-----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, IgA46xhfQMD7GL+FR7+WZdhGNYnYMEFwhLp4GfRALUFS7xXXhql2F7Ds2cUXBzeD 0RTvhUBkKjzb8eLa+ouW5A== 0000935069-05-000322.txt : 20050225 0000935069-05-000322.hdr.sgml : 20050225 20050225154306 ACCESSION NUMBER: 0000935069-05-000322 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: 05641265 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 ra670_12034ncsr.txt RA670_12034NCSR.TXT 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 Balanced 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 achieved strong returns compared to its primary benchmark, the S&P 500 Index, during the 12-month reporting period. We attribute this performance to our security selection strategy in the stock market's financials, health care, consumer discretionary and consumer staples sectors as well as strong performance from corporate bonds and mortgage-backed securities. While both stocks and bonds contributed positively to performance overall, the Fund's modest emphasis on bonds over stocks hindered its overall results when stocks rallied strongly late in the year. Among equities, the Fund produced better returns than its benchmark in the financials sector, where performance was driven by favorable stock selection. The Fund enjoyed particularly strong results from the initial public offering of Genworth Financial, Inc., Cl. A, an insurance company spun off by GE Capital. Also in the insurance industry, another major insurance and financial services provider posted strong returns. The Fund also benefited from its position in a regional bank that was acquired by a larger competitor, and the Fund's real estate-related holdings were driven higher by good performance from a hotel-related real estate investment trust. The Fund's largest single holding, international cable systems operator UnitedGlobalCom, Inc., Cl. A, gained value as did other consumer discretionary companies in the media, home building and restaurant industries. A managed care provider, a health insurance company and a medical equipment manufacturer drove gains in the Fund's health care sector, more than offsetting weakness in a managed care provider that was hurt by allegations of mismanagement. Among consumer staples companies, the Fund benefited from its position in Altria Group, Inc. (formerly Phillip Morris), which gained value as litigation concerns waned. A chicken producer saw attractive results when fears of "mad cow disease" and the low-carb diet craze boosted consumption of poultry. A beer, wine, and spirits maker gained value after several successful acquisitions and the apparent end to a "wine glut." On the other hand, the Fund received disappointing contributions from the telecommunications sector. The Fund's investments in the energy, industrials and information technology sectors were largely in line with industry averages. The Fund's telecommunications investments were hurt by its lack of exposure to a U.S. mobile phone service provider that was acquired during the reporting period, and an unfavorable legal ruling favoring regional Bell operating companies over smaller competitors. Although energy stocks generally fared well as oil and gas prices surged, relatively light exposure to the area prevented the Fund from participating fully in its gains. Among technology stocks, good performance from software providers was undermined by lackluster results from hardware manufacturers and semiconductor makers. Among bonds, the Fund's returns were driven by its relatively heavy exposure to corporate bonds, including a small position in high-yield securities. Corporate bonds rated "triple-B" fared especially well compared to their more highly rated counterparts. While the Fund's relatively heavy exposure to mortgage-backed securities also helped boost fixed-income returns, we began to reduce its mortgage position toward the neutral range later in the reporting period. We also added value by maintaining a shorter-than-average duration position in the rising interest-rate environment. The Fund's small positions in commercial mortgages and asset-backed securities also helped boost fixed-income returns. 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-year period. In the case of Service shares, performance is measured from inception of the class on May 1, 2002. Performance information does not reflect charges that apply to separate accounts investing in the Fund. If these charges were taken into account, performance would be lower. The graph assumes that all dividends and capital gains distributions were reinvested in additional shares. 4 | OPPENHEIMER BALANCED FUND/VA The Fund's performance is compared to the performance of both the S&P 500 Index, an unmanaged index of U.S. equity securities that is a measure of the general domestic stock market and the Lehman Brothers Aggregate Bond Index, an unmanaged index of U.S. corporate, government and mortgage-backed securities that is a measure of the domestic bond market. Index performance reflects the reinvestment of income but does not consider the effect of transaction costs, and none of the data in the graphs show 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. 5 | OPPENHEIMER BALANCED FUND/VA FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- NON-SERVICE SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Balanced Fund/VA (Non-Service) S&P 500 Index Lehman Brothers Aggregate Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Balanced Fund/VA S&P 500 Lehman Brothers (Non-Service) Index Aggregate Bond Index 12/31/1994 10,000 10,000 10,000 03/31/1995 10,647 10,973 10,504 06/30/1995 11,349 12,019 11,144 09/30/1995 11,888 12,973 11,363 12/31/1995 12,136 13,753 11,847 03/31/1996 12,548 14,491 11,637 06/30/1996 12,885 15,141 11,704 09/30/1996 13,387 15,609 11,920 12/31/1996 14,016 16,909 12,278 03/31/1997 14,021 17,363 12,209 06/30/1997 15,299 20,392 12,657 09/30/1997 16,485 21,919 13,078 12/31/1997 16,430 22,548 13,463 03/31/1998 17,565 25,691 13,672 06/30/1998 17,596 26,544 13,992 09/30/1998 15,756 23,910 14,583 12/31/1998 17,524 28,997 14,632 03/31/1999 17,807 30,441 14,560 06/30/1999 19,008 32,583 14,432 09/30/1999 18,379 30,554 14,530 12/31/1999 19,591 35,096 14,512 03/31/2000 20,789 35,900 14,832 06/30/2000 20,903 34,946 15,091 09/30/2000 20,966 34,608 15,546 12/31/2000 20,852 31,902 16,199 03/31/2001 20,678 28,122 16,691 06/30/2001 21,965 29,767 16,785 09/30/2001 19,557 25,399 17,559 12/31/2001 21,315 28,113 17,567 03/31/2002 21,391 28,191 17,584 06/30/2002 19,823 24,416 18,233 09/30/2002 17,893 20,200 19,069 12/31/2002 19,098 21,902 19,369 03/31/2003 18,902 21,212 19,638 06/30/2003 21,271 24,476 20,130 09/30/2003 22,020 25,124 20,100 12/31/2003 23,864 28,181 20,164 03/31/2004 24,412 28,658 20,700 06/30/2004 24,185 29,151 20,194 09/30/2004 24,366 28,606 20,839 12/31/2004 26,274 31,245 21,038
AVERAGE ANNUAL TOTAL RETURN OF NON-SERVICE SHARES OF THE FUND AT 12/31/04 1-Year 10.10% 5-Year 6.05% 10-Year 10.14% SERVICE SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Balanced Fund/VA (Service) S&P 500 Index Lehman Brothers Aggregate Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Balanced Fund/VA S&P 500 Lehman Brothers (Service) Index Aggregate Bond Index 05/01/2002 10,000 10,000 10,000 06/30/2002 9,407 9,220 10,172 09/30/2002 8,491 7,628 10,638 12/31/2002 9,056 8,271 10,806 03/31/2003 8,951 8,010 10,956 06/30/2003 10,075 9,242 11,230 09/30/2003 10,423 9,487 11,214 12/31/2003 11,291 10,641 11,249 03/31/2004 11,542 10,822 11,548 06/30/2004 11,427 11,008 11,266 09/30/2004 11,506 10,802 11,626 12/31/2004 12,397 11,799 11,737
AVERAGE ANNUAL TOTAL RETURN OF SERVICE SHARES OF THE FUND AT 12/31/2004 1-Year 9.79% 5-Year N/A Since Inception (5/1/02) 8.39% 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. 6 | OPPENHEIMER BALANCED 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 $ 1,086.40 $ 3.89 - ------------------------------------------------------------------------------- Non-Service shares Hypothetical 1,000.00 1,021.42 3.77 - ------------------------------------------------------------------------------- Service shares Actual 1,000.00 1,084.90 5.31 - ------------------------------------------------------------------------------- Service shares Hypothetical 1,000.00 1,020.06 5.14 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 0.74% - --------------------------------- Service shares 1.01 - -------------------------------------------------------------------------------- 7 | OPPENHEIMER BALANCED FUND/VA STATEMENT OF INVESTMENTS December 31, 2004 - -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- COMMON STOCKS--52.4% - ------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--8.6% - ------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--0.8% McDonald's Corp. 154,500 $ 4,953,270 - ------------------------------------------------------------------------------- HOUSEHOLD DURABLES--0.3% WCI Communities, Inc. 1 69,600 2,046,240 - ------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL--0.5% IAC/InterActiveCorp 103,600 2,861,432 - ------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS--0.1% Leapfrog Enterprises, Inc. 1 47,200 641,920 - ------------------------------------------------------------------------------- MEDIA--6.6% Liberty Media Corp., Cl. A 1 996,200 10,938,276 - ------------------------------------------------------------------------------- Liberty Media International, Inc., Cl. A 1 46,794 2,163,287 - ------------------------------------------------------------------------------- UnitedGlobalCom, Inc., Cl. A 1 2,268,484 21,913,555 - ------------------------------------------------------------------------------- Viacom, Inc., Cl. B 131,800 4,796,202 --------------- 39,811,320 - ------------------------------------------------------------------------------- SPECIALTY RETAIL--0.3% Gap, Inc. (The) 82,300 1,738,176 - ------------------------------------------------------------------------------- CONSUMER STAPLES--3.7% - ------------------------------------------------------------------------------- BEVERAGES--1.0% Constellation Brands, Inc., Cl. A 1 133,900 6,227,689 - ------------------------------------------------------------------------------- FOOD PRODUCTS--0.7% Tyson Foods, Inc., Cl. A 233,800 4,301,920 - ------------------------------------------------------------------------------- TOBACCO--2.0% Altria Group, Inc. 199,600 12,195,560 - ------------------------------------------------------------------------------- Energy--3.7% - ------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--0.3% Halliburton Co. 42,600 1,671,624 - ------------------------------------------------------------------------------- OIL & GAS--3.4% BP plc, ADR 50,400 2,943,360 - ------------------------------------------------------------------------------- Kinder Morgan, Inc. 34,900 2,552,237 - ------------------------------------------------------------------------------- LUKOIL, Sponsored ADR 44,300 5,426,750 - ------------------------------------------------------------------------------- Petroleo Brasileiro SA, Preference 81,000 2,962,782 - ------------------------------------------------------------------------------- Talisman Energy, Inc. 137,700 3,717,894 - ------------------------------------------------------------------------------- Total SA, B Shares 1,700 372,570 - ------------------------------------------------------------------------------- TotalFinaElf SA, Sponsored ADR 24,000 2,636,160 --------------- 20,611,753 - ------------------------------------------------------------------------------- FINANCIALS--10.0% - ------------------------------------------------------------------------------- CAPITAL MARKETS--0.4% UBS AG 25,042 2,099,863 - ------------------------------------------------------------------------------- COMMERCIAL BANKS--2.5% Bank of America Corp. 169,968 7,986,796 - ------------------------------------------------------------------------------- Wachovia Corp. 74,315 3,908,969 - ------------------------------------------------------------------------------- Wells Fargo & Co. 54,600 3,393,390 --------------- 15,289,155 VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES--3.2% Citigroup, Inc. 164,100 $ 7,906,338 - ------------------------------------------------------------------------------- JPMorgan Chase & Co. 100,500 3,920,505 - ------------------------------------------------------------------------------- Lehman Brothers Holdings, Inc. 70,500 6,167,340 - ------------------------------------------------------------------------------- Morgan Stanley 30,600 1,698,912 --------------- 19,693,095 - ------------------------------------------------------------------------------- INSURANCE--2.7% Assured Guaranty Ltd. 181,900 3,577,973 - ------------------------------------------------------------------------------- Genworth Financial, Inc., Cl. A 258,500 6,979,500 - ------------------------------------------------------------------------------- Prudential Financial, Inc. 109,000 5,990,640 --------------- 16,548,113 - ------------------------------------------------------------------------------- REAL ESTATE--0.4% Host Marriott Corp. 140,500 2,430,650 - ------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE--0.8% Freddie Mac 67,200 4,952,640 - ------------------------------------------------------------------------------- HEALTH CARE--7.6% - ------------------------------------------------------------------------------- BIOTECHNOLOGY--1.9% MedImmune, Inc. 1 167,900 4,551,769 - ------------------------------------------------------------------------------- Wyeth 158,300 6,741,997 --------------- 11,293,766 - ------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--0.7% Beckman Coulter, Inc. 61,000 4,086,390 - ------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--1.3% Manor Care, Inc. 47,600 1,686,468 - ------------------------------------------------------------------------------- PacifiCare Health Systems, Inc. 46,800 2,645,136 - ------------------------------------------------------------------------------- Tenet Healthcare Corp. 1 349,700 3,839,706 --------------- 8,171,310 - ------------------------------------------------------------------------------- PHARMACEUTICALS--3.7% GlaxoSmithKline plc, ADR 62,600 2,966,614 - ------------------------------------------------------------------------------- Novartis AG 89,813 4,525,798 - ------------------------------------------------------------------------------- Pfizer, Inc. 207,600 5,582,364 - ------------------------------------------------------------------------------- Schering-Plough Corp. 175,200 3,658,176 - ------------------------------------------------------------------------------- Watson Pharmaceuticals, Inc. 1 170,700 5,600,667 --------------- 22,333,619 - ------------------------------------------------------------------------------- INDUSTRIALS--5.7% - ------------------------------------------------------------------------------- AEROSPACE & DEFENSE--2.9% Empresa Brasileira de Aeronautica SA, ADR 101,400 3,390,816 - ------------------------------------------------------------------------------- Honeywell International, Inc. 83,600 2,960,276 - ------------------------------------------------------------------------------- Orbital Sciences Corp. 1 557,464 6,594,799 - ------------------------------------------------------------------------------- Raytheon Co. 121,800 4,729,494 --------------- 17,675,385 8 | OPPENHEIMER BALANCED FUND/VA VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--1.9% Cendant Corp. 484,500 $ 11,327,610 - ------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--0.9% General Electric Co. 97,900 3,573,350 - ------------------------------------------------------------------------------- Tyco International Ltd. 48,800 1,744,112 --------------- 5,317,462 - ------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--8.9% - ------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS--2.2% Hewlett-Packard Co. 145,400 3,049,038 - ------------------------------------------------------------------------------- International Business Machines Corp. 103,500 10,203,030 --------------- 13,252,068 - ------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.8% Flextronics International Ltd. 1 347,800 4,806,596 - ------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--0.3% Net2Phone, Inc. 1 481,500 1,637,100 - ------------------------------------------------------------------------------- IT SERVICES--0.3% CSG Systems International, Inc. 115,700 2,163,590 - ------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.3% Freescale Semiconductor, Inc., Cl. A 1 282,900 5,041,278 - ------------------------------------------------------------------------------- Intel Corp. 128,600 3,007,954 --------------- 8,049,232 - ------------------------------------------------------------------------------- SOFTWARE--4.0% Compuware Corp. 1 245,400 1,587,738 - ------------------------------------------------------------------------------- Microsoft Corp. 290,000 7,745,900 - ------------------------------------------------------------------------------- Novell, Inc. 1 252,700 1,705,725 - ------------------------------------------------------------------------------- Synopsys, Inc. 1 39,600 776,952 - ------------------------------------------------------------------------------- Take-Two Interactive Software, Inc. 355,800 12,378,282 --------------- 24,194,597 - ------------------------------------------------------------------------------- MATERIALS--1.4% - ------------------------------------------------------------------------------- CHEMICALS--0.4% Praxair, Inc. 58,900 2,600,435 - ------------------------------------------------------------------------------- Sterling Chemicals, Inc. 1,2 18 671 --------------- 2,601,106 - ------------------------------------------------------------------------------- METALS & MINING--0.7% Companhia Vale do Rio Doce, Sponsored ADR 115,800 2,823,204 - ------------------------------------------------------------------------------- GrafTech International Ltd. 1 164,200 1,553,332 --------------- 4,376,536 - ------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS--0.3% Bowater, Inc. 33,700 1,481,789 VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--1.3% - ------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--1.3% IDT Corp., Cl. B 1 494,600 $ 7,656,408 - ------------------------------------------------------------------------------- WorldCom, Inc./WorldCom Group 1 375,000 -- --------------- 7,656,408 - ------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--0.0% Leap Wireless International, Inc. 1 1,707 46,089 - ------------------------------------------------------------------------------- UTILITIES--1.5% - ------------------------------------------------------------------------------- ELECTRIC UTILITIES--1.2% AES Corp. (The) 1 389,900 5,329,933 - ------------------------------------------------------------------------------- PG&E Corp. 58,100 1,933,568 --------------- 7,263,501 - ------------------------------------------------------------------------------- GAS UTILITIES--0.3% Sempra Energy 52,900 1,940,372 --------------- Total Common Stocks (Cost $222,624,033) 317,748,946 UNITS - ------------------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES--0.0% - ------------------------------------------------------------------------------- HF Holdings, Inc. Wts., Exp. 9/27/09 1,2 2,593 26 - ------------------------------------------------------------------------------- Lucent Technologies, Inc. Wts., Exp. 12/10/07 1 8,881 14,032 - ------------------------------------------------------------------------------- Sterling Chemicals, Inc. Wts., Exp. 12/19/08 1,2 31 145 - ------------------------------------------------------------------------------- Sun Healthcare Group, Inc. Wts., Exp. 2/28/05 1 1,241 -- --------------- Total Rights, Warrants and Certificates (Cost $38,932) 14,203 PRINCIPAL AMOUNT - ------------------------------------------------------------------------------- ASSET-BACKED SECURITIES--5.9% - ------------------------------------------------------------------------------- Bank One Auto Securitization Trust, Automobile Receivable Certificates, Series 2003-1, Cl. A2, 1.29%, 8/21/06 $ 428,668 427,907 - ------------------------------------------------------------------------------- BMW Vehicle Owner Trust, Automobile Loan Certificates, Series 2004-A, Cl. A2, 1.88%, 10/25/06 1,342,339 1,338,035 - ------------------------------------------------------------------------------- Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts., Series 2004-2, Cl. A3, 3.58%, 1/15/09 1,270,000 1,268,413 - ------------------------------------------------------------------------------- Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates: Series 2003-C, Cl. AF1, 2.14%, 7/25/18 118,828 118,696 Series 2004-A, Cl. AF1, 2.03%, 6/25/19 279,453 278,377 Series 2004-D, Cl. AF1, 2.98%, 4/25/20 2 548,493 546,714 9 | OPPENHEIMER BALANCED FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- ASSET-BACKED SECURITIES Continued - ------------------------------------------------------------------------------- Chase Funding Mortgage Loan Asset-Backed Certificates, Home Equity Mtg. Obligations: Series 2002-4, Cl. 1A3, 3.44%, 4/25/23 $ 176,951 $ 176,963 Series 2003-1, Cl. 1A3, 3.14%, 7/25/23 519,865 519,594 Series 2003-4, Cl. 1A1, 2.538%, 9/25/17 3 105,089 105,145 Series 2003-4, Cl. 1A2, 2.138%, 7/25/18 470,000 468,421 Series 2004-1, Cl. 2A1, 2.528%, 9/25/21 3 912,702 913,289 - ------------------------------------------------------------------------------- Chase Manhattan Auto Owner Trust, Automobile Loan Pass-Through Certificates: Series 2002-A, Cl. A4, 4.24%, 9/15/08 270,583 272,276 Series 2003-B, Cl. A2, 1.28%, 3/15/06 111,861 111,799 - ------------------------------------------------------------------------------- CIT Equipment Collateral, Equipment Receivable-Backed Nts., Series 2004-DFS, Cl. A2, 2.66%, 11/20/06 2 900,000 896,169 - ------------------------------------------------------------------------------- Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series 2002-A3, Cl. A3, 4.40%, 5/15/07 1,050,000 1,057,252 - ------------------------------------------------------------------------------- CitiFinancial Mortgage Securities, Inc., Home Equity Collateralized Mtg. Obligations: Series 2003-2, Cl. AF1, 2.518%, 5/25/33 3 62,274 62,315 Series 2003-3, Cl. AF1, 2.538%, 8/25/33 3 288,500 288,693 - ------------------------------------------------------------------------------- Citigroup Mortgage Loan Trust, Inc., Home Equity Mtg. Obligations, Series 2004-OPT1, Cl. A1B, 2.388%, 9/1/34 2 957,943 956,745 - ------------------------------------------------------------------------------- Countrywide Asset-Backed Certificates, Inc., Home Equity Asset-Backed Certificates, Series 2002-4, Cl. A1, 2.788%, 2/25/33 3 247,806 249,209 - ------------------------------------------------------------------------------- DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates: Series 2003-A, Cl. A2, 1.52%, 12/8/05 344,336 344,301 Series 2003-B, Cl. A2, 1.61%, 7/10/06 1,429,174 1,426,772 Series 2004-B, Cl. A2, 2.48%, 2/8/07 2 1,000,000 997,602 Series 2004-C, Cl. A2, 2.62%, 6/8/07 1,720,000 1,714,720 - ------------------------------------------------------------------------------- Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates, Series 2004-A, Cl. A2, 2.13%, 10/15/06 2,200,000 2,191,434 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- ASSET-BACKED SECURITIES Continued - ------------------------------------------------------------------------------- Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts., Series 2003-3, Cl. A1, 1.50%, 1/15/08 $ 768,019 $ 765,306 - ------------------------------------------------------------------------------- Honda Auto Receivables Owner Trust, Automobile Receivable Obligations: Series 2003-3, Cl. A2, 1.52%, 4/21/06 815,279 813,913 Series 2003-4, Cl. A2, 1.58%, 7/17/06 1,186,525 1,183,878 - ------------------------------------------------------------------------------- Household Automotive Trust, Automobile Loan Certificates, Series 2003-2, Cl. A2, 1.56%, 12/18/06 483,178 482,223 - ------------------------------------------------------------------------------- M&I Auto Loan Trust, Automobile Loan Certificates: Series 2002-1, Cl. A3, 2.49%, 10/22/07 499,345 499,276 Series 2003-1, Cl. A2, 1.60%, 7/20/06 780,991 779,864 - ------------------------------------------------------------------------------- National City Auto Receivables Trust, Automobile Receivable Obligations, Series 2004-A, Cl. A2, 1.50%, 2/15/07 830,296 827,374 - ------------------------------------------------------------------------------- Nissan Auto Lease Trust, Automobile Lease Obligations: Series 2003-A, Cl. A2, 1.69%, 12/15/05 77,230 77,230 Series 2004-A, Cl. A2, 2.55%, 1/15/07 840,000 839,430 - ------------------------------------------------------------------------------- Nissan Auto Receivables Owner Trust, Automobile Receivable Nts.: Series 2002-A, Cl. A4, 4.28%, 10/16/06 214,670 215,752 Series 2004-A, Cl. A2, 1.40%, 7/17/06 941,394 937,610 - ------------------------------------------------------------------------------- Option One Mortgage Loan Trust, Home Equity Mtg. Obligations, Series 2004-3, Cl. A2, 2.568%, 11/25/34 2,3 538,440 538,787 - ------------------------------------------------------------------------------- Popular ABS Mortgage Pass-Through Trust, Home Equity Pass-Through Certificates, Series 2004-5, Cl. AF2, 3.735%, 11/10/34 2 340,000 338,869 - ------------------------------------------------------------------------------- Toyota Auto Receivables Owner Trust, Automobile Mtg.-Backed Obligations: Series 2002-B, Cl. A3, 3.76%, 6/15/06 77,995 78,108 Series 2003-B, Cl. A2, 1.43%, 2/15/06 315,355 315,162 - ------------------------------------------------------------------------------- USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.: Series 2002-1, Cl. A3, 2.41%, 10/16/06 206,620 206,613 Series 2004-1, Cl. A2, 1.43%, 9/15/06 2,232,894 2,225,786 Series 2004-2, Cl. A2, 2.41%, 2/15/07 1,030,000 1,026,746 Series 2004-3, Cl. A2, 2.79%, 6/15/07 820,000 818,382 - ------------------------------------------------------------------------------- Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities, Series 2004-A, Cl. A2, 2.47%, 1/22/07 1,040,000 1,035,247 10 | OPPENHEIMER BALANCED FUND/VA 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 $ 143,570 $ 143,521 Series 2003-2, Cl. A2, 1.55%, 6/20/06 619,502 618,299 - ------------------------------------------------------------------------------- Wachovia Auto Owner Trust, Automobile Receivable Nts., Series 2004-B, Cl. A2, 2.40%, 5/21/07 740,000 736,955 - ------------------------------------------------------------------------------- Wells Fargo Home Equity Trust, Collateralized Mtg. Obligations, Series 2004-2, Cl. AI1B, 2.94%, 9/25/18 1,530,733 1,523,659 - ------------------------------------------------------------------------------- Whole Auto Loan Trust, Automobile Loan Receivable Certificates: Series 2003-1, Cl. A2A, 1.40%, 4/15/06 766,394 764,957 Series 2004-1, Cl. A2A, 2.59%, 5/15/07 1,070,000 1,066,063 --------------- Total Asset-Backed Securities (Cost $35,698,339) 35,589,851 - ------------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS--31.9% - ------------------------------------------------------------------------------- GOVERNMENT AGENCY--27.6% - ------------------------------------------------------------------------------- FHLMC/FNMA/SPONSORED--27.5% Federal Home Loan Mortgage Corp.: 5%, 1/1/35 4 12,183,000 12,099,242 5.50%, 1/1/35 4 7,814,000 7,938,540 6.50%, 7/1/28-4/1/34 1,451,574 1,526,542 7%, 5/1/29-11/1/34 9,828,160 10,422,441 7%, 1/1/35 4 1,697,000 1,797,759 - ------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Series 1669, Cl. G, 6.50%, 2/15/23 280,065 282,296 Series 2055, Cl. ZM, 6.50%, 5/15/28 722,759 751,722 Series 2075, Cl. D, 6.50%, 8/15/28 1,622,217 1,688,728 Series 2080, Cl. Z, 6.50%, 8/15/28 455,576 469,770 Series 2387, Cl. PD, 6%, 4/15/30 937,202 971,466 Series 2466, Cl. PD, 6.50%, 4/15/30 259,674 260,925 Series 2498, Cl. PC, 5.50%, 10/15/14 134,573 135,726 Series 2500, Cl. FD, 2.903%, 3/15/32 3 269,712 270,770 Series 2526, Cl. FE, 2.803%, 6/15/29 3 331,555 332,748 Series 2551, Cl. FD, 2.803%, 1/15/33 3 265,555 267,375 Series 2551, Cl. TA, 4.50%, 2/15/18 112,341 112,270 - ------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security: Series 176, Cl. IO, (0.21)%, 6/1/26 5 469,447 87,648 Series 183, Cl. IO, (1.41)%, 4/1/27 5 761,669 147,670 Series 184, Cl. IO, 1.85%, 12/1/26 5 773,660 143,863 Series 192, Cl. IO, 3.27%, 2/1/28 5 209,537 38,940 Series 200, Cl. IO, 2.89%, 1/1/29 5 256,034 49,086 Series 2130, Cl. SC, 12.38%, 3/15/29 5 576,012 60,173 Series 2796, Cl. SD, 19.10%, 7/15/26 5 795,040 80,364 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------- FHLMC/FNMA/SPONSORED Continued Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security, Series 176, Cl. PO, 6.95%, 6/1/26 6 $ 206,600 $ 180,247 - ------------------------------------------------------------------------------- Federal National Mortgage Assn.: 4.50%, 1/1/20 4 5,578,000 5,560,569 5%, 1/1/20-1/1/35 4 22,693,000 22,586,331 5.50%, 3/1/33-1/1/34 5,764,934 5,859,441 5.50%, 1/1/35 4 22,082,000 22,420,120 6%, 5/1/16-8/1/24 8,553,513 8,926,103 6%, 1/1/35 4 12,055,000 12,465,617 6.50%, 11/1/27-10/1/30 1,359,313 1,429,034 6.50%, 1/1/35 4 15,978,000 16,756,928 7%, 12/1/31-10/1/34 11,580,421 12,281,759 7%, 8/1/28-6/1/32 4 4,627,104 4,910,937 7.50%, 7/1/30-9/1/30 1,082,094 1,159,793 8.50%, 7/1/32 56,581 61,468 - ------------------------------------------------------------------------------- Federal National Mortgage Assn., Collateralized Mtg. Obligations, Trust 2002-T1, Cl. A2, 7%, 11/25/31 1,561,930 1,656,130 - ------------------------------------------------------------------------------- Federal National Mortgage Assn., Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Trust 1993-87, Cl. Z, 6.50%, 6/25/23 1,256,369 1,319,246 Trust 1998-63, Cl. PG, 6%, 3/25/27 256,265 257,487 Trust 2001-50, Cl. NE, 6%, 8/25/30 508,881 515,913 Trust 2001-70, Cl. LR, 6%, 9/25/30 489,509 499,106 Trust 2001-72, Cl. NH, 6%, 4/25/30 397,360 406,372 Trust 2001-74, Cl. PD, 6%, 5/25/30 169,872 172,177 Trust 2002-50, Cl. PD, 6%, 9/25/27 278,499 278,685 Trust 2002-77, Cl. WF, 2.81%, 12/18/32 3 426,467 428,987 Trust 2002-94, Cl. MA, 4.50%, 8/25/09 737,669 739,285 Trust 2003-81, Cl. PA, 5%, 2/25/12 221,314 222,127 Trust 2004-101, Cl. BG, 5%, 1/25/20 1,110,000 1,119,713 - ------------------------------------------------------------------------------- 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 5 469,725 90,287 Trust 2002-47, Cl. NS, 9.28%, 4/25/32 5 1,030,485 108,006 Trust 2002-51, Cl. S, 9.56%, 8/25/32 5 946,229 99,276 - ------------------------------------------------------------------------------- Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Trust 222, Cl. 2, (2.53)%, 6/1/23 5 1,519,204 283,050 Trust 233, Cl. 2, (0.80)%, 8/1/23 5 1,435,014 265,601 Trust 240, Cl. 2, 0.11%, 9/1/23 5 2,324,143 442,611 Trust 252, Cl. 2, (3.44)%, 11/1/23 5 1,161,785 228,219 Trust 254, Cl. 2, (0.11)%, 1/1/24 5 584,942 120,874 Trust 273, Cl. 2, 0.09%, 7/1/26 5 340,774 62,963 Trust 321, Cl. 2, (8.45)%, 3/1/32 5 4,842,910 962,409 Trust 333, Cl. 2, 1.40%, 3/1/33 5 4,696,785 1,015,778 Trust 334, Cl. 17, (16.18)%, 2/1/33 5 777,496 155,868 Trust 2001-81, Cl. S, 13.68%, 1/25/32 5 482,978 58,907 11 | OPPENHEIMER BALANCED FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- FHLMC/FNMA/SPONSORED Continued Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Continued Trust 2002-52, Cl. SD, 8.85%, 9/25/32 5 $ 1,191,233 $ 123,167 Trust 2002-77, Cl. SH, 21.15%, 12/18/32 5 619,517 62,738 Trust 2002-9, Cl. MS, 10.62%, 3/25/32 5 703,195 76,703 Trust 2004-54, Cl. DS, 20.40%, 11/25/30 5 993,390 90,528 - ------------------------------------------------------------------------------- Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 1993-184, Cl. M, 9.71%, 9/25/23 6 480,445 416,075 --------------- 166,812,699 - ------------------------------------------------------------------------------- GNMA/GUARANTEED--0.1% Government National Mortgage Assn., 8%, 4/15/23 293,164 320,660 - ------------------------------------------------------------------------------- Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Series 2001-21, Cl. SB, 14.94%, 1/16/27 5 920,135 88,003 Series 2002-15, Cl. SM, 9.39%, 2/16/32 5 1,047,287 100,973 Series 2002-76, Cl. SY, 9.35%, 12/16/26 5 2,108,379 215,071 Series 2004-11, Cl. SM, 10.64%, 1/17/30 5 835,059 75,086 --------------- 799,793 - ------------------------------------------------------------------------------- PRIVATE--4.3% - ------------------------------------------------------------------------------- COMMERCIAL--4.3% Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2004-6, Cl. A3, 4.512%, 12/10/42 1,000,000 1,000,000 - ------------------------------------------------------------------------------- Bank of America Mortgage Securities, Inc., Collateralized Mtg. Obligations Pass-Through Certificates: Series 2004-2, Cl. 2A1, 6.50%, 7/20/32 1,636,692 1,672,129 Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 1,275,323 1,325,141 Series 2004-E, Cl. 2A9, 3.712%, 6/25/34 931,642 932,230 Series 2004-G, Cl. 2A1, 2.469%, 8/25/34 622,321 621,094 - ------------------------------------------------------------------------------- Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations, Series 2004-J9, Cl. 1A1, 2.598%, 10/25/34 3 1,299,747 1,301,242 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- COMMERCIAL Continued 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 $ 680,000 $ 731,518 - ------------------------------------------------------------------------------- General Motors Acceptance Corp. Commercial Mtg. Securities, Inc., Commercial Mtg. Obligations, Series 2004-C3, Cl. A4, 4.547%, 12/10/41 640,000 641,684 - ------------------------------------------------------------------------------- GMAC Commercial Mortgage Securities, Inc., Mtg. Pass-Through Certificates, Series 1997-C1, Cl. A3, 6.869%, 7/15/29 506,985 536,679 - ------------------------------------------------------------------------------- GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates: Series 2004-C1, Cl. A1, 3.659%, 10/10/28 685,259 677,810 Series 2004-GG2, Cl. A3, 4.602%, 8/10/38 410,000 418,316 - ------------------------------------------------------------------------------- GSR Mortgage Loan Trust, Collateralized Mtg. Obligations, Series 04-12, Cl. 3A1, 4.593%, 12/25/34 2,3 2,018,542 2,021,322 - ------------------------------------------------------------------------------- Mastr Alternative Loan Trust, Pass-Through Collateralized Mtg. Obligations, Series 2004-6, Cl. 10A1, 6%, 7/25/34 1,893,011 1,954,708 - ------------------------------------------------------------------------------- Mastr Asset Securitization Trust, Pass-Through Collateralized Mtg. Obligations, Series 2004-9, Cl. A3, 4.70%, 8/25/34 2,476,850 2,478,856 - ------------------------------------------------------------------------------- Mastr Seasoned Securities Trust, Collateralized Mtg. Obligations, Series 2004-2, Cl. PT65, 6.50%, 12/1/34 4 2,966,000 3,054,517 - ------------------------------------------------------------------------------- Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 780,000 844,183 - ------------------------------------------------------------------------------- Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15 983,000 1,133,147 - ------------------------------------------------------------------------------- Washington Mutual Mortgage Securities Corp., Collateralized Mtg. Pass-Through Certificates, Series 2003-AR12, Cl. A2, 2.446%, 2/25/34 3 16,547 16,556 12 | OPPENHEIMER BALANCED FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- COMMERICIAL Continued Wells Fargo Mortgage-Backed Securities Trust, Collateralized Mtg. Obligations: Series 2004-DD, Cl. 2A1, 4.548%, 1/25/35 $ 2,260,000 $ 2,263,708 Series 2004-N, Cl. A10, 3.803%, 8/25/34 2 1,652,090 1,657,524 Series 2004-W, Cl. A2, 4.635%, 11/25/34 3 948,941 951,560 --------------- 26,233,924 - ------------------------------------------------------------------------------- OTHER--0.0% CIT Equipment Collateral, Equipment Receivable-Backed Nts., Series 2003-EF1, Cl. A2, 1.49%, 12/20/05 77,989 78,005 --------------- Total Mortgage-Backed Obligations (Cost $193,402,123) 193,924,421 - ------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS--6.6% - ------------------------------------------------------------------------------- Federal Home Loan Bank Bonds, 3.125%, 9/15/06 2,155,000 2,153,636 - ------------------------------------------------------------------------------- Federal Home Loan Bank Unsec. Bonds, 2.75%, 10/15/06 2,540,000 2,520,993 - ------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp. Unsec. Nts., 6.875%, 9/15/10 1,500,000 1,714,446 - ------------------------------------------------------------------------------- Federal National Mortgage Assn. Unsec. Nts.: 4.25%, 7/15/07 4,315,000 4,408,066 7.25%, 1/15/10-5/15/30 4,075,000 4,790,855 - ------------------------------------------------------------------------------- Tennessee Valley Authority Bonds: 7.125%, 5/1/30 795,000 992,111 Series A, 6.79%, 5/23/12 7,916,000 9,128,446 - ------------------------------------------------------------------------------- U.S. Treasury Bonds: 5.375%, 2/15/31 2,197,000 2,376,365 5.50%, 8/15/28 645,000 698,314 STRIPS, 3.37%, 2/15/11 7 409,000 322,164 STRIPS, 3.86%, 2/15/13 7 478,000 340,039 - ------------------------------------------------------------------------------- U.S. Treasury Nts.: 2.50%, 9/30/06-10/31/06 8,960,000 8,882,683 4.25%, 11/15/13-11/15/14 1,538,000 1,546,678 5.75%, 8/15/10 434,000 477,960 --------------- Total U.S. Government Obligations (Cost $40,249,219) 40,352,756 - ------------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS--0.1% - ------------------------------------------------------------------------------- United Mexican States Nts., 7.50%, 1/14/12 (Cost $520,726) 475,000 539,838 - ------------------------------------------------------------------------------- NON-CONVERTIBLE CORPORATE BONDS AND NOTES--13.2% ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts., Series B, 10/15/93 400,000 $ 461,950 - ------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06 $ 1,185,000 $ 1,233,951 - ------------------------------------------------------------------------------- Allied Waste North America, Inc., 8.875% Sr. Nts., Series B, 4/1/08 540,000 580,500 - ------------------------------------------------------------------------------- Allstate Financial Global Funding LLC, 4.25% Nts., 9/10/08 9 245,000 248,094 - ------------------------------------------------------------------------------- Allstate Life Global Funding II, 3.50% Nts., 7/30/07 330,000 328,808 - ------------------------------------------------------------------------------- American Express Centurion Bank, 4.375% Nts., 7/30/09 435,000 442,381 - ------------------------------------------------------------------------------- American Honda Finance Corp., 3.85% Nts., 11/6/08 9 835,000 833,408 - ------------------------------------------------------------------------------- AT&T Wireless Services, Inc., 7.50% Sr. Unsec. Nts., 5/1/07 885,000 961,767 - ------------------------------------------------------------------------------- AXA, 8.60% Unsec. Sub. Nts., 12/15/30 750,000 987,984 - ------------------------------------------------------------------------------- Bank of America Corp.: 4.875% Sr. Unsec. Nts., 1/15/13 15,000 15,286 7.80% Jr. Unsec. Sub. Nts., 2/15/10 400,000 465,659 - ------------------------------------------------------------------------------- Bankers Trust Corp., 7.375% Unsec. Sub. Nts., 5/1/08 100,000 111,007 - ------------------------------------------------------------------------------- Beazer Homes USA, Inc., 8.625% Sr. Unsec. Nts., 5/15/11 565,000 618,675 - ------------------------------------------------------------------------------- Boeing Capital Corp.: 5.65% Sr. Unsec. Nts., 5/15/06 180,000 185,670 6.50% Nts., 2/15/12 10 750,000 841,571 - ------------------------------------------------------------------------------- British Telecommunications plc: 7.875% Nts., 12/15/05 770,000 803,285 8.125% Nts., 12/15/10 420,000 504,968 - ------------------------------------------------------------------------------- Canadian National Railway Co., 4.25% Nts., 8/1/09 161,000 162,448 - ------------------------------------------------------------------------------- CenterPoint Energy, Inc.: 5.875% Sr. Nts., 6/1/08 690,000 722,564 8.125% Unsec. Nts., Series B, 7/15/05 270,000 277,148 - ------------------------------------------------------------------------------- Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08 1,155,000 1,297,895 - ------------------------------------------------------------------------------- Chesapeake Energy Corp., 7.50% Sr. Nts., 6/15/14 610,000 669,475 - ------------------------------------------------------------------------------- CIGNA Corp., 7.40% Unsec. Nts., 5/15/07 1,410,000 1,515,619 - ------------------------------------------------------------------------------- CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12 1,000,000 1,185,388 - ------------------------------------------------------------------------------- Citigroup, Inc., 6.875% Unsec. Nts., 2/15/98 450,000 514,893 - ------------------------------------------------------------------------------- Citizens Communications Co., 9.25% Sr. Nts., 5/15/11 291,000 341,925 - ------------------------------------------------------------------------------- Coca-Cola Co. (The), 7.375% Unsec. Debs., 7/29/93 360,000 457,509 - ------------------------------------------------------------------------------- ConAgra Foods, Inc., 6% Nts., 9/15/06 610,000 635,388 - ------------------------------------------------------------------------------- Conectiv, Inc., 5.30% Unsec. Unsub. Nts., Series B, 6/1/05 168,000 169,381 13 | OPPENHEIMER BALANCED FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued Cox Communications, Inc., 7.875% Unsec. Nts., 8/15/09 $ 760,000 $ 863,431 - ------------------------------------------------------------------------------- CSX Corp., 6.25% Unsec. Nts., 10/15/08 585,000 631,265 - ------------------------------------------------------------------------------- D.R. Horton, Inc., 6.125% Nts., 1/15/14 555,000 574,425 - ------------------------------------------------------------------------------- DaimlerChrysler North America Holding Corp., 4.75% Unsec. Nts., 1/15/08 1,090,000 1,114,053 - ------------------------------------------------------------------------------- Delphi Automotive Systems Corp., 6.50% Nts., 5/1/09 500,000 514,400 - ------------------------------------------------------------------------------- Deutsche Telekom International Finance BV, 8.50% Unsub. Nts., 6/15/10 770,000 918,381 - ------------------------------------------------------------------------------- Dominion Resources, Inc., 8.125% Sr. Unsub. Nts., 6/15/10 530,000 624,528 - ------------------------------------------------------------------------------- DTE Energy Co., 6.45% Sr. Unsub. Nts., 6/1/06 580,000 603,983 - ------------------------------------------------------------------------------- Duke Capital LLC, 5.668% Nts., 8/15/14 645,000 666,774 - ------------------------------------------------------------------------------- EOP Operating LP: 6.763% Sr. Unsec. Nts., 6/15/07 180,000 191,591 8.375% Nts., 3/15/06 425,000 448,405 - ------------------------------------------------------------------------------- Federated Department Stores, Inc., 6.625% Sr. Unsec. Nts., 9/1/08 810,000 882,514 - ------------------------------------------------------------------------------- FedEx Corp., 2.65% Unsec. Nts., 4/1/07 1,320,000 1,293,538 - ------------------------------------------------------------------------------- FirstEnergy Corp.: 5.50% Sr. Unsub. Nts., Series A, 11/15/06 495,000 511,228 7.375% Sr. Unsub. Nts., Series C, 11/15/31 565,000 647,246 - ------------------------------------------------------------------------------- Food Lion, Inc., 7.55% Nts., 4/15/07 785,000 852,939 - ------------------------------------------------------------------------------- Ford Holdings, Inc., 9.30% Unsec. Unsub. Debs., 3/1/30 240,000 282,218 - ------------------------------------------------------------------------------- Ford Motor Co., 7.70% Unsec. Debs., 5/15/97 400,000 387,614 - ------------------------------------------------------------------------------- Ford Motor Credit Co., 7.375% Nts., 10/28/09 255,000 275,339 - ------------------------------------------------------------------------------- France Telecom SA: 7.95% Sr. Unsec. Nts., 3/1/06 115,000 120,779 8.50% Sr. Unsec. Nts., 3/1/11 540,000 644,961 9.25% Sr. Unsec. Nts., 3/1/31 3 230,000 312,708 - ------------------------------------------------------------------------------- Franklin Resources, Inc., 3.70% Nts., 4/15/08 425,000 424,320 - ------------------------------------------------------------------------------- Gap, Inc. (The): 6.90% Nts., 9/15/07 2 354,000 382,320 10.55% Unsub. Nts., 12/15/08 141,000 172,373 - ------------------------------------------------------------------------------- General Electric Capital Corp., 7.25% Nts., Series A, 2/1/05 400,000 401,310 - ------------------------------------------------------------------------------- General Mills, Inc., 3.875% Nts., 11/30/07 950,000 953,687 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued General Motors Acceptance Corp., 7.25% Nts., 3/2/11 $ 1,660,000 $ 1,740,108 - ------------------------------------------------------------------------------- General Motors Corp., 8.375% Sr. Unsec. Debs., 7/15/33 280,000 290,907 - ------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The), 7.80% Sr. Unsec. Unsub. Nts., Series B, 1/28/10 400,000 462,792 - ------------------------------------------------------------------------------- Hartford Financial Services Group, Inc. (The), 2.375% Nts., 6/1/06 345,000 338,808 - ------------------------------------------------------------------------------- Hertz Corp. (The), 6.35% Nts., 6/15/10 1,560,000 1,600,650 - ------------------------------------------------------------------------------- Hilton Hotels Corp., 7.95% Sr. Nts., 4/15/07 450,000 489,713 - ------------------------------------------------------------------------------- Household Finance Corp., 8.875% Sr. Unsec. Nts., 2/15/06 830,000 878,858 - ------------------------------------------------------------------------------- Huntsman Corp./ICI Chemical Co. plc, 13.08% Sr. Unsec. Disc. Nts., 12/31/09 7 500,000 282,500 - ------------------------------------------------------------------------------- Hutchison Whampoa International Ltd., 7.45% Sr. Bonds, 11/24/33 9 495,000 550,726 - ------------------------------------------------------------------------------- IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08 2,3 540,000 610,200 - ------------------------------------------------------------------------------- iStar Financial, Inc.: 4.875% Sr. Unsec. Nts., Series B, 1/15/09 545,000 553,687 8.75% Sr. Unsec. Nts., 8/15/08 400,000 456,487 - ------------------------------------------------------------------------------- J.C. Penney Co., Inc., 8% Nts., 3/1/10 1,160,000 1,331,100 - ------------------------------------------------------------------------------- John Hancock Global Funding II, 7.90% Nts., 7/2/10 9 947,000 1,110,079 - ------------------------------------------------------------------------------- Kaiser Aluminum & Chemical Corp., 10.875% Sr. Nts., Series B, 10/15/06 1,11 250,000 221,875 - ------------------------------------------------------------------------------- Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts., 9/1/12 595,000 655,005 - ------------------------------------------------------------------------------- Kraft Foods, Inc., 5.25% Nts., 6/1/07 1,435,000 1,487,320 - ------------------------------------------------------------------------------- Kroger Co. (The), 7.80% Sr. Nts., 8/15/07 905,000 993,094 - ------------------------------------------------------------------------------- Lear Corp., 8.11% Sr. Unsec. Nts., Series B, 5/15/09 1,000,000 1,135,205 - ------------------------------------------------------------------------------- Lehman Brothers Holdings, Inc., 7% Nts., 2/1/08 765,000 836,410 - ------------------------------------------------------------------------------- Lehman Brothers, Inc., 6.625% Sr. Sub. Nts., 2/15/08 125,000 135,056 - ------------------------------------------------------------------------------- Lennar Corp., 5.95% Sr. Unsec. Nts., 3/1/13 580,000 615,214 - ------------------------------------------------------------------------------- Liberty Media Corp., 3.50% Nts., 9/25/06 600,000 596,913 - ------------------------------------------------------------------------------- Liberty Property Trust, 5.65% Sr. Nts., 8/15/14 615,000 633,055 - ------------------------------------------------------------------------------- Marsh & McLennan Cos., Inc., 5.375% Nts., 7/15/14 268,000 262,334 14 | OPPENHEIMER BALANCED FUND/VA PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued May Department Stores Co., 3.95% Nts., 7/15/07 $ 81,000 $ 81,185 - ------------------------------------------------------------------------------- MBNA America Bank NA, 5.375% Nts., 1/15/08 935,000 977,229 - ------------------------------------------------------------------------------- McDonnell Douglas Corp., 6.875% Unsec. Unsub. Nts., 11/1/06 160,000 169,432 - ------------------------------------------------------------------------------- Merrill Lynch & Co., Inc., 4.125% Nts., 9/10/09 1,280,000 1,280,475 - ------------------------------------------------------------------------------- Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 393,750 - ------------------------------------------------------------------------------- Morgan Stanley, 6.60% Nts., 4/1/12 570,000 636,656 - ------------------------------------------------------------------------------- National City Bank, 6.20% Sub. Nts., 12/15/11 83,000 91,376 - ------------------------------------------------------------------------------- NiSource Finance Corp.: 3.20% Nts., 11/1/06 180,000 178,462 7.875% Sr. Unsec. Nts., 11/15/10 790,000 929,821 - ------------------------------------------------------------------------------- Northrop Grumman Corp., 7.125% Sr. Nts., 2/15/11 767,000 881,327 - ------------------------------------------------------------------------------- Petroleos Mexicanos, 9.50% Sr. Sub. Nts., 9/15/27 365,000 458,988 - ------------------------------------------------------------------------------- PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13 9 424,641 412,316 - ------------------------------------------------------------------------------- Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 9 900,000 1,145,817 - ------------------------------------------------------------------------------- Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 9 920,000 1,178,061 - ------------------------------------------------------------------------------- PSEG Energy Holdings LLC, 7.75% Unsec. Nts., 4/16/07 2 595,000 632,188 - ------------------------------------------------------------------------------- R&B Falcon Corp., 9.50% Sr. Unsec. Nts., 12/15/08 500,000 593,204 - ------------------------------------------------------------------------------- Raytheon Co., 6.50% Unsec. Nts., 7/15/05 225,000 229,049 - ------------------------------------------------------------------------------- Safeway, Inc., 4.80% Sr. Unsec. Nts., 7/16/07 1,445,000 1,480,099 - ------------------------------------------------------------------------------- Spieker Properties LP, 6.75% Unsec. Unsub. Nts., 1/15/08 360,000 390,458 - ------------------------------------------------------------------------------- Sprint Capital Corp.: 7.125% Sr. Unsec. Nts., 1/30/06 595,000 619,028 8.75% Nts., 3/15/32 530,000 708,297 - ------------------------------------------------------------------------------- Starwood Hotels & Resorts Worldwide, Inc., 7.375% Nts., 5/1/07 470,000 503,488 - ------------------------------------------------------------------------------- Sterling Chemicals, Inc., 10% Sr. Sec. Nts., 12/19/07 8 221,615 222,723 - ------------------------------------------------------------------------------- SunTrust Banks, Inc.: 4% Nts., 10/15/08 640,000 646,461 7.75% Unsec. Sub. Nts., 5/1/10 57,000 66,275 - ------------------------------------------------------------------------------- TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 1,145,000 1,477,881 - ------------------------------------------------------------------------------- TECO Energy, Inc., 10.50% Sr. Unsec. Nts., 12/1/07 475,000 549,805 PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued Telefonos de Mexico SA de CV, 4.50% Nts., 11/19/08 $ 530,000 $ 534,857 - ------------------------------------------------------------------------------- Time Warner Cos., Inc., 9.125% Debs., 1/15/13 530,000 682,359 - ------------------------------------------------------------------------------- Time Warner Entertainment Co. LP, 10.15% Sr. Nts., 5/1/12 500,000 656,851 - ------------------------------------------------------------------------------- Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11 565,000 627,150 - ------------------------------------------------------------------------------- TXU Corp., 4.80% Nts., 11/15/09 9 555,000 556,591 - ------------------------------------------------------------------------------- Tyco International Group SA: 6.375% Sr. Unsec. Unsub. Nts., 2/15/06 850,000 878,557 6.375% Nts., 10/15/11 750,000 829,192 6.75% Sr. Unsub. Nts., 2/15/11 378,000 424,194 - ------------------------------------------------------------------------------- Univision Communications, Inc.: 2.875% Sr. Unsec. Nts., 10/15/06 163,000 160,910 3.50% Sr. Unsec. Nts., 10/15/07 845,000 835,577 - ------------------------------------------------------------------------------- Volkswagen Credit, Inc., 2.33% Nts., 7/21/05 3,9 1,225,000 1,225,103 - ------------------------------------------------------------------------------- Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 1,225,000 1,272,553 - ------------------------------------------------------------------------------- Waste Management, Inc.: 7% Sr. Nts., 7/15/28 220,000 248,893 7.125% Sr. Unsec. Nts., 10/1/07 800,000 869,420 - ------------------------------------------------------------------------------- Western Forest Products, Inc., 15% Sec. Nts., 7/28/09 8,9 146,000 165,345 - ------------------------------------------------------------------------------- Weyerhaeuser Co., 5.50% Unsec. Unsub. Nts., 3/15/05 250,000 251,163 - ------------------------------------------------------------------------------- Yum! Brands, Inc., 8.50% Sr. Unsec. Nts., 4/15/06 1,230,000 1,307,014 --------------- Total Non-Convertible Corporate Bonds and Notes (Cost $77,208,011) 79,998,603 - ------------------------------------------------------------------------------- STRUCTURED NOTES--0.6% - ------------------------------------------------------------------------------- Deutsche Bank AG, COUNTS Corp. Sec. Credit Linked Nts., Series 2003-1, 3.78%, 1/7/05 2,3 (Cost $3,550,000) 3,550,000 3,539,350 - ------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--5.9% - ------------------------------------------------------------------------------- Undivided interest of 2.49% 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 $36,015,482 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 $36,009,000) 36,009,000 36,009,000 - ------------------------------------------------------------------------------- Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $609,300,383) 707,716,968 15 | OPPENHEIMER BALANCED FUND/VA STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--2.0% - ------------------------------------------------------------------------------- MASTER FLOATING NOTES--0.2% Bear Stearns, 2.493%, 1/3/05 12 $ 500,000 $ 500,000 - ------------------------------------------------------------------------------- Merrill Lynch Mortgage Capital, 2.413%, 1/3/05 12 500,000 500,000 --------------- 1,000,000 - ------------------------------------------------------------------------------- REPURCHASE AGREEMENT--1.8% 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 $10,968,169 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 12 10,966,012 10,966,012 --------------- Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $11,966,012) 11,966,012 - ------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $621,266,395) 118.6% 719,682,980 - ------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (18.6) (112,742,772) --------------------------------- NET ASSETS 100.0% $ 606,940,208 ================================= FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income producing security. 2. Illiquid security. The aggregate value of illiquid securities as of December 31, 2004 was $13,118,632, which represents 2.16% of the Fund's net assets. See Note 9 of Notes to Financial Statements. 3. Represents the current interest rate for a variable or increasing rate security. 4. When-issued security or forward commitment to be delivered and settled after December 31, 2004. See Note 1 of Notes to Financial Statements. 5. 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 $5,333,862 or 0.88% of the Fund's net assets as of December 31, 2004. 6. Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. These securities amount to $596,322 or 0.10% of the Fund's net assets as of December 31, 2004. 7. Zero coupon bond reflects effective yield on the date of purchase. 8. Interest or dividend is paid-in-kind. 9. 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 $7,425,540 or 1.22% of the Fund's net assets as of December 31, 2004. 10. 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 $785,467. See Note 6 of Notes to Financial Statements. 11. Issue is in default. See Note 1 of Notes to Financial Statements. 12. 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 10 of Notes to Financial Statements. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 16 | OPPENHEIMER BALANCED FUND/VA STATEMENT OF ASSETS AND LIABILITIES December 31, 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investments, at value (including securities loaned of $32,538,035) (cost $621,266,395)--see accompanying statement of investments $ 719,682,980 - -------------------------------------------------------------------------------- Cash 752,712 - -------------------------------------------------------------------------------- Collateral for securities loaned 21,172,558 - -------------------------------------------------------------------------------- Unrealized appreciation on swap contracts 39,477 - -------------------------------------------------------------------------------- Receivables and other assets: Investments sold on a when-issued basis or forward commitment 34,157,333 Interest, dividends and principal paydowns 2,698,161 Futures margins 171,264 Shares of beneficial interest sold 160,472 Other 9,836 ---------------- Total assets 778,844,793 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Return of collateral for securities loaned 33,138,570 - -------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased (including $138,238,645 purchased on a when-issued basis or forward commitment) 138,452,752 Shares of beneficial interest redeemed 202,423 Shareholder communications 35,195 Distribution and service plan fees 33,267 Trustees' compensation 13,840 Transfer and shareholder servicing agent fees 1,709 Other 26,829 ---------------- Total liabilities 171,904,585 - -------------------------------------------------------------------------------- NET ASSETS $ 606,940,208 ================ - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - -------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 34,997 - -------------------------------------------------------------------------------- Additional paid-in capital 477,924,685 - -------------------------------------------------------------------------------- Accumulated net investment income 9,981,717 - -------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 20,056,825 - -------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 98,941,984 ---------------- NET ASSETS $ 606,940,208 ================ - -------------------------------------------------------------------------------- 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 $547,290,257 and 31,542,247 shares of beneficial interest outstanding) $ 17.35 - -------------------------------------------------------------------------------- Service Shares: Net asset value, redemption price per share and offering price per share (based on net assets of $59,649,951 and 3,455,362 shares of beneficial interest outstanding) $ 17.26 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 | OPPENHEIMER BALANCED FUND/VA STATEMENT OF OPERATIONS For the Year Ended December 31, 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- Interest $ 8,070,767 - -------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $92,103) 5,180,617 - -------------------------------------------------------------------------------- Portfolio lending fees 28,817 ---------------- Total investment income 13,280,201 - -------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------- Management fees 4,101,747 - -------------------------------------------------------------------------------- Distribution and service plan fees -- Service shares 99,391 - -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Non-Service shares 10,110 Service shares 10,010 - -------------------------------------------------------------------------------- Shareholder communications: Non-Service shares 34,192 Service shares 2,425 - -------------------------------------------------------------------------------- Custodian fees and expenses 20,673 - -------------------------------------------------------------------------------- Trustees' compensation 17,269 - -------------------------------------------------------------------------------- Other 40,636 ---------------- Total expenses 4,336,453 Less reduction to custodian expenses (13,820) ---------------- Net expenses 4,322,633 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 8,957,568 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- Net realized gain on: Investments (including premiums on options exercised) 50,334,810 Closing of futures contracts 1,583,889 Closing and expiration of option contracts written 331,434 Foreign currency transactions 197,105 Swap contracts 229,352 Net increase from payment by affiliate 13,067 ---------------- Net realized gain 52,689,657 - -------------------------------------------------------------------------------- Net change in unrealized appreciation on: Investments (6,627,575) Translation of assets and liabilities denominated in foreign currencies 340,324 Futures contracts (4,983) Option contracts 249,912 Swap contracts 31,513 ---------------- Net change in unrealized appreciation (6,010,809) - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 55,636,416 ================ SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 | OPPENHEIMER BALANCED FUND/VA STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2004 2003 - ----------------------------------------------------------------------------------------------- OPERATIONS - ----------------------------------------------------------------------------------------------- Net investment income $ 8,957,568 $ 8,796,089 - ----------------------------------------------------------------------------------------------- Net realized gain 52,689,657 1,352,031 - ----------------------------------------------------------------------------------------------- Net change in unrealized appreciation (6,010,809) 99,178,424 --------------------------------- Net increase in net assets resulting from operations 55,636,416 109,326,544 - ----------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------- Dividends from net investment income: Non-Service shares (5,486,430) (13,791,025) Service shares (294,219) (86,954) - ----------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - ----------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from beneficial interest transactions: Non-Service shares (31,808,087) (18,122,603) Service shares 29,880,516 20,531,465 - ----------------------------------------------------------------------------------------------- NET ASSETS - ----------------------------------------------------------------------------------------------- Total increase 47,928,196 97,857,427 - ----------------------------------------------------------------------------------------------- Beginning of period 559,012,012 461,154,585 --------------------------------- End of period (including accumulated net investment income of $9,981,717 and $5,770,535, respectively) $ 606,940,208 $ 559,012,012 =================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 | OPPENHEIMER BALANCED 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 $ 15.92 $ 13.16 $ 15.40 $ 16.55 $ 17.46 - ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .26 1 .27 .50 .53 .72 Net realized and unrealized gain (loss) 1.33 2.90 (2.02) (.19) .38 ---------------------------------------------------------------------------- Total from investment operations 1.59 3.17 (1.52) .34 1.10 - ----------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.16) (.41) (.51) (.64) (.82) Distributions from net realized gain -- -- (.21) (.85) (1.19) ---------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.16) (.41) (.72) (1.49) (2.01) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 17.35 $ 15.92 $ 13.16 $ 15.40 $ 16.55 ============================================================================ - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 10.10% 24.96% (10.40)% 2.22% 6.44% - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 547,290 $ 533,710 $ 458,848 $ 593,033 $ 589,298 - ----------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 528,655 $ 475,389 $ 517,516 $ 599,324 $ 566,724 - ----------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 1.59% 1.82% 3.31% 3.42% 4.36% Total expenses 0.74% 4 0.76% 4 0.74% 4 0.76% 4 0.76% 4 - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 68% 5 248% 42% 30% 42%
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 $1,460,076,994 and $1,473,590,963, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 | OPPENHEIMER BALANCED FUND/VA
SERVICE SHARES YEAR ENDED DECEMBER 31, 2004 2003 2002 1 - -------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - -------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 15.87 $ 13.14 $ 14.51 - -------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .23 2 .39 .13 Net realized and unrealized gain (loss) 1.31 2.74 (1.50) ------------------------------------------- Total from investment operations 1.54 3.13 (1.37) - -------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.15) (.40) -- Distributions from net realized gain -- -- -- ------------------------------------------- Total dividends and/or distributions to shareholders (.15) (.40) -- - -------------------------------------------------------------------------------------------------- Net asset value, end of period $ 17.26 $ 15.87 $ 13.14 =========================================== - -------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 3 9.79% 24.69% (9.44)% - -------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 59,650 $ 25,302 $ 2,306 - -------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 39,851 $ 9,908 $ 1,037 - -------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 1.41% 1.37% 3.30% Total expenses 1.02% 5 1.01% 5 0.99% 5 - -------------------------------------------------------------------------------------------------- Portfolio turnover rate 68% 6 248% 42%
1. For the period from May 1, 2002 (inception of offering) to December 31, 2002. 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 $1,460,076,994 and $1,473,590,963, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | OPPENHEIMER BALANCED FUND/VA NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Balanced Fund/VA (the Fund), formerly Oppenheimer Multiple Strategies Fund/VA, is a separate series of Oppenheimer Variable Account Funds (the Trust), an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund's investment objective is to seek a high total investment return, which includes current income and capital appreciation in the value of its shares. The Trust's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. 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 0.6% of the Fund's net assets and resulted in unrealized cumulative losses of $10,650. 22 | OPPENHEIMER BALANCED FUND/VA - -------------------------------------------------------------------------------- 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 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 $138,238,645 of securities on a when-issued basis or forward commitment and sold $34,157,333 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 $221,875, representing 0.04% 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. 23 | OPPENHEIMER BALANCED FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued 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. - -------------------------------------------------------------------------------- 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 UNDISTRIBUTED ON COST OF SECURITIES NET UNDISTRIBUTED ACCUMULATED AND OTHER INVESTMENTS INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES ----------------------------------------------------------------------------- $10,362,511 $21,392,409 $803,612 $98,038,867 1. The Fund had $803,612 of straddle losses which were deferred. 2. During the fiscal year ended December 31, 2004, the Fund utilized $28,540,378 of capital loss carryforward to offset capital gains realized in that fiscal year. 3. During the fiscal year ended December 31, 2003, the Fund did not utilize any capital loss carryforward. 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. REDUCTION TO INCREASE TO ACCUMULATED NET INCREASE TO ACCUMULATED NET REALIZED GAIN PAID-IN CAPITAL INVESTMENT INCOME ON INVESTMENTS 4 ----------------------------------------------------------------- $1,654,641 $1,034,263 $2,688,904 4. $1,654,641, all of which was long-term capital gain, was distributed in connection with Fund share redemptions. 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 $5,780,649 $13,877,979 24 | OPPENHEIMER BALANCED 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 $ 621,634,306 Federal tax cost of other investments (16,548,740) -------------- Total federal tax cost $ 605,085,566 ============== Gross unrealized appreciation $ 105,187,798 Gross unrealized depreciation (7,148,931) -------------- Net unrealized appreciation $ 98,038,867 ============== - -------------------------------------------------------------------------------- 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. 25 | OPPENHEIMER BALANCED 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 2,625,394 $ 42,309,798 2,968,658 $ 42,421,336 Dividends and/or distributions reinvested 342,260 5,486,430 1,109,495 13,791,025 Redeemed (4,948,306) (79,604,315) (5,419,511) (74,334,964) ------------------------------------------------------------------- Net decrease (1,980,652) $ (31,808,087) (1,341,358) $ (18,122,603) =================================================================== - ------------------------------------------------------------------------------------------------------------------------------- SERVICE SHARES Sold 2,003,047 $ 32,170,140 1,500,492 $ 21,676,028 Dividends and/or distributions reinvested 18,400 294,219 7,012 86,954 Redeemed (160,331) (2,583,843) (88,818) (1,231,517) ------------------------------------------------------------------- Net increase 1,861,116 $ 29,880,516 1,418,686 $ 20,531,465 ===================================================================
- -------------------------------------------------------------------------------- 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 $331,990,724 and $301,035,350, respectively. There were purchases of $52,280,455 and sales of $43,715,083 of U.S. government and government agency obligations for the year ended December 31, 2004. In addition, there were purchases of $1,460,076,994 and sales of $1,473,590,963 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 and 0.60% of average annual net assets over $800 million. - -------------------------------------------------------------------------------- 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 $19,256 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. 26 | OPPENHEIMER BALANCED FUND/VA - -------------------------------------------------------------------------------- PAYMENTS AND WAIVERS OF EXPENSES. Following a review of its use of brokerage commissions for sales that is permitted under its investment advisory agreement, the Fund's Manager terminated that practice in July 2003. Subsequently, the Manager paid the Fund $13,067, an amount equivalent to certain of such commissions incurred in prior years. 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 no outstanding foreign currency contracts. - -------------------------------------------------------------------------------- 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. 27 | OPPENHEIMER BALANCED FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS Continued 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 U.S. Long Bonds 3/21/05 234 $ 26,325,000 $ 365,428 U.S. Treasury Nts., 10 yr. 3/21/05 253 28,320,188 149,015 ------------ 514,443 ------------ CONTRACTS TO SELL U.S. Treasury Nts., 2 yr. 3/31/05 156 32,696,625 15,330 U.S. Treasury Nts., 5 yr. 3/21/05 352 38,555,000 (52,265) ------------ (36,935) ------------ $ 477,508 ============
- -------------------------------------------------------------------------------- 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 --------------------------- NUMBER OF AMOUNT OF CONTRACTS PREMIUMS - ---------------------------------------------------------------------------- Options outstanding as of December 31, 2003 5,287 $ 745,373 Options closed or expired (2,280) (331,434) Options exercised (3,007) (413,939) --------------------------- Options outstanding as of December 31, 2004 -- $ -- =========================== 28 | OPPENHEIMER BALANCED FUND/VA - -------------------------------------------------------------------------------- 8. TOTAL RETURN SWAP CONTRACTS The Fund may enter into a total return 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 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. Total return swaps are subject to risks (if the counterparty fails to meet its obligations). As of December 31, 2004, the Fund had entered into the following total return swap agreements:
PAID BY RECEIVED BY SWAP NOTIONAL THE FUND AT THE FUND AT TERMINATION UNREALIZED COUNTERPARTY AMOUNT DECEMBER 31, 2004 DECEMBER 31, 2004 DATES APPRECIATION - -------------------------------------------------------------------------------------------------------------------------- Value of total return One-Month LIBOR of Lehman Brothers Deutsche Bank AG $4,250,000 less 50 basis points CMBS Index 1/1/05 $ 21,173 Value of total return Goldman Sachs One-Month of Lehman Brothers Capital Markets LP 4,250,000 LIBOR BBA CMBS Index 3/31/05 18,304 ---------- $ 39,477 ==========
Index abbreviations are as follows: CMBS Commercial Mortgage Backed Securities Markets LIBOR London-Interbank Offered Rate LIBOR BBA London-Interbank Offered Rate British Bankers Association - -------------------------------------------------------------------------------- 9. ILLIQUID SECURITIES As of December 31, 2004, investments in securities included issues that are illiquid. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. - -------------------------------------------------------------------------------- 10. 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 $32,538,035. Cash of $33,138,570 was received as collateral for the loans, of which $11,966,012 was invested in approved instruments. 29 | OPPENHEIMER BALANCED FUND/VA NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 11. 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. 30 | OPPENHEIMER BALANCED FUND/VA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER BALANCED FUND/VA: We have audited the accompanying statement of assets and liabilities of Oppenheimer Balanced 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 Balanced 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 31 | OPPENHEIMER BALANCED 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 $0.1646 and $0.1521 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 40.81% 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. 32 | OPPENHEIMER BALANCED FUND/VA TRUSTEES AND OFFICERS Unaudited - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD BY FUND, LENGTH OF SERVICE, AGE TRUSTEE; 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 TRUSTEES 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL. WILLIAM L. ARMSTRONG, Chairman of the Board of Chairman of the following private mortgage banking companies: Cherry Creek Mortgage Trustees (since 2003) and Company (since 1991), Centennial State Mortgage Company (since 1994), The El Paso Trustee (since 1999) Mortgage Company (since 1993), Transland Financial Services, Inc. (since 1997); Age: 67 Chairman of the following private companies: Great Frontier Insurance (insurance agency) (since 1995), Ambassador Media Corporation and Broadway 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 Trustee (since 1993) private equity funds) (until February 2001); Chairman, President and Chief Executive Age: 73 Officer of A.G. Edwards 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 Trustee (since 1999) Asset Management Corporation; President, Treasurer and a director (June 1989-April Age: 68 1999) of Centennial 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 Trustee (since 1999) 2000). Formerly Director (March 2001-May 2002) of Genetic ID, Inc. and its Age: 66 subsidiaries (a privately held biotech 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 Trustee (since 1990) foundation); a director (since 1997) of Putnam Lovell Finance (finance company); a Age: 63 director (since June 2002) of UNUMProvident (insurance company). Formerly a director (October 1999-October 2003) of P.R. Pharmaceuticals (a privately 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. Overs 38 portfolios in the OppenheimerFunds complex. SAM FREEDMAN, Director of Colorado Uplift (a non-profit charity) (since September 1984). Formerly Trustee (since 1996) (until October 1994) Mr. Freedman held several positions in subsidiary or affiliated Age: 64 companies of the Manager. Oversees 38 portfolios in the OppenheimerFunds complex. BEVERLY L. HAMILTON, Trustee of Monterey International Studies (an educational organization) (since Trustee (since 2002) February 2000); a director of The California Endowment (a philanthropic organization) Age: 58 (since April 2002) and of 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.
33 | OPPENHEIMER BALANCED FUND/VA TRUSTEES AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- ROBERT J. MALONE, Chairman, Chief Executive Officer and Director of Steele Street State Bank (a Trustee (since 2002) commercial banking entity) (since August 2003); director of Colorado UpLIFT (a Age: 60 non-profit organization) (since 1986); 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 Trustee (since 2000) (since 1987) (both open-end investment companies) and the Springfield Library and Age: 62 Museum Association (since 1995) (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 AND OFFICER LIBERTY STREET, 11TH 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 President and Trustee September 2000) of the Manager; President and a director or trustee of other (since 2001) Oppenheimer funds; President and a director (since July 2001) of Oppenheimer Age: 55 Acquisition Corp. (the Manager's parent holding company) 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. - ------------------------------------------------------------------------------------------------------------------------- OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. FERREIRA, LEAVY, MANIOUDAKIS, 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. EMMANUEL FERREIRA, Vice President of the Manager since January 2003. An officer of 5 portfolios in the Vice President and Portfolio OppenheimerFunds complex. Formerly, Portfolio Manager at Lashire Investments (July Manager (since 2003) 1999-December 2002), and a Senior Analyst at Mark Asset Management (July 1997-June Age: 37 1999).
34 | OPPENHEIMER BALANCED FUND/VA
CHRISTOPHER LEAVY, Senior Vice President of the Manager since September 2000; an officer of 8 portfolios Vice President and Portfolio in the OppenheimerFunds complex. Formerly a portfolio manager of Morgan Stanley Dean Manager (since 2003) Witter Investment Management (1997 - September 2000). Age: 33 ANGELO MANIOUDAKIS, Senior Vice President of the Manager (since April 2002), of HarbourView Asset Vice President and Management Corporation (since April, 2002 and of OFI Institutional Asset Management, Portfolio Manager Inc. (since June 2002); an officer of 14 portfolios in the OppenheimerFunds complex. (since 2003) Formerly Executive Director and portfolio manager for Miller, Anderson & Sherrerd, a Age: 38 division of Morgan Stanley Investment Management (August 1993-April 2002). BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer of Treasurer (since 1999) HarbourView Asset Management Corporation, Shareholder Financial Services, Inc., Age: 45 Shareholder Services, Inc., 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 Vice President & Secretary 2002) of the Manager; General Counsel and a director (since November 2001) of the (since 2001) Distributor; General Counsel (since November 2001) of Centennial Asset Management Age: 56 Corporation; Senior Vice President and General 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 and Chief Vice President (since June 1983) of OppenheimerFunds Distributor, Inc., Centennial Compliance Officer Asset Management Corporation and Shareholder Services, Inc. Formerly (until February (since 2004) 2004) Vice President and Director of Internal Audit of OppenheimerFunds, Inc. An Age: 54 officer of 83 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY CALLING 1.800.981.2871. 35 | OPPENHEIMER BALANCED 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 $20,500 in fiscal 2004 and $19,000 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 ra670_12034ex99codeeth.txt RA670_12034EX99CODEETH.TXT 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 ra670_12034ex99cert.txt RA670_12034EX99CERT.TXT 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 Balanced 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 Balanced 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 ra670_12034ex906cert.txt RA670_12034EX906CERT.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 Balanced 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 Balanced Fund/VA Oppenheimer Balanced 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-----