CERTIFICATES OF DEPOSIT--0.1% Banco Bilbao Vizcaya NY, 2.248% Deposit Nts., 2/10/05 18 799,967 799,967 --------------- Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $14,877,998) 14,877,998 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $874,296,742) 107.4% 920,922,629 - -------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (7.4) (63,302,323) ------------------------------- NET ASSETS 100.0% $ 857,620,306 =============================== 29 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- FOOTNOTES TO STATEMENT OF INVESTMENTS Principal amount, contracts and exercise price are reported in U.S. Dollars, except for those denoted in the following currencies: ARP Argentine Peso AUD Australian Dollar BRR Brazilian Real CAD Canadian Dollar COP Colombian Peso DEM German Mark DKK Danish Krone DOP Dominican Republic Peso EUR Euro FRF French Franc GBP British Pound Sterling ILS Israeli Shekel JPY Japanese Yen MXN Mexican Nuevo Peso NGN Nigeria Naira NZD New Zealand Dollar PEN Peruvian New Sol PLZ Polish Zloty ROL Romanian Leu RUR Russian Ruble SEK Swedish Krona UAH Ukraine Hryvnia ZAR South African Rand 1. Represents the current interest rate for a variable or increasing rate security. 2. Illiquid or restricted security. The aggregate value of illiquid or restricted securities as of December 31, 2004 was $26,847,365, which represents 3.13% of the Fund's net assets, of which $70,658 is considered restricted. See Note 11 of Notes to Financial Statements. 3. Issue is in default. See Note 1 of Notes to Financial Statements. 4. Non-income producing security. 5. When-issued security or forward commitment to be delivered and settled after December 31, 2004. See Note 1 of Notes to Financial Statements. 6. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. These securities amount to $2,971,051 or 0.35% of the Fund's net assets as of December 31, 2004. 7. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $78,866,795 or 9.20% of the Fund's net assets as of December 31, 2004. 8. Zero coupon bond reflects effective yield on the date of purchase. 9. All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures sales contracts with an aggregate market value of $1,957,202. See Note 6 of Notes to Financial Statements. 10. A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5 of Notes to Financial Statements. 11. A sufficient amount of securities has been designated to cover outstanding written put options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE SUBJECT TO PUT DATES PRICE RECEIVED SEE NOTE 1 - ----------------------------------------------------------------------------------------------------------------------------- Brazilian Real (BRR) 1,175,000 1/19/05 $2.65 $ 1,792 $ 8,196 Turkish Lira (TRL) 1,150,000 1/6/05 1.00 3,565 11,499 ----------------------- $ 5,357 $19,695 =======================
12. A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE SUBJECT TO CALL DATE RATE RECEIVED SEE NOTE 1 - ----------------------------------------------------------------------------------------------------------------------------- New Zealand (Government of) Bonds, 7% 7/15/09 945NZD 3/7/05 5.95%NZD $ 2,661 $ 444
13. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 14. Interest or dividend is paid-in-kind. 15. Received as the result of issuer reorganization. 16. Interest rate represents a weighted average rate comprised of the interest rates of the underlying securities. 17. The Fund may have elements of risk due to concentrated investments. Such concentrations may subject the Fund to additional risks. 18. The security has been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 12 of Notes to Financial Statements. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 30 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF ASSETS AND LIABILITIES December 31, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- ASSETS - --------------------------------------------------------------------------------------------------------------------- Investments, at value (including cost and market value of $$86,024,000 in repurchase agreements) (including securities loaned of $44,013,349) (cost $874,296,742)--see accompanying statement of investments $ 920,922,629 - --------------------------------------------------------------------------------------------------------------------- Cash 2,055,902 - --------------------------------------------------------------------------------------------------------------------- Collateral for securities loaned 29,980,833 - --------------------------------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency contracts 3,540,592 - --------------------------------------------------------------------------------------------------------------------- Receivables and other assets: Investments sold (including $12,465,550 sold on a when-issued basis or forward commitment) 12,692,922 Interest, dividends and principal paydowns 10,583,665 Shares of beneficial interest sold 3,295,957 Futures margins 33,583 Other 9,827 ---------------- Total assets 983,115,910 - --------------------------------------------------------------------------------------------------------------------- LIABILITIES - --------------------------------------------------------------------------------------------------------------------- Bank overdraft-foreign currencies (cost $96,882) 96,964 - --------------------------------------------------------------------------------------------------------------------- Options written, at value (premiums received $8,018)--see accompanying statement of investments 20,139 - --------------------------------------------------------------------------------------------------------------------- Swaptions written, at value (premiums received $94,462) 70,869 - --------------------------------------------------------------------------------------------------------------------- Return of collateral for securities loaned 44,858,831 - --------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on foreign currency contracts 3,277,300 - --------------------------------------------------------------------------------------------------------------------- Unrealized depreciation on swap contracts 1,458,503 - --------------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased on a when-issued basis or forward commitment 73,731,367 Closed foreign currency contracts 1,588,757 Shares of beneficial interest redeemed 147,125 Distribution and service plan fees 133,244 Shareholder communications 34,768 Trustees' compensation 14,921 Transfer and shareholder servicing agent fees 1,705 Other 61,111 ---------------- Total liabilities 125,495,604 - --------------------------------------------------------------------------------------------------------------------- NET ASSETS $ 857,620,306 ================ - --------------------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - --------------------------------------------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 164,032 - --------------------------------------------------------------------------------------------------------------------- Additional paid-in capital 797,449,500 - --------------------------------------------------------------------------------------------------------------------- Accumulated net investment income 39,051,911 - --------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (24,499,421) - --------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 45,454,284 ---------------- NET ASSETS $ 857,620,306 ================ - --------------------------------------------------------------------------------------------------------------------- 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 $614,915,045 and 118,133,764 shares of beneficial interest outstanding) $ 5.21 - --------------------------------------------------------------------------------------------------------------------- Service Shares: Net asset value, redemption price per share and offering price per share (based on net assets of $242,705,261 and 45,898,401 shares of beneficial interest outstanding) $ 5.29
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 31 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENT OF OPERATIONS For the Year Ended December 31, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME - --------------------------------------------------------------------------------------------------------------------- Interest $ 35,831,510 - --------------------------------------------------------------------------------------------------------------------- Fee income 1,811,978 - --------------------------------------------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $7,565) 150,977 - --------------------------------------------------------------------------------------------------------------------- Portfolio lending fees 35,374 ---------------- Total investment income 37,829,839 - --------------------------------------------------------------------------------------------------------------------- EXPENSES - --------------------------------------------------------------------------------------------------------------------- Management fees 5,203,309 - --------------------------------------------------------------------------------------------------------------------- Distribution and service plan fees--Service shares 373,995 - --------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Non-Service shares 10,083 Service shares 10,030 - --------------------------------------------------------------------------------------------------------------------- Shareholder communications: Non-Service shares 42,334 Service shares 8,511 - --------------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 92,792 - --------------------------------------------------------------------------------------------------------------------- Trustees' compensation 20,732 - --------------------------------------------------------------------------------------------------------------------- Other 72,134 ---------------- Total expenses 5,833,920 Less reduction to custodian expenses (21,553) ---------------- Net expenses 5,812,367 - --------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 32,017,472 - --------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - --------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on: Investments (including premiums on options exercised) 2,526,920 Closing of futures contracts 28,864 Closing and expiration of option contracts written 484,456 Closing and expiration of swaption contracts (326,048) Foreign currency transactions 4,604,115 Swap contracts 293,602 ---------------- Net realized gain 7,611,909 - --------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments 16,486,291 Translation of assets and liabilities denominated in foreign currencies 9,070,184 Futures contracts 67,809 Option contracts (153,144) Swaption contracts 39,135 Swap contracts (502,851) ---------------- Net change in unrealized appreciation 25,007,424 - --------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 64,636,805 ================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 32 | OPPENHEIMER STRATEGIC BOND FUND/VA STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2004 2003 - ------------------------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------------------------ Net investment income $ 32,017,472 $ 28,077,622 - ------------------------------------------------------------------------------------------------------------------ Net realized gain 7,611,909 13,639,276 - ------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) 25,007,424 41,999,716 ---------------------------------- Net increase in net assets resulting from operations 64,636,805 83,716,614 - ------------------------------------------------------------------------------------------------------------------ DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------------ Dividends from net investment income: Non-Service shares (29,467,620) (28,473,133) Service shares (5,049,740) (842,251) - ------------------------------------------------------------------------------------------------------------------ BENEFICIAL INTEREST TRANSACTIONS - ------------------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from beneficial interest transactions: Non-Service shares 23,501,705 115,808,103 Service shares 152,771,336 66,753,974 - ------------------------------------------------------------------------------------------------------------------ NET ASSETS - ------------------------------------------------------------------------------------------------------------------ Total increase 206,392,486 236,963,307 - ------------------------------------------------------------------------------------------------------------------ Beginning of period 651,227,820 414,264,513 ---------------------------------- End of period (including accumulated net investment income of $39,051,911 and $32,618,798, respectively) $ 857,620,306 $ 651,227,820 ==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 33 | OPPENHEIMER STRATEGIC BOND FUND/VA FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
NON-SERVICE SHARES YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.05 $ 4.57 $ 4.62 $ 4.69 $ 4.97 - ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .22 1 .22 .29 .41 .41 Net realized and unrealized gain (loss) .20 .56 .03 (.19) (.28) ---------------------------------------------------------------------------------- Total from investment operations .42 .78 .32 .22 .13 - ----------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.26) (.30) (.37) (.29) (.41) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.21 $ 5.05 $ 4.57 $ 4.62 $ 4.69 ================================================================================= - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 8.67% 18.07% 7.44% 4.85% 2.63% - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 614,915 $ 571,445 $ 406,126 $ 351,686 $ 304,562 - ----------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 584,878 $ 472,213 $ 374,519 $ 330,711 $ 289,923 - ----------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 4.50% 5.61% 6.89% 8.78% 9.23% Total expenses 0.74% 0.75% 0.79% 0.79% 0.79% Expenses after payments and waivers and reduction to custodian expenses N/A 4 N/A 4 0.78% N/A 4 N/A 4 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 88% 5 117% 65% 104% 104%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. 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. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $959,649,113 and $973,488,511, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 34 | OPPENHEIMER STRATEGIC BOND FUND/VA
SERVICE SHARES YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 1 - --------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.13 $ 4.67 $ 4.73 $ 4.64 - --------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .19 2 .27 .03 .15 Net realized and unrealized gain (loss) .22 .49 .28 (.06) ------------------------------------------------------- Total from investment operations .41 .76 .31 .09 - --------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.25) (.30) (.37) -- - --------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.29 $ 5.13 $ 4.67 $ 4.73 ======================================================= - --------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 8.43% 17.16% 7.03% 1.94% - --------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 242,705 $ 79,782 $ 8,138 $ 4 - --------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 150,040 $ 34,744 $ 2,307 $ 2 - --------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 3.82% 4.57% 5.40% 8.17% Total expenses 0.99% 1.02% 1.06% 0.92% Expenses after payments and waivers and reduction to custodian expenses N/A 5 N/A 5 1.03% N/A 5 - --------------------------------------------------------------------------------------------------------- Portfolio turnover rate 88% 6 117% 65% 104%
1. For the period from March 19, 2001 (inception of offering) to December 31, 2001. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. 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. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 4. Annualized for periods of less than one full year. 5. Reduction to custodian expenses less than 0.01%. 6. The portfolio turnover rate excludes purchase transactions and sales transactions of To Be Announced (TBA) mortgage-related securities of $959,649,113 and $973,488,511, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 35 | OPPENHEIMER STRATEGIC BOND FUND/VA NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Strategic Bond 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 level of current income principally derived from interest on debt securities. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- SECURITIES VALUATION. The Fund calculates the net asset value of its shares as of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. 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. Securities traded on NASDAQ are valued based on the closing price provided by NASDAQ 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. Corporate, government and municipal debt instruments having a remaining maturity in excess of 60 days and all mortgage-backed securities will be valued at the mean between the "bid" and "asked" prices. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value. Foreign and domestic securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund's assets are valued but after the close of their respective exchanges will be fair valued. Fair value is determined in good faith using 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 structured notes whose market values, interest rates and/or redemption prices are linked to the performance of underlying foreign currencies, interest rate spreads, stock market indices, prices of individual securities, commodities or other financial instruments or the occurrence of other specific events. The structured notes are often leveraged, increasing the volatility of each note's market value relative to the change in the underlying linked financial element or event. 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, 2004, the market value of these securities comprised 10.2% of the Fund's net assets and resulted in unrealized cumulative gains of $5,027,560. - -------------------------------------------------------------------------------- SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis or forward commitment can take place up to ten days 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 internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a when-issued basis or forward commitment may increase the volatility of the Fund's net asset value to the extent the Fund executes such transactions while 36 | OPPENHEIMER STRATEGIC BOND FUND/VA remaining substantially fully invested. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase. As of December 31, 2004, the Fund had purchased $73,731,367 of securities on a when-issued basis or forward commitment and sold $12,465,550 of securities issued on a when-issued basis or forward commitment. In connection with its ability to purchase or sell 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 Fund records the incremental difference between the forward purchase and sale of each forward roll as realized gain (loss) on investments or as fee income in the case of such transactions that have an associated fee in lieu of a difference in the forward purchase and sale price. Risks 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 at redelivery as compared to the securities sold to the counterparty; counterparty credit risk; and the potential pay down speed variance between the mortgage-related pools. - -------------------------------------------------------------------------------- SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be subject to a greater degree of credit risk, market fluctuations and 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, 2004, securities with an aggregate market value of $4,866,448, representing 0.57% of the Fund's net assets, were in default. - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars as of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. 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. Foreign exchange rates may be valued primarily using dealer supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates. 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. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. 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. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. 37 | OPPENHEIMER STRATEGIC BOND FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis 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 comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. The tax components of capital shown in the table below represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes. NET UNREALIZED APPRECIATION BASED ON COST OF SECURITIES AND UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME INCOME GAIN CARRYFORWARD 1,2,3,4,5,6,7 TAX PURPOSES - -------------------------------------------------------------------------------- $40,140,664 $-- $24,032,280 $44,353,647 1. As of December 31, 2004, the Fund had $21,566,899 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2004, details of the capital loss carryforwards were as follows: EXPIRING ----------------------------- 2007 $ 4,546,599 2008 253,735 2009 9,904,928 2010 6,861,637 ------------- Total $ 21,566,899 ============= 2. As of December 31, 2004, the Fund had $478,895 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2013. 3. The Fund had $1,979,188 of post-October foreign currency losses which were deferred. 4. The Fund had $1,918 of post-October passive foreign investment company losses which were deferred. 5. The Fund had $5,380 of straddle losses which were deferred. 6. During the fiscal year ended December 31, 2004, the Fund utilized $1,200,449 of capital loss carryforward to offset capital gains realized in that fiscal year. 7. During the fiscal year ended December 31, 2003, the Fund utilized $666,406 of capital loss carryforward to offset capital gains realized in that fiscal year. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. Accordingly, the following amounts have been reclassified for December 31, 2004. Net assets of the Fund were unaffected by the reclassifications. INCREASE TO INCREASE TO ACCUMULATED ACCUMULATED NET NET REALIZED LOSS INVESTMENT INCOME ON INVESTMENTS ------------------------------------------------ $8,933,001 $8,933,001 The tax character of distributions paid during the years ended December 31, 2004 and December 31, 2003 was as follows: YEAR ENDED YEAR ENDED DECEMBER 31, 2004 DECEMBER 31, 2003 ----------------------------------------------------------------- Distributions paid from: Ordinary income $34,517,360 $29,315,384 38 | OPPENHEIMER STRATEGIC BOND FUND/VA The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2004 are noted below. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss. Federal tax cost of securities $ 875,097,377 Federal tax cost of other investments (35,019,525) --------------- Total federal tax cost $ 840,077,852 =============== Gross unrealized appreciation $ 61,496,783 Gross unrealized depreciation (17,143,136) --------------- Net unrealized appreciation $ 44,353,647 =============== - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- 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. Income and capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings. - -------------------------------------------------------------------------------- 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 U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 39 | OPPENHEIMER STRATEGIC BOND FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 2004 YEAR ENDED DECEMBER 31, 2003 SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------------------------- NON-SERVICE SHARES Sold 24,003,073 $ 119,433,508 46,663,574 $ 222,213,838 Dividends and/or distributions reinvested 6,088,351 29,467,620 6,471,166 28,473,133 Redeemed (25,208,632) (125,399,423) (28,764,717) (134,878,868) ------------------------------------------------------------- Net increase 4,882,792 $ 23,501,705 24,370,023 $ 115,808,103 ============================================================= - --------------------------------------------------------------------------------------------------------- SERVICE SHARES Sold 31,450,838 $ 158,302,695 14,341,848 $ 69,419,263 Dividends and/or distributions reinvested 1,026,369 5,049,740 187,166 842,251 Redeemed (2,125,979) (10,581,099) (725,688) (3,507,540) ------------------------------------------------------------- Net increase 30,351,228 $ 152,771,336 13,803,326 $ 66,753,974 =============================================================
- -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than U.S. government obligations and short-term obligations, for the year ended December 31, 2004, were $461,469,057 and $348,803,252, respectively. There were purchases of $188,816,133 and sales of $149,557,330 of U.S. government and government agency obligations for the year ended December 31, 2004. In addition, there were purchases of $959,649,113 and sales of $973,488,511 of To Be Announced (TBA) mortgage-related securities for the year ended December 31, 2004. - -------------------------------------------------------------------------------- 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 which provides for a fee at an annual rate of 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. - -------------------------------------------------------------------------------- ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for preparing and filing the Fund's tax returns. - -------------------------------------------------------------------------------- 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 per account fee. For the year ended December 31, 2004, the Fund paid $20,075 to OFS for services to the Fund. Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee. - -------------------------------------------------------------------------------- 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 and personal service and account maintenance 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 Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. The impact of the service plan is to increase operating expenses of the Service shares, which results in lower performance compared to the Fund's shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations. 40 | OPPENHEIMER STRATEGIC BOND FUND/VA - -------------------------------------------------------------------------------- PAYMENTS AND WAIVERS OF EXPENSES. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. FOREIGN CURRENCY CONTRACTS A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts to settle specific purchases or sales of securities denominated in a foreign currency and for protection from adverse exchange rate fluctuation. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using prevailing foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign transaction. Contracts closed or settled with the same broker are recorded as net realized gains or losses. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. As of December 31, 2004, the Fund had outstanding foreign currency contracts as follows:
CONTRACT EXPIRATION AMOUNT VALUATION AS OF UNREALIZED UNREALIZED CONTRACT DESCRIPTION DATES (000S) DEC. 31, 2004 APPRECIATION DEPRECIATION - ------------------------------------------------------------------------------------------------------------------------------------ CONTRACTS TO PURCHASE Argentine Peso (ARP) 2/2/05 3,375ARP $ 1,135,426 $ 34,140 $ -- Australian Dollar (AUD) 1/21/05 3,700AUD 2,895,042 98,582 -- Brazilian Real (BRR) 1/24/05-1/5/10 16,613BRR 6,773,392 692,000 -- British Pound Sterling (GBP) 1/21/05 1,500GBP 2,875,473 -- 15,027 Chilean Peso (CLP) 1/21/05 544,448CLP 979,661 39,661 -- Columbian Peso (COP) 1/7/05-1/24/05 4,071,671COP 1,727,121 27,903 -- Czech Koruna (CZK) 4/22/05 31,700CZK 1,419,803 154,814 -- Euro (EUR) 3/2/05-4/1/05 9,390EUR 12,773,224 233,897 -- Indian Rupee (INR) 11/9/05-12/20/05 43,280INR 983,430 23,106 -- Japanese Yen (JPY) 3/15/05-3/31/05 4,184,500JPY 41,064,379 1,867,755 -- Mexican Nuevo Peso (MXN) 1/6/05 10,620MXN 951,676 318 -- New Zealand Dollar (NZD) 1/21/05 3,970NZD 2,860,055 49,295 -- Russian Ruble (RUR) 10/27/05 28,475RUR 1,012,819 37,314 -- Slovakia Koruna (SKK) 2/18/05-3/21/05 57,110SKK 2,001,271 93,090 -- South Korean Won (KRW) 2/23/05 518,170KRW 499,985 12,983 -- Swedish Krona (SEK) 2/16/05 23,690SEK 3,566,562 150,891 -- Turkish Lira (TRL) 12/18/07 1,166TRL 1,163,905 -- 2,443 --------------------------- 3,515,749 17,470 --------------------------- CONTRACTS TO SELL Australian Dollar (AUD) 3/2/05 8,730AUD 6,810,313 -- 81,851 Brazilian Real (BRR) 1/4/05 945BRR 355,262 -- 5,355 British Pound Sterling (GBP) 5/9/05-6/8/05 6,060GBP 11,544,808 24,843 425,528 Canadian Dollar (CAD) 2/24/05 330CAD 275,352 -- 22,620 Columbian Peso (COP) 1/18/05 1,225,560COP 519,901 -- 3,876 Euro (EUR) 2/18/05-6/08/05 37,815EUR 51,431,155 -- 2,324,724 Japanese Yen (JPY) 1/20/05-6/8/05 955,800JPY 9,394,115 -- 114,371 Norwegian Krone (NOK) 1/20/05-2/16/05 38,300NOK 6,327,058 -- 179,124 Swiss Franc (CHF) 1/20/05-4/1/05 7,590CHF 7,012,995 -- 60,910 Turkish Lira (TRL) 6/21/05 1,760,669,590TRL 1,207,819 -- 41,471 --------------------------- 24,843 3,259,830 --------------------------- Total unrealized appreciation and depreciation $ 3,540,592 $ 3,277,300 ===========================
41 | OPPENHEIMER STRATEGIC BOND FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a negotiated price on a stipulated future date. 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 protection from changes in market value of stocks 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 as a 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 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 has expired. Cash held by the broker to cover initial margin requirements on open futures contracts is noted in the Statement of Assets and Liabilities. 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 the closing and expiration of futures contracts. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. 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, 2004, the Fund had outstanding futures contracts as follows:
UNREALIZED EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION CONTRACT DESCRIPTION DATES CONTRACTS DECEMBER 31, 2004 (DEPRECIATION) - -------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Japan (Government of) Bonds, 10 yr 3/10/05 1 $ 1,350,249 $ (6,325) NASDAQ 100 Index 3/17/05 17 2,768,450 42,521 U.S. Long Bonds 3/21/05 205 23,062,500 19,355 U.S. Treasury Nts., 10 yr 3/21/05 132 14,775,750 62,360 United Kingdom Long Gilt 3/29/05 3 642,553 4,089 --------------- 122,000 --------------- CONTRACTS TO SELL CAC-40 10 Index 3/18/05 22 1,144,556 2,698 DAX Index 3/18/05 4 580,671 (1,326) Euro-Bundesobligation 3/8/05 13 2,095,514 13,355 FTSE 100 Index 3/18/05 27 2,486,897 (31,159) Japan (Government of) Bonds, 10 yr 3/9/05 5 675,222 927 Japan (Government of) Bonds, 10 yr 3/10/05 6 8,101,493 2,928 Nikkei 225 Index 3/10/05 11 1,232,361 (72,997) Standard & Poor's 500 Index 3/17/05 36 10,923,300 (157,363) U.S. Long Bonds 3/21/05 124 13,950,000 (29,185) U.S. Treasury Nts., 2 yr 3/31/05 70 14,671,563 4,242 U.S. Treasury Nts., 5 yr 3/21/05 106 11,610,313 (63,909) --------------- (331,789) --------------- $ (209,789) ===============
42 | OPPENHEIMER STRATEGIC BOND FUND/VA - -------------------------------------------------------------------------------- 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. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Contracts 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, 2004 was as follows:
CALL OPTIONS PUT OPTIONS --------------------------- ---------------------------- PRINCIPAL/ PRINCIPAL/ NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF CONTRACTS PREMIUMS CONTRACTS PREMIUMS - --------------------------------------------------------------------------------------------------------- Options outstanding as of December 31, 2003 9,765,000 $ 128,130 744,000,000 $ 138,880 Options written 2,225,002,170 165,903 722,325,000 105,898 Options closed or expired (2,231,511,225) (253,965) (1,464,000,000) (239,421) Options exercised (3,255,000) (37,407) -- -- ----------------------------------------------------------- Options outstanding as of December 31, 2004 945 $ 2,661 2,325,000 $ 5,357 ===========================================================
- -------------------------------------------------------------------------------- 8. CREDIT SWAP CONTRACTS The Fund may enter into a credit swap transaction to maintain a total return on a particular investment or portion of its portfolio, or for other non-speculative purposes. Because the principal amount is not exchanged, it represents neither an asset nor a liability to either counterparty, and is referred to as a notional principal amount. The Fund records an increase or decrease to unrealized gain (loss), in the amount due to or owed by the Fund at termination or settlement. Credit swaps are subject to credit risks (if the counterparty fails to meet its obligations). The Fund pays an annual interest fee on the notional amount in exchange for the counterparty paying in a potential credit event. 43 | OPPENHEIMER STRATEGIC BOND FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8. CREDIT SWAP CONTRACTS Continued During the year ended December 31, 2004, the Fund entered into transactions to hedge credit risk. Information regarding the credit swaps is as follows:
UNREALIZED EXPIRATION NOTIONAL VALUATION AS OF APPRECIATION CONTRACT DESCRIPTION DATES AMOUNT DECEMBER 31, 2004 (DEPRECIATION) - --------------------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Citigroup Global Markets Ltd., Venezuela (Republic of) Credit Nts. 11/20/09 $ 6,350,000 $ (257,398) $ (257,398) Deutsche Bank AG: Export-Import Bank of Korea Credit Bonds 6/20/09 780,000 (10,452) (10,452) Korea Deposit Insurance Corp. Credit Bonds 6/20/09 780,000 (10,374) (10,374) Korea Development Bank Credit Bonds 6/20/09 780,000 (10,140) (10,140) Korea Electric Power Corp. Credit Bonds 6/20/09 780,000 (10,686) (10,686) Philippines (Republic of) 10 yr. Credit Bonds 7/25/13 930,000 26,435 26,435 Samsung Electronic Co. Ltd. Credit Bonds 6/20/09 780,000 (9,828) (9,828) United Mexican States Credit Bonds 9/20/13 1,235,000 (80,794) (80,794) Venezuela (Republic of) Credit Bonds 10/20/09 4,715,000 (311,128) (311,128) JPMorgan Chase Bank: Export-Import Bank of Korea Credit Bonds 6/20/09 390,000 (8,522) (8,522) Jordan (Kingdom of) Credit Nts. 6/6/06 250,000 (752) (752) Korea Deposit Insurance Corp. Credit Bonds 6/20/09 390,000 (8,374) (8,374) Korea Development Bank Credit Bonds 6/20/09 390,000 (8,358) (8,358) Korea Electric Power Co. Credit Bonds 6/20/09 390,000 (8,942) (8,942) Russian Federation Credit Bonds 10/9/13 730,000 (41,855) (41,855) Samsung Electronics Co. Ltd. Credit Bonds 6/20/09 390,000 (8,457) (8,457) Lehman Brothers Special Financing, Inc.: Brazil (Federal Republic of) Credit Bonds 8/20/09 3,000,000 (464,999) (464,999) Turkey (Republic of) Credit Bonds 11/11/09 1,850,000 (7,189) (7,189) Morgan Stanley Capital Services, Inc.: Brazil (Federal Republic of) Credit Bonds 8/20/09 2,440,000 (377,069) (377,069) Hungary (Republic of) Credit Bonds 12/2/13 1,880,000 (41,014) (41,014) Panama (Republic of) Credit Bonds 11/20/14 1,730,000 (106,672) (106,672) Philippines (Republic of) Credit Bonds 6/20/09 1,135,000 (17,102) (17,102) Philippines (Republic of) 5 yr. Credit Bonds 9/20/09 950,000 (5,696) (5,696) Venezuela (Republic of) Credit Bonds 8/20/06-2/20/14 5,050,000 (437,023) (437,023) UBS AG: Brazil (Federal Republic of) Credit Bonds 10/20/09 900,000 (65,111) (65,111) Russian Federation Credit Bonds 11/2/14-11/5/14 3,825,000 (163,083) (163,083) Venezuela (Republic of) Credit Bonds 8/20/06-6/20/14 5,685,000 (798,858) (798,858) --------------- $ (3,243,441) ===============
- -------------------------------------------------------------------------------- 9. INTEREST RATE SWAP CONTRACTS The Fund may enter into an interest rate swap transaction to maintain a total return or yield spread on a particular investment, or portion of its portfolio, or for other non-speculative purposes. Interest rate swaps involve the exchange of commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments. The coupon payments are based on an agreed upon principal amount and a specified index. Because the principal amount is not exchanged, it represents neither an asset nor a liability to either counterparty, and is referred to as notional. The Fund records an increase or decrease to unrealized gain (loss), in the amount due to or owed by the Fund at termination or settlement. Interest rate swaps are subject to credit risk (if the counterparty fails to meet its obligations) and interest rate risk. The Fund could be obligated to pay more under its swap agreements than it receives under them, as a result of interest rate changes. 44 | OPPENHEIMER STRATEGIC BOND FUND/VA As of December 31, 2004, the Fund had entered into the following interest rate swap agreements:
FIXED RATE FLOATING RATE PAID BY RECEIVED BY UNREALIZED NOTIONAL THE FUND AT THE FUND AT FLOATING TERMINATION APPRECIATION SWAP COUNTERPARTY AMOUNT DEC. 31, 2004 DEC. 31, 2004 RATE INDEX DATES (DEPRECIATION) - ---------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG 74,350,000INR 4.88% 4.50% IRS 1/15/09 $ 66,467 Three-Month Deutsche Bank AG 3,185,000 3.1025 1.82 LIBOR flat 3/4/08 32,431 Deutsche Bank AG 55,240,000 2.585 1.04 90-day CPTW 8/19/09 (1,061) Three-Month Deutsche Bank AG 10,000,000 2.27625 5.32 LIBOR BBA 5/12/14 582,127 Six-Month JPMorgan Chase Bank 880,000EUR 3.135 2.081 LIBOR flat 7/14/08 (13,503) Six-Month JPMorgan Chase Bank 245,400,000HUF 9.13 7.00 LIBOR flat 7/14/08 (74,862) 28 Day JPMorgan Chase Bank 14,620,000MXN 9.10 10.88 MXN TIIE 11/16/14 16,172 Three-Month JPMorgan Chase Bank 6,625,000 3.052 1.86 LIBOR flat 3/10/08 111,767 Three-Month JPMorgan Chase Bank 50,000,000 2.21 4.0725 LIBOR BBA 5/6/09 417,937 Three-Month JPMorgan Chase Bank 35,000,000 1.70 4.985 LIBOR BBA 5/6/14 1,144,347 Three-Month JPMorgan Chase Bank 25,000,000 4.24 1.65 LIBOR 7/23/09 (648,784) Three-Month JPMorgan Chase Bank 1,820,000 2.13 4.94 LIBOR BBA 4/30/14 55,137 Morgan Stanley Capital Three-Month Services, Inc. 13,000,000 3.82 2.26 LIBOR flat 11/10/08 (27,411) Morgan Stanley Capital Three-Month Services, Inc. 22,000,000 2.32 1.71 LIBOR flat 11/10/05 124,174 --------------- $ 1,784,938 ===============
Notional amount is reported in U.S. Dollars, except for those denoted in the following currencies. Index abbreviations and currencies are as follows: EUR Euro HUF Hungarian Forint INR Indian Rupee MXN Mexican Nuevo Peso BBA British Bankers Association CPTW Bloomberg Taiwan Secondary Commercial Papers IRS India Swap Composites LIBOR London-Interbank Offered Rate LIBOR BBA London-Interbank Offered Rate British Bankers Association TIIE Interbank Equilibrium Interest Rate - -------------------------------------------------------------------------------- 10. SWAPTION TRANSACTIONS The Fund may enter into a swaption transaction, whereby a contract that grants the holder, in return for payment of the purchase price (the "premium") of the option, the right, but not the obligation, to enter into an interest rate swap at a preset rate within a specified period of time, with the writer of the contract. The writer receives premiums and bears the risk of unfavorable changes in the preset rate on the underlying interest rate swap. Swaption contracts written by the Fund do not give rise to counterparty credit risk as they obligate the Fund, not its counterparty, to perform. Swaptions written are reported as a liability in the Statement of Assets and Liabilities. 45 | OPPENHEIMER STRATEGIC BOND FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 10. SWAPTION TRANSACTIONS Continued Written swaption activity for the year ended December 31, 2004 was as follows:
CALL SWAPTIONS PUT SWAPTIONS ------------------------ ------------------------- NOTIONAL AMOUNT OF NOTIONAL AMOUNT OF AMOUNT PREMIUMS AMOUNT PREMIUMS - ----------------------------------------------------------------------------------------------------- Swaptions outstanding as of December 31, 2003 -- $ -- 2,220,000 $ 19,758 Swaptions written 22,660,000 240,122 19,060,000 77,390 Swaptions closed or expired (15,990,000) (174,120) (10,820,000) (48,930) Swaptions exercised -- -- (2,220,000) (19,758) ----------------------------------------------------- Swaptions outstanding as of December 31, 2004 6,670,000 $ 66,002 8,240,000 $ 28,460 =====================================================
As of December 31, 2004, the Fund had entered into the following swaption contracts:
NOTIONAL EXPIRATION EXERCISE PREMIUM VALUE SWAPTIONS AMOUNT DATES RATE RECEIVED SEE NOTE 1 - ------------------------------------------------------------------------------------------------ British Pound Sterling Call 6,670,000GBP 3/29/05 4.792%GBP $ 66,002 $ 49,504 Deutsche Bank AG Put 8,240,000AUD 2/3/05 5.685%AUD 28,460 21,365 ---------------------- $ 94,462 $ 70,869 ======================
Notional amount and exercise price are denoted in the following currencies: AUD Australian Dollar GBP British Pound Sterling - -------------------------------------------------------------------------------- 11. ILLIQUID OR RESTRICTED SECURITIES AND CURRENCY As of December 31, 2004, investments in securities included issues that are illiquid or restricted. Restricted securities are purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. Information concerning restricted securities and currency is as follows:
ACQUISITION VALUATION AS OF UNREALIZED SECURITY DATES COST DECEMBER 31, 2004 DEPRECIATION - ------------------------------------------------------------------------------------------------------------------------ Geotek Communications, Inc., Series B, Escrow Shares 1/4/01 $ 840 $ -- $ 840 Prandium, Inc. 3/19/99-9/25/02 284,000 266 283,734 CURRENCY Argentine Peso 6/25/04 70,732 70,392 340
- -------------------------------------------------------------------------------- 12. SECURITIES LENDING The Fund lends portfolio securities from time to time in order to earn additional income. In return, the Fund receives collateral in the form of US Treasury obligations or cash, against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the funds and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The Fund retains a portion of the interest earned from the collateral. The Fund also continues to receive interest or dividends paid on the securities loaned. As of December 31, 2004, the Fund had on loan securities valued at $44,013,349. Cash of $44,858,831 was received as collateral for the loans, of which $14,877,998 was invested in approved instruments. 46 | OPPENHEIMER STRATEGIC BOND FUND/VA - -------------------------------------------------------------------------------- 13. LITIGATION A consolidated amended complaint has been filed as putative derivative and class actions against the Manager, OFS and the Distributor (collectively, the "Oppenheimer defendants"), as well as 51 of the Oppenheimer funds (as "Nominal Defendants") excluding the Fund, 31 present and former Directors or Trustees and 9 present and former officers of the funds. This complaint, filed in the U.S. District Court for the Southern District of New York on January 10, 2005, consolidates into a single action and amends six individual previously-filed putative derivative and class action complaints. Like those prior complaints, the complaint alleges that the Manager charged excessive fees for distribution and other costs, improperly used assets of the funds in the form of directed brokerage commissions and 12b-1 fees to pay brokers to promote sales of the funds, and failed to properly disclose the use of assets of the funds to make those payments in violation of the Investment Company Act of 1940 and the Investment Advisers Act of 1940. Also, like those prior complaints, the complaint further alleges that by permitting and/or participating in those actions, the Directors/Trustees and the Officers breached their fiduciary duties to shareholders of the funds under the Investment Company Act of 1940 and at common law. The complaint seeks unspecified compensatory and punitive damages, rescission of the funds' investment advisory agreements, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. The Oppenheimer defendants believe that the allegations contained in the Complaints are without merit and that they, the funds named as Nominal Defendants, and the Directors/Trustees of those funds have meritorious defenses against the claims asserted. The Oppenheimer defendants intend to defend these lawsuits vigorously and to contest any claimed liability, and they have retained legal counsel to defend such suits. The Oppenheimer defendants believe that it is premature to render any opinion as to the likelihood of an outcome unfavorable to them and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 47 | OPPENHEIMER STRATEGIC BOND FUND/VA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER STRATEGIC BOND FUND/VA: We have audited the accompanying statement of assets and liabilities of Oppenheimer Strategic Bond Fund/VA, a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2004, 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 presented. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, 2004, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. Additionally, an audit 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 Strategic Bond Fund/VA as of December 31, 2004, 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 presented, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Denver, Colorado February 11, 2005 48 | OPPENHEIMER STRATEGIC BOND FUND/VA FEDERAL INCOME TAX INFORMATION Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In early 2005, if applicable, shareholders of record received information regarding all dividends and distributions paid to them by the Fund during calendar year 2004. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Dividends of $0.2583 and $0.2536 per share were paid to Non-service and Service shareholders, respectively, on March 15, 2004, all of which was designated as ordinary income for federal income tax purposes. Dividends, if any, paid by the Fund during the fiscal year ended December 31, 2004 which are not designated as capital gain distributions should be multiplied by 0.16% 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. - -------------------------------------------------------------------------------- PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities ("portfolio proxies") held by the Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to file new Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Fund's Form N-PX filing is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov. The Fund files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's Form N-Q filings are available on the SEC's website at www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 49 | OPPENHEIMER STRATEGIC BOND FUND/VA TRUSTEES AND OFFICERS Unaudited - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ 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. WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek Mortgage Company (since Chairman of the Board 1991), Centennial State Mortgage Company (since 1994), The El Paso Mortgage Company (since 1993), of Trustees (since 2003) Transland Financial Services, Inc. (since 1997); Chairman of the following private companies: Great and Trustee (since 1999) Frontier Insurance (insurance agency) (since 1995), Ambassador Media Corporation and Broadway Age: 67 Ventures (since 1984); a director of the following public companies: Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992) and UNUMProvident (insurance company) (since 1991). Mr. Armstrong is also a Director/Trustee of Campus Crusade for Christ and the Bradley Foundation. Formerly a director of the following: Storage Technology Corporation (a publicly-held computer equipment company) (1991-February 2003), and International Family Entertainment (television channel) (1992-1997), 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 38 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: 73 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 38 portfolios in the OppenheimerFunds complex. GEORGE C. BOWEN, Formerly Assistant Secretary and a director (December 1991-April 1999) of Centennial Asset Trustee (since 1999) Management Corporation; President, Treasurer and a director (June 1989-April 1999) of Centennial Age: 68 Capital Corporation; Chief Executive Officer and a director of MultiSource Services, Inc. (March 1996-April 1999). Until April 1999 Mr. Bowen held several positions in subsidiary or affiliated companies of the Manager. Oversees 38 portfolios in the OppenheimerFunds complex. EDWARD L. CAMERON, A member of The Life Guard of Mount Vernon, George Washington's home (since June 2000). Formerly Trustee (since 1999) Director (March 2001-May 2002) of Genetic ID, Inc. and its subsidiaries (a privately held biotech Age: 66 company); a partner (July 1974-June 1999) with PricewaterhouseCoopers LLP (an accounting firm); and Chairman (July 1994-June 1998) of Price Waterhouse LLP Global Investment Management Industry Services Group. Oversees 38 portfolios in the OppenheimerFunds complex. JON S. FOSSEL, Director (since February 1998) of Rocky Mountain Elk Foundation (a not-for-profit foundation); a Trustee (since 1990) director (since 1997) of Putnam Lovell Finance (finance company); a director (since June 2002) of Age: 63 UNUMProvident (an insurance company). Formerly a director (October 1999-October 2003) of P.R. Pharmaceuticals (a privately held company); 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 (until October 1995) of Oppenheimer Acquisition Corp., Shareholders Services Inc. and Shareholder Financial Services, Inc. Oversees 38 portfolios in the OppenheimerFunds complex. SAM FREEDMAN, Director of Colorado Uplift (a non-profit charity) (since September 1984). Formerly (until October Trustee (since 1996) 1994) Mr. Freedman held several positions in subsidiary or affiliated companies of the Manager. Age: 64 Oversees 38 portfolios in the OppenheimerFunds complex.
50 | OPPENHEIMER STRATEGIC BOND FUND/VA BEVERLY L. HAMILTON, Trustee of Monterey International Studies (an educational organization) (since February 2000); a Trustee (since 2002) director of The California Endowment (a philanthropic organization) (since April 2002) and of Age: 58 Community Hospital of Monterey Peninsula (educational organization) (since February 2002); a director of America Funds Emerging Markets Growth Fund (since October 1991) (an investment company); an advisor to Credit Suisse First Boston's Sprout venture capital unit. Mrs. Hamilton also is a member of the investment committees of the Rockefeller Foundation and of the University of Michigan. Formerly, Trustee of MassMutual Institutional Funds (open-end investment company) (1996-May 2004); a director of MML Series Investment Fund (April 1989-May 2004) and MML Services (April 1987-May 2004) (investment companies); member of the investment committee (2000-2003) of Hartford Hospital; an advisor (2000-2003) to Unilever (Holland)'s pension fund; and President (February 1991-April 2000) of ARCO Investment Management Company. Oversees 37 portfolios in the OppenheimerFunds complex. ROBERT J. MALONE, Chairman, Chief Executive Officer and Director of Steele Street State Bank (a commercial banking Trustee (since 2002) entity) (since August 2003); director of Colorado UpLIFT (a non-profit organization) (since 1986); Age: 60 trustee (since 2000) of the Gallagher Family Foundation (non-profit organization). Formerly, Chairman of U.S. Bank-Colorado (a subsidiary of U.S. Bancorp and formerly Colorado National Bank,) (July 1996-April 1, 1999), a director of: Commercial Assets, Inc. (a REIT) (1993-2000), Jones Knowledge, Inc. (a privately held company) (2001-July 2004) and U.S. Exploration, Inc. (oil and gas exploration) (1997-February 2004). Oversees 37 portfolios in the OppenheimerFunds complex. F. WILLIAM MARSHALL, JR., Trustee of MassMutual Institutional Funds (since 1996) and MML Series Investment Fund (since 1987) Trustee (since 2000) (both open-end investment companies) and the Springfield Library and Museum Association (since 1995) Age: 62 (museums) and the Community Music School of Springfield (music school) (since 1996); Trustee (since 1987), Chairman of the Board (since 2003) and Chairman of the investment committee (since 1994) for the Worcester Polytech Institute (private university); and President and Treasurer (since January 1999) of the SIS Fund (a private not for profit charitable fund). Formerly, member of the investment committee of the Community Foundation of Western Massachusetts (1998-2003); Chairman (January 1999-July 1999) of SIS & Family Bank, F.S.B. (formerly SIS Bank) (commercial bank); and Executive Vice President (January 1999-July 1999) of Peoples Heritage Financial Group, Inc. (commercial bank). Oversees 38 portfolios in the OppenheimerFunds complex. - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH AND OFFICER FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR AN INDEFINITE TERM, UNTIL HIS RESIGNATION, 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. (the Manager's parent holding company) Age: 55 and of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc. (a subsidiary of the Manager); Chairman and a director (since July 2001) of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager); 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 the Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management Corporation, Trinity Investment Management Corporation and Tremont Capital Management, Inc. (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.; Executive Vice President (since February 1997) of Massachusetts Mutual Life Insurance Company (the Manager's parent company); a director (since June 1995) of DLB Acquisition Corporation (a holding company that owns the shares of Babson Capital Management LLC); a member of the Investment Company Institute's Board of Governors (elected to serve from October 3, 2003 through September 30, 2006). 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 62 portfolios as Trustee/Director and 21 additional portfolios as Officer in the OppenheimerFunds complex.
51 | OPPENHEIMER STRATEGIC BOND FUND/VA TRUSTEES AND OFFICERS Unaudited / Continued - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. STEINMETZ AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY 10281-1008, FOR MESSRS. VANDEHEY AND WIXTED 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER EARLIER RESIGNATION, DEATH OR REMOVAL. ART STEINMETZ, Senior Vice President of the Manager (since March 1993) and of HarbourView Asset Management Vice President and Corporation (since March 2000); an officer of 4 portfolios in the OppenheimerFunds complex. Portfolio Manager (since 1993) Age: 46 BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer of HarbourView Treasurer (since 1999) Asset Management Corporation, Shareholder Financial Services, Inc., Shareholder Services, Inc., Age: 45 Oppenheimer Real Asset Management Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), of OFI Private Investments, Inc. (since March 2000), of OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May 2000), of OFI Institutional Asset Management, Inc. (since November 2000), and of OppenheimerFunds Legacy Program (a Colorado non-profit corporation) (since June 2003); Treasurer and Chief Financial Officer (since May 2000) of OFI Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. Formerly Assistant Treasurer of Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer (March 1995-March 1999) at Bankers Trust Company-Mutual Fund Services Division. An officer of 83 portfolios in the OppenheimerFunds complex. ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since February 2002) of the Vice President and Manager; General Counsel and a director (since November 2001) of the Distributor; General Counsel Secretary (since 2001) (since November 2001) of Centennial Asset Management Corporation; Senior Vice President and General Age: 56 Counsel (since November 2001) of HarbourView Asset Management Corporation; Secretary and General Counsel (since November 2001) of Oppenheimer Acquisition Corp.; Assistant Secretary and a director (since October 1997) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and a director (since November 2001) of Oppenheimer Partnership Holdings, Inc.; a director (since November 2001) of Oppenheimer Real Asset Management, Inc.; Senior Vice President, General Counsel and a director (since November 2001) of Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private Investments, Inc. and OFI Trust Company; Vice President (since November 2001) of OppenheimerFunds Legacy Program; Senior Vice President and General Counsel (since November 2001) of OFI Institutional Asset Management, Inc.; a director since June 2003)of OppenheimerFunds (Asia) Limited. Formerly Senior Vice President (May 1985-December 2003), 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); and OppenheimerFunds International Ltd. (October 1997-November 2001). An officer of 83 portfolios in the OppenheimerFunds complex. MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the Manager; Vice President Vice President and (since June 1983) of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and Chief Compliance Officer Shareholder Services, Inc. Formerly (until February 2004) Vice President and Director of Internal (since 2004) Audit of OppenheimerFunds, Inc. An officer of 83 portfolios in the OppenheimerFunds complex. Age: 54
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY CALLING 1.800.981.2871. 52 | OPPENHEIMER STRATEGIC BOND FUND/VA ITEM 2. CODE OF ETHICS The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT The Board of Trustees of the registrant has determined that Edward L. Cameron, the Chairman of the Board's Audit Committee, and George C. Bowen, a member of the Board's Audit Committee, possess the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit committee financial experts," and has designated Messrs. Cameron and Bowen as the Audit Committee's financial experts. Messrs. Cameron and Bowen are "independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES (a) Audit Fees The principal accountant for the audit of the registrant's annual financial statements billed $19,000 in fiscal 2004 and $16,500 in fiscal 2003. (b) Audit-Related Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees to the registrant during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed no such fees in fiscal 2004 and $35,859 in fiscal 2003 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees include: internal control reviews. (c) Tax Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees to the registrant during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed no such fees in fiscal 2004 and $5,548 in fiscal 2003 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees include: tax compliance, tax planning and tax advice. Tax compliance generally involves preparation of original and amended tax returns, claims for a refund and tax payment-planning services. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities. (d) All Other Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees to the registrant during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. (e) (1) During its regularly scheduled periodic meetings, the registrant's audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the registrant. The audit committee has delegated pre-approval authority to its Chairman for any subsequent new engagements that arise between regularly scheduled meeting dates provided that any fees such pre-approved are presented to the audit committee at its next regularly scheduled meeting. Under applicable laws, pre-approval of non-audit services maybe waived provided that: 1) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of fees paid by the registrant to it principal accountant during the fiscal year in which services are provided 2) such services were not recognized by the registrant at the time of engagement as non-audit services and 3) such services are promptly brought to the attention of the audit committee of the registrant and approved prior to the completion of the audit. (2) 100% (f) Not applicable as less than 50%. (g) The principal accountant for the audit of the registrant's annual financial statements billed no such fees in fiscal 2004 and $41,407 in fiscal 2003 to the registrant and the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant related to non-audit fees. Those billings did not include any prohibited non-audit services as defined by the Securities Exchange Act of 1934. (h) The registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal account's independence. No such services were rendered. ITEM 5. NOT APPLICABLE ITEM 6. SCHEDULE OF INVESTMENTS NOT APPLICABLE ITEM 7. NOT APPLICABLE ITEM 8. NOT APPLICABLE ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The registrant's Board of Trustees has established a Governance Committee, one function of which is to create and oversee the process by which shareholders can submit nominees for positions on the Board. The Governance Committee has not yet adopted a charter, but anticipates that it will do so by the end of this calendar year. The Committee has temporarily adopted the process previously adopted by the Audit Committee regarding shareholder submission of nominees for board positions. Shareholders may submit names of individuals, accompanied by complete and properly supported resumes, for the Governance Committee's consideration by mailing such information to the Committee in care of the Fund. The Committee may consider such persons at such time as it meets to consider possible nominees. The Committee, however, reserves solo discretion to determine the candidates for trustees and independent trustees to recommend to the Board and/or shareholders and may identify candidates other than those submitted by Shareholders. The Committee may, but need not, consider the advice and recommendation of the Manager and its affiliates in selecting nominees. The full Board elects new trustees except for those instances when a shareholder vote is required. Shareholders who desire to communicate with the Board should address correspondence to the Board of Trustees of the registrant, or to an individual Trustee c/o the Secretary of the Fund at 6803 South Tucson Way, Centennial, Colorado 80112 and may submit their correspondence electronically at WWW.OPPENHEIMERFUNDS.COM under the caption "contact us." If your correspondence is intended for a particular Trustee, please indicate the name of the Trustee for whom it is intended. The sender should indicate in the address whether it is intended for the entire board, the Independent Trustees as group, or to an individual Trustee. The Governance Committee will consider if a different process should be recommended to the Board. ITEM 10. CONTROLS AND PROCEDURES (a) Based on their evaluation of registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of December 31, 2004, registrant's principal executive officer and principal financial officer found registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. (b) There have been no changes in registrant's internal controls over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT APPLICABLE TO SEMIANNUAL REPORTS) (B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS) EX-99.CODE ETH 2 ra265_12015ex99codeeth.txt RA265_12015EX99CODE EX-99.CODE ETH CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS OF THE OPPENHEIMER FUNDS AND OF OPPENHEIMERFUNDS, INC. This Code of Ethics for Principal Executive and Senior Financial Officers (referred to in this document as the "Code") has been adopted by each of the investment companies for which OppenheimerFunds, Inc. or one of its subsidiaries or affiliates (referred to collectively in this document as "OFI") acts as investment adviser (individually, a "Fund" and collectively, the "Funds"), and by OFI to effectuate compliance with Section 406 under the Sarbanes-Oxley Act of 2002 and the rules adopted to implement Section 406. This Code applies to each Fund's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions ("Covered Officers"). A listing of positions currently within the ambit of Covered Officers is attached as EXHIBIT A. 1 1. PURPOSE OF THE CODE This Code sets forth standards and procedures that are reasonably designed to deter wrongdoing and promote: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely, and understandable disclosure in reports and documents that a Fund files with, or submits to, the U.S. Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; o compliance with applicable governmental laws, rules and regulations; o the prompt internal reporting of violations of this Code to the Code Administrator identified below; and o accountability for adherence to this Code. In general, the principles that govern honest and ethical conduct, including the avoidance of conflicts of interest between personal and professional relationships, reflect, at the minimum, the following: (1) the duty at all times in performing any responsibilities as a Fund financial officer, controller, accountant or principal executive officer to place the interests of the Funds ahead of personal interests; (2) the fundamental standard that Covered Officers should not take inappropriate advantage of their positions; (3) the duty to assure that a Fund's financial statements and reports to its shareholders are prepared honestly and accurately in accordance with applicable rules, regulations and accounting standards; and (4) the duty to conduct the Funds' business and affairs in an honest and ethical manner. Each Covered Officer should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. - -------- 1 The obligations imposed by this Code on Covered Officers are separate from and in addition to any obligations that may be imposed on such persons as Covered Persons under the Code of Ethics adopted by the Oppenheimer Funds dated May 15, 2002, under Rule 17j-1 of the Investment Company Act of 1940, as amended and any other code of conduct applicable to Covered Officers in whatever capacity they serve. This Code does not incorporate by reference any provisions of the Rule 17j-1 Code of Ethics and accordingly, any violations or waivers granted under the Rule 17j-1 Code of Ethics will not be considered a violation or waiver under this Code. It is acknowledged that, as a result of the contractual relationship between each Fund and OFI, of which the Covered Officers are also officers or employees, and subject to OFI's fiduciary duties to each Fund, the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on OFI and the Funds. It is further acknowledged that the participation of the Covered Officers in such activities is inherent in the contractual relationship between each Fund and OFI and is consistent with the expectations of the Board of Trustees/Directors of the performance by the Covered Officers of their duties as officers of the Funds. 2. PROHIBITIONS The specific provisions and reporting requirements of this Code are concerned primarily with promoting honest and ethical conduct and avoiding conflicts of interest in personal and professional relationships. No Covered Officer may use information concerning the business and affairs of a Fund, including the investment intentions of a Fund, or use his or her ability to influence such investment intentions, for personal gain to himself or herself, his or her family or friends or any other person or in a manner detrimental to the interests of a Fund or its shareholders. No Covered Officer may use his or her personal influence or personal relationships to influence the preparation and issuance of financial reports of a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund and its shareholders. No Covered Officer shall intentionally for any reason take any action or fail to take any action in connection with his or her official acts on behalf of a Fund that causes the Fund to violate applicable laws, rules and regulations. No Covered Officer shall, in connection with carrying out his or her official duties and responsibilities on behalf of a Fund: (i) employ any device, scheme or artifice to defraud a Fund or its shareholders; (ii) intentionally cause a Fund to make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading in its official documents, regulatory filings, financial statements or communications to the public; (iii) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any Fund or its shareholders; (iv) engage in any manipulative practice with respect to any Fund; (v) use his or her personal influence or personal relationships to influence any business decision, investment decisions, or financial reporting by a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund or its shareholders; (vi) intentionally cause a Fund to fail to comply with applicable laws, rules and regulations, including failure to comply with the requirement of full, fair, accurate, understandable and timely disclosure in reports and documents that a Fund files with, or submits to, the SEC and in other public communications made by the Fund; (vii) intentionally mislead or omit to provide material information to the Fund's independent auditors or to the Board of Trustees/Directors or the officers of the Fund or its investment adviser in connection with financial reporting matters; (viii) fail to notify the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser promptly if he or she becomes aware of any existing or potential violations of this Code or applicable laws; (ix) retaliate against others for, or otherwise discourage the reporting of, actual or apparent violations of this Code; or (x) fails to acknowledge or certify compliance with this Code if requested to do so. 3. REPORTS OF CONFLICTS OF INTERESTS If a Covered Officer becomes aware of a conflict of interest under this Code or, to the Covered Officer's reasonable belief, the appearance of one, he or she must immediately report the matter to the Code's Administrator. If the Code Administrator is involved or believed to be involved in the conflict of interest or appearance of conflict of interest, the Covered Officer shall report the matter directly to the OFI's Chief Executive Officer. Upon receipt of a report of a conflict, the Code Administrator will take prompt steps to determine whether a conflict of interest exists. If the Code Administrator determines that an actual conflict of interest exists, the Code Administrator will take steps to resolve the conflict. If the Code Administrator determines that the appearance of a conflict exists, the Code Administrator will take appropriate steps to remedy such appearance. If the Code Administrator determines that no conflict or appearance of a conflict exists, the Code Administrator shall meet with the Covered Officer to advise him or her of such finding and of his or her reason for taking no action. In lieu of determining whether a conflict or appearance of conflict exists, the Code Administrator may in his or her discretion refer the matter to the Fund's Board of Trustees/Directors. 4. WAIVERS Any Covered Officer requesting a waiver of any of the provisions of this Code must submit a written request for such waiver to the Code Administrator, setting forth the basis of such request and all necessary facts upon which such request can be evaluated. The Code Administrator shall review such request and make a written determination thereon, which shall be binding. The Code Administrator may in reviewing such request, consult at his discretion with legal counsel to OFI or to the Fund. In determining whether to waive any of the provisions of this Code, the Code Administrator shall consider whether the proposed waiver: : (i) is prohibited by this Code; (ii) is consistent with honest and ethical conduct; and (iii) will result in a conflict of interest between the Covered Officer's personal and professional obligations to a Fund. In lieu of determining whether to grant a waiver, the Code Administrator in his or her discretion may refer the matter to the appropriate Fund's Board of Trustees/Directors. 5. REPORTING REQUIREMENTS (a) Each Covered Officer shall, upon becoming subject to this Code, be provided with a copy of this Code and shall affirm in writing that he or she has received, read, understands and shall adhere to this Code. (b) At least annually, all Covered Officers shall be provided with a copy of this Code and shall certify that they have read and understand this Code and recognize that they are subject thereto. (c) At least annually, all Covered Officers shall certify that they have complied with the requirements of this Code and that they have disclosed or reported any violations of this Code to the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser. (d) The Code Administrator shall submit a quarterly report to the Board of Trustees/Directors of each Fund containing (i) a description of any report of a conflict of interest or apparent conflict and the disposition thereof; (ii) a description of any request for a waiver from this Code and the disposition thereof; (iii) any violation of the Code that has been reported or found and the sanction imposed; (iv) interpretations issued under the Code by the Code Administrator; and (v) any other significant information arising under the Code including any proposed amendments. (e) Each Covered Officer shall notify the Code Administrator promptly if he or she knows of or has a reasonable belief that any violation of this Code has occurred or is likely to occur. Failure to do so is itself a violation of this Code. (f) Any changes to or waivers of this Code, including "implicit" waivers as defined in applicable SEC rules, will, to the extent required, be disclosed by the Code Administrator or his or her designee as provided by applicable SEC rules. 2 6. ANNUAL RENEWAL At least annually, the Board of Trustees/Directors of each Fund shall review the Code and determine whether any amendments (including any amendments that may be recommended by OFI or the Fund's legal counsel) are necessary or desirable, and shall consider whether to renew and/or amend the Code. 7. SANCTIONS Any violation of this Code of Ethics shall be subject to the imposition of such sanctions by OFI as may be deemed appropriate under the circumstances to achieve the purposes of this Code and may include, without limitation, a letter of censure, suspension from employment or termination of employment, in the sole discretion of OFI. 8. ADMINISTRATION AND CONSTRUCTION (a) The administration of this Code of Ethics shall be the responsibility of OFI's General Counsel or his designee as the "Code Administrator" of this Code, acting under the terms of this Code and the oversight of the Trustees/Directors of the Funds. (b) The duties of such Code Administrator will include: (i) Continuous maintenance of a current list of the names of all Covered Officers; (ii) Furnishing all Covered Officers a copy of this Code and initially and periodically informing them of their duties and obligations thereunder; (iii) Maintaining or supervising the maintenance of all records required by this Code, including records of waivers granted hereunder; (iv) Issuing interpretations of this Code which appear to the Code Administrator to be consistent with the objectives of this Code and any applicable laws or regulations; (v) Conducting such inspections or investigations as shall reasonably be required to detect and report any violations of this Code, with his or her recommendations, to the Chief Executive Officer of OFI and to the Trustees/Directors of the affected Fund(s) or any committee appointed by them to deal with such information; and (vi) Periodically conducting educational training programs as needed to explain and reinforce the terms of this Code. (c) In carrying out the duties and responsibilities described under this Code, the Code Administrator may consult with legal counsel, who may include legal counsel to the applicable Funds, and such other persons as the Administrator shall deem necessary or desirable. The Code Administrator - ------------- 2 An "implicit waiver" is the failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to the General Counsel, the Code Administrator, an executive officer of the Fund or OFI. shall be protected from any liability hereunder or under any applicable law, rule or regulation, for decisions made in good faith based upon his or her reasonable judgment. 9. REQUIRED RECORDS The Administrator shall maintain and cause to be maintained in an easily accessible place, the following records for the period required by applicable SEC rules (currently six years following the end of the fiscal year of OFI in which the applicable event or report occurred): (a) A copy of any Code which has been in effect during the period; (b) A record of any violation of any such Code and of any action taken as a result of such violation, during the period; (c) A copy of each annual report pursuant to the Code made by a Covered Officer during the period; (d) A copy of each report made by the Code Administrator pursuant to this Code during the period; (e) A list of all Covered Officers who are or have been required to make reports pursuant to this Code during the period, plus those person(s) who are or were responsible for reviewing these reports; (f) A record of any request to waive any requirement of this Code, the decision thereon and the reasons supporting the decision; and (g) A record of any report of any conflict of interest or appearance of a conflict of interest received by the Code Administrator or discovered by the Code Administrator during the period, the decision thereon and the reasons supporting the decision. 10. AMENDMENTS AND MODIFICATIONS This Code may not be amended or modified except by an amendment in writing which is approved or ratified by OFI and by a majority vote of the Independent Trustees/Directors of each of the applicable Funds. 11. CONFIDENTIALITY. This Code is identified for the internal use of the Funds and OFI. Reports and records prepared or maintained under this Code are considered confidential and shall be maintained and protected accordingly to the extent permitted by applicable laws, rules and regulations. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Trustees/Directors of the affected Fund(s) and their counsel, the independent auditors of the affected Funds and/or OFI, and to OFI, except as such disclosure may be required pursuant to applicable judicial or regulatory process. Dated as of: June 25, 2003 Adopted by Board I of the Oppenheimer Funds June 13, 2003 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board II of the Oppenheimer/Centennial Funds June 24, 2003 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board III of the Oppenheimer Funds June 9, 2003 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board IV of the Oppenheimer Funds May 21, 2003 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by the Boards of Directors of OppenheimerFunds, Inc. and its subsidiaries and affiliates that act as investment adviser to the Oppenheimer or Centennial funds June 1, 2003 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Senior Vice President and General Counsel EXHIBIT A POSITIONS COVERED BY THIS CODE OF ETHICS FOR SENIOR OFFICERS EACH OPPENHEIMER OR CENTENNIAL FUND Principal Executive Officer Principal Financial Officer Treasurer Assistant Treasurer PERSONNEL OF OFI WHO BY VIRTUE OF THEIR JOBS PERFORM CRITICAL FINANCIAL AND ACCOUNTING FUNCTIONS FOR OFI ON BEHALF OF A FUND, INCLUDING: Treasurer Senior Vice President/Fund Accounting Vice President/Fund Accounting EX-99.CERT 3 ra265_12015ex-99cert.txt RA265_12015EX-99CERT Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, JOHN V. MURPHY, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Strategic Bond Fund/VA; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of trustees (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 2/8/05 /s/ John V. Murphy -------------------------- John V. Murphy Chief Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, BRIAN W. WIXTED, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Strategic Bond Fund/VA; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of trustees (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 2/8/05 /s/ Brian W. Wixted ---------------------------- Brian W. Wixted Chief Financial Officer EX-99.906 4 ra265_12015ex906cert.txt RA265_12015EX906CERT.TXT EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 JOHN V. MURPHY, Chief Executive Officer, and BRIAN W. WIXTED, Chief Financial Officer, of Oppenheimer Strategic Bond Fund/VA (the "Registrant"), each certify to the best of his or her knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended December 31, 2004 (the "Form N-CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. Chief Executive Officer Chief Financial Officer Oppenheimer Strategic Bond Fund/VA Oppenheimer Strategic Bond Fund/VA /s/ John V. Murphy /s/ Brian W. Wixted - ---------------------------- ---------------------------- John V. Murphy Brian W. Wixted Date: 2/8/05 Date: 2/8/05 -----END PRIVACY-ENHANCED MESSAGE-----