UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4108
OPPENHEIMER STRATEGIC BOND FUND/VA
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: DECEMBER 31
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Date of reporting period: JANUARY 1, 2003 - DECEMBER 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Oppenheimer Strategic Bond
Fund/VA's positive returns during its fiscal year were driven primarily by its
investments in high-yield corporate bonds. As a group, lower-rated bonds rallied
strongly after falling to cyclical lows at the start of the reporting period.
Improving investor sentiment created greater demand for high-yield bonds as
economic expectations improved, and scandal-related concerns eased. Within the
corporate bond market, we emphasized securities in the wireless
telecommunications and utilities groups. We believed that prices of many such
bonds had fallen too far during the declines that roiled both industry groups.
Indeed, the Fund received strong returns from these areas as investors' concerns
waned. In addition, the Fund successfully employed some yield-enhancement
strategies using index-linked structured notes in the high-yield bond market.
The Fund also benefited from its foreign investments as the U.S. dollar
generally weakened relative to the euro and yen. The foreign government sector
contributed to the Fund's returns during the reporting period.
Early in the year, we reduced the Fund's sensitivity to rising interest rates
by shortening its duration posture among U.S. government securities. However
this relatively defensive posture hindered performance while interest rates fell
through June 2003. There were benefits as the Fund avoided the brunt of the
market's sharp declines in July and August, when rates rose sharply, but there
were no significant gains or losses associated with our positioning or the
movement of interest rates. The Fund's relatively defensive posture also helped
it weather heightened volatility in the mortgage-backed securities market. It is
important to remember that mortgage-backed securities may entail greater risk
due to prepayment. By focusing primarily on securities backed by higher-rate
mortgages, we reduced the uncertainty related to expected prepayments as a
record number of homeowners refinanced their mortgages.
Because the year was characterized by declining interest rates and bond
yields, the Fund's dividend distribution rate was adjusted in February and again
in September, to reflect lower yields among many fixed-income securities,
ranging from U.S. Treasuries to high-yield corporate bonds. However, the Fund's
yield should be considered in context of inflation.
Between the start and end of the reporting period, we increased the Fund's
emphasis on credit-sensitive securities over those that are more interest-rate
sensitive. However, after their recent gains, we recently have taken some
profits in emerging-market foreign bonds, reducing the Fund's exposure to the
sector and increasing its holdings of developed-market bonds, which we expect to
benefit if the U.S. dollar remains relatively weak. In addition, during the
spring, we sold corporate bonds after they had appreciated to levels we no
longer considered attractive values. In the more interest rate-sensitive areas,
we have maintained a modestly heavy position in mortgage-backed securities
because of the declining risk of prepayments as refinancing activity ebbs. Of
course, the Fund's composition is likely to change as economic and market
conditions evolve. The Fund's holdings, strategies and management are subject to
change.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each share class of the Fund
held until December 31, 2003 for the periods shown. 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 March 19, 2001.
Performance information does not reflect charges that apply to separate accounts
investing in the Fund. If these charges were taken into account, performance
would be lower. The graph assumes that all dividends and capital gains
distributions were reinvested in additional shares.
The Fund's performance is compared to the performance of the Lehman Brothers
Aggregate Bond Index, an unmanaged index of U.S. corporate and government bonds,
and to the Citigroup World Government Bond Index, formerly known as Salomon
Brothers World Government Bond Index, an unmanaged index of debt securities of
major foreign governments. Index performance reflects the reinvestment of income
but does not consider the effect of transaction costs. 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.
3 | OPPENHEIMER STRATEGIC BOND FUND/VA
FUND PERFORMANCE DISCUSSION
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NON-SERVICE SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Strategic Bond Fund/VA (Non-Service)
Lehman Brothers Aggregate Bond Index
Citigroup World Government Bond Index
Oppenheimer Strategic Bond Lehman Brothers Aggregate Citigroup World Government
Fund/VA (Non-Service) Bond Index Bond Index
12/31/1993 $10,000 $10,000 $10,000
03/31/1994 9,630 9,713 10,000
06/30/1994 9,659 9,613 10,067
09/30/1994 9,799 9,672 10,185
12/31/1994 9,622 9,708 10,235
03/31/1995 9,791 10,198 11,353
06/30/1995 10,368 10,819 11,959
09/30/1995 10,652 11,032 11,834
12/31/1995 11,097 11,502 12,183
03/31/1996 11,278 11,298 11,954
06/30/1996 11,557 11,362 12,003
09/30/1996 12,005 11,572 12,331
12/31/1996 12,437 11,919 12,624
03/31/1997 12,431 11,853 12,102
06/30/1997 12,930 12,288 12,469
09/30/1997 13,364 12,696 12,627
12/31/1997 13,520 13,070 12,653
03/31/1998 13,857 13,274 12,753
06/30/1998 13,966 13,584 13,006
09/30/1998 13,667 14,158 14,089
12/31/1998 13,911 14,206 14,590
03/31/1999 13,930 14,135 14,027
06/30/1999 13,930 14,011 13,543
09/30/1999 13,959 14,106 14,157
12/31/1999 14,304 14,089 13,968
03/31/2000 14,462 14,400 13,992
06/30/2000 14,556 14,651 13,971
09/30/2000 14,712 15,092 13,605
12/31/2000 14,681 15,727 14,189
03/31/2001 14,979 16,204 13,757
06/30/2001 14,860 16,296 13,542
09/30/2001 14,760 17,047 14,511
12/31/2001 15,393 17,055 14,049
03/31/2002 15,634 17,071 13,822
06/30/2002 15,706 17,701 15,433
09/30/2002 15,778 18,512 16,030
12/31/2002 16,538 18,804 16,788
03/31/2003 17,130 19,066 17,309
06/30/2003 18,174 19,542 17,981
09/30/2003 18,715 19,514 18,336
12/31/2003 19,527 19,576 19,291
AVERAGE ANNUAL TOTAL RETURNS OF NON-SERVICE SHARES OF THE FUND AT 12/31/03
1-Year 18.07% 5-Year 7.02% 10-Year 6.92% Inception Date 5/3/93
SERVICE SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Strategic Bond Fund/VA (Service)
Lehman Brothers Aggregate Bond Index
Citigroup World Government Bond Index
Oppenheimer Strategic Bond Lehman Brothers Aggregate Citigroup World Government
Fund/VA (Service) Bond Index Bond Index
03/19/2001 $10,000 $10,000 $10,000
03/31/2001 9,914 10,000 10,000
06/30/2001 9,871 10,056 9,843
09/30/2001 9,784 10,520 10,548
12/31/2001 10,194 10,525 10,212
03/31/2002 10,326 10,535 10,047
06/30/2002 10,373 10,924 11,218
09/30/2002 10,419 11,425 11,652
12/31/2002 10,910 11,604 12,203
03/31/2003 11,287 11,766 12,582
06/30/2003 11,960 12,060 13,070
09/30/2003 12,284 12,043 13,328
12/31/2003 12,782 12,081 14,022
AVERAGE ANNUAL TOTAL RETURNS OF SERVICE SHARES OF THE FUND AT 12/31/03
1-Year 17.16% Since Inception 9.22% Inception Date 3/19/01
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR MORE CURRENT
PERFORMANCE DATA, 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.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND CHARGES
AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND
OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL
ADVISOR OR CALLING US AT 1.800.981.2871. READ THE PROSPECTUS CAREFULLY BEFORE
INVESTING.
GRAPHS ARE NOT DRAWN TO SAME SCALE. AN EXPLANATION OF THE CALCULATION OF THE
PERFORMANCE IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
4 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS December 31, 2003
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PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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ASSET-BACKED SECURITIES--5.3%
American Money Management
Corp., Commercial Debt
Obligations Sub. Bonds, Series I,
Cl. D1, 13.602%, 1/15/12 1 $ 172,858 $ 146,930
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Bank One Auto Securitization
Trust, Automobile Receivables,
Series 2003-1, Cl. A 2, 1.29%,
8/21/06 620,000 619,856
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BMW Vehicle Owner Trust,
Automobile Loan Certificates,
Series 2003-A, Cl. A 2,
1.45%, 11/25/05 1 900,878 902,341
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Capital Auto Receivables Asset
Trust, Automobile Mtg.-Backed
Nts., Series 2003-2, Cl. A 2A,
1.20%, 5/16/05 760,000 760,404
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Caterpillar Financial Asset Trust,
Equipment Loan Pass-Through
Certificates, Series 2003-A,
Cl. A 2, 1.25%, 10/25/05 460,000 460,187
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Centex Home Equity Co. LLC,
Home Equity Loan
Asset-Backed Certificates:
Series 2003-A, Cl. AF1,
1.836%, 10/25/17 146,576 146,706
Series 2003-B, Cl. AF1,
1.64%, 2/25/18 1 218,050 217,993
Series 2003-C, Cl. AF1,
2.14%, 7/25/18 655,704 657,228
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Chase Funding Mortgage Loan
Asset-Backed Certificates,
Home Equity Mtg. Obligations:
Series 2003-3, Cl. 1A 1,
1.199%, 8/25/17 2 336,407 336,449
Series 2003-4, Cl. 1A 1,
1.24%, 9/25/17 2 733,950 734,130
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Chase Manhattan Auto Owner
Trust, Automobile Loan
Pass-Through Certificates:
Series 2003-A, Cl. A 2,
1.26%, 1/16/06 1 290,000 290,190
Series 2003-B, Cl. A 2,
1.287%, 3/15/06 360,000 360,123
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CitiFinancial Mortgage Securities,
Inc., Home Equity Collateralized
Mtg. Obligations:
Series 2003-1, Cl. AF1,
1.94%, 1/25/33 244,026 244,234
Series 2003-2, Cl. AF1,
1.219%, 5/25/33 1,2 346,095 346,081
Series 2003-3, Cl. AF1,
1.261%, 8/25/33 1,2 510,816 510,828
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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ASSET-BACKED SECURITIES Continued
Conseco Finance
Securitizations Corp., Home
Equity Loan Pass-Through
Certificates, Series 2001-D,
Cl. M2, 2.87%, 11/15/32 2 $ 3,000,000 $ 2,947,321
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Consumer Credit Reference
Index Securities Program, Credit
Card Asset-Backed Certificates,
Series 2002-B, Cl. FX, 10.421%,
3/22/07 1 500,000 526,130
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DaimlerChrysler Auto Trust,
Automobile Loan Pass-Through
Certificates:
Series 2002-B, Cl. A 2,
2.20%, 4/6/05 62,005 62,108
Series 2003-A, Cl. A 2,
1.52%, 12/8/05 1,070,000 1,071,937
Series 2003-B, Cl. A 2,
1.61%, 7/8/06 970,000 962,628
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Embarcadero Aircraft
Securitization Trust, Airplane
Collateral Obligations, Series
2000-A, Cl. B, 0.678%, 8/15/25 1,3 1,820,063 4,550
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Ford Credit Auto Owner Trust,
Automobile Loan Pass-Through
Certificates, Series 2003-A, Cl.
A 2A, 1.62%, 8/15/05 404,958 405,826
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Harley-Davidson Motorcycle
Trust, Motorcycle Receivable Nts.:
Series 2002-2, Cl. A 1,
1.91%, 4/16/07 224,526 225,294
Series 2003-3, Cl. A 1,
1.50%, 1/15/08 925,846 927,436
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Honda Auto Receivables Owner
Trust, Automobile Receivables
Obligations:
Series 2003-1, Cl. A 2,
1.46%, 9/19/05 543,221 544,053
Series 2003-3, Cl. A 2,
1.52%, 4/21/06 1,190,000 1,191,952
Series 2003-4, Cl. A 2,
1.58%, 7/17/06 960,000 961,561
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Household Automotive Trust,
Automobile Loan Certificates,
Series 2003-2, Cl. A 2, 1.56%,
12/18/06 430,000 430,577
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Impac Secured Assets CMN
Owner Trust, Home Equity
Collateralized Mtg. Obligations,
Series 2001-5, Cl.
M1, 7.25%, 8/25/31 2,197,000 2,324,020
5 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
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PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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ASSET-BACKED SECURITIES Continued
Lehman ABS Manufactured
Housing Contract, Commercial
Mtg. Pass-Through Certificates,
Series 2001-B, Cl. A4, 5.27%,
9/15/18 $ 2,911,035 $ 2,810,117
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M&I Auto Loan Trust,
Automobile Loan Certificates:
Series 2002-1, Cl. A 3,
2.49%, 10/22/07 730,000 736,341
Series 2003-1, Cl. A 2,
1.60%, 7/20/06 820,000 820,315
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NC Finance Trust, Collateralized
Mtg. Obligations, Series 1999-I,
Cl. ECFD, 8.75%, 12/25/28 1 69,314 20,794
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Nissan Auto Lease Trust, Auto
Lease Obligations, Series 2003-A,
Cl. A 2, 1.69%, 12/15/05 640,000 641,773
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Nissan Auto Receivables Owner
Trust, Automobile Receivable Nts.:
Series 2003-A, Cl. A 2,
1.45%, 5/16/05 800,742 801,786
Series 2003-B, Cl. A 2,
1.20%, 11/15/05 1,110,000 1,110,434
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Principal Residential Mortgage
Capital Resources Trust, Real
Estate Mtg. Investment Conduit
Participation Certificates,
Series 2000-1, Cl. B,
2.799%, 6/20/05 1,2 1,000,000 990,625
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Residential Funding Mortgage
Securities II, Inc., Home Equity
Loan Pass-Through Certificates,
Series 2003-HS1, Cl. AI2, 1.241%,
1/25/33 2 295,040 295,205
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Toyota Auto Receivables
Owner Trust, Automobile
Mtg.-Backed Obligations:
Series 2002-B, Cl. A 3,
3.76%, 6/15/06 285,552 289,374
Series 2003-A, Cl. A 2,
1.28%, 8/15/05 1,027,717 1,028,653
Series 2003-B, Cl. A 2,
1.43%, 2/15/06 780,000 780,404
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USAA Auto Owner Trust,
Automobile Loan
Asset-Backed Nts.:
Series 2002-1, Cl. A 3,
2.41%, 10/16/06 450,285 453,520
Series 2003-1, Cl. A 2,
1.22%, 4/17/06 660,000 660,252
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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ASSET-BACKED SECURITIES Continued
Volkswagen Auto Loan
Enhanced Trust, Automobile
Loan Receivables:
Series 2003-1, Cl. A 2,
1.11%, 12/20/05 $ 1,420,000 $ 1,419,473
Series 2003-2, Cl. A 2,
1.55%, 6/20/06 550,000 550,888
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Whole Auto Loan Trust,
Automobile Loan Receivables:
Series 2002-1, Cl. A 2,
1.88%, 6/15/05 754,823 756,877
Series 2003-1, Cl. A 2A,
1.40%, 4/15/06 1,120,000 1,120,973
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Total Asset-Backed Securities
(Cost $36,475,254) 34,606,877
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MORTGAGE-BACKED OBLIGATIONS--14.6%
Asset Securitization Corp.,
Commercial Mtg.
Pass-Through Certificates:
Series 1996-D2, Cl. A 3,
7.515%, 2/14/29 2 3,000,000 3,156,246
Series 1996-MD6, Cl. A7,
7.961%, 11/13/29 2 2,000,000 1,966,478
Series 1997-D4, Cl. B1,
7.525%, 4/14/29 375,000 359,606
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CIT Equipment Collateral,
Equipment Receivable-
Backed Nts.,
Series 2003-EF1, Cl. A 2,
1.49%, 12/20/05 300,000 300,146
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Federal Home Loan
Mortgage Corp.:
5%, 1/1/34 4 1,229,000 1,213,254
7%, 9/1/33-11/1/33 1,559,185 1,653,594
11%, 11/1/14 116,841 129,985
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Federal Home Loan Mortgage
Corp., Gtd. Mtg. Pass-Through
Participation Certificates,
Series 151, Cl. F, 9%, 5/15/21 177,765 178,064
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Federal Home Loan Mortgage
Corp., Gtd. Real Estate Mtg.
Investment Conduit Multiclass
Pass-Through Certificates:
Series 2500, Cl. FD,
1.62%, 3/15/32 2 262,051 260,342
Series 2526, Cl. FE,
1.52%, 6/15/29 2 286,002 285,189
Series 2551, Cl. FD,
1.52%, 1/15/33 2 247,768 248,775
6 | OPPENHEIMER STRATEGIC BOND FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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MORTGAGE-BACKED OBLIGATIONS Continued
Federal Home Loan Mortgage
Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 177, Cl. B,
(2.489)%, 7/1/26 5 $ 717,861 $ 126,699
Series 208, Cl. IO,
(34.206)%, 6/1/30 5 1,395,321 227,770
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Federal Home Loan Mortgage
Corp., Structured Pass-Through
Securities, Collateralized Mtg.
Obligations:
Series H006, Cl. A 1,
1.724%, 4/15/08 163,137 163,010
Series T-42, Cl. A 2,
5.50%, 2/25/42 134,287 136,315
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Federal National Mortgage Assn.:
5%, 1/1/34 4 2,201,000 2,178,303
5.50%, 1/14/34 4 7,120,000 7,213,450
6%, 2/25/34 4 4,286,000 4,430,653
6.50%, 5/1/29-5/1/32 2,453,676 2,567,442
6.50%, 1/25/34 4 17,939,000 18,763,082
7%, 9/1/33-11/1/33 862,880 915,256
7%, 7/1/32-1/25/34 4 31,846,794 33,727,817
7.50%, 8/1/25 37,715 40,454
8.50%, 7/1/32 93,593 101,073
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Federal National Mortgage Assn.,
Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
Trust 1993-202, Cl. PH,
6.50%, 2/25/22 6 219,392 219,368
Trust 2002-77, Cl. WF,
1.52%, 12/18/32 2 429,914 431,252
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Federal National Mortgage Assn.,
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Trust 2003-81, Cl. PA, 5%, 2/25/12 236,556 242,292
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Federal National Mortgage Assn.,
Interest-Only Stripped
Mtg.-Backed Security:
Trust 294, Cl. 2, (33.063)%, 2/1/28 5 284,563 49,526
Trust 313, Cl. 2,
(27.665)%, 6/25/31 5 1,750,932 297,578
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First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-CHL1, Cl. D,
7.96%, 4/29/39 1,2 350,000 349,781
Series 1997-CHL1, Cl. E,
7.96%, 4/29/39 1,2 600,000 486,750
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GMAC Commercial Mortgage
Securities, Inc., Mtg. Pass-Through
Certificates, Series 1998-C1, Cl. F,
7.172%, 5/15/30 2 1,800,000 1,813,351
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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MORTGAGE-BACKED OBLIGATIONS Continued
Government National
Mortgage Assn.:
5.625%, 11/20/25 2 $ 26,732 $ 27,528
7%, 3/15/28-7/15/28 2,094,849 2,236,885
7.50%, 2/15/27 232,474 249,932
8%, 11/15/25-5/15/26 165,112 180,333
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Government National Mortgage
Assn., Gtd. Multiclass Mtg.
Participation Certificates,
Series 1999-27, Cl. PQ,
7.50%, 8/16/28 4,327,024 4,406,974
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Lehman Structured Securities Corp.,
Collateralized Mtg. Obligations,
Series 2001-GE4, Cl. A,
111.60%, 10/25/30 2 32,391 32,847
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Merrill Lynch Mortgage
Investors, Inc., Mtg. Pass-Through
Certificates,
Series 1995-C2, Cl. D,
7.688%, 6/15/21 2 183,742 197,779
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Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1, Cl. F,
7.457%, 2/15/28 2,7 162,744 149,120
Series 1997-RR, Cl. D, 7.709%,
4/30/39 2,7 450,024 422,120
Series 1997-RR, Cl. E,
7.709%, 4/30/39 2,7 300,016 237,928
Series 1997-RR, Cl. F,
7.709%, 4/30/39 2,7 600,032 397,482
Series 1997-XL1, Cl. G, 7.695%,
10/3/30 7 390,000 345,359
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Prudential Mortgage Capital Co. II
LLC, Commercial Mtg. Pass-Through
Certificates, Series PRU-HTG
2000-C1, Cl. A 2, 7.306%, 10/6/15 556,000 641,427
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Salomon Brothers Mortgage
Securities VII, Inc., Commercial
Mtg. Pass-Through Certificates:
Series 1996-B, Cl. 1, 6.865%,
4/25/26 1,2 68,140 59,239
Series 1996-C1, Cl. F,
8.467%, 1/20/06 1,2 1,000,000 950,000
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Structured Asset Securities Corp.,
Commercial Mtg. Obligations, Series
1995-C4, Cl. E, 8.964%, 6/25/26 1,2 2,708 2,708
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Washington Mutual Mortgage
Securities Corp., Collateralized
Mtg. Obligations Pass-Through
Certificates, Series 2003-AR7, Cl. A 1,
1.507%, 8/25/33 2 601,986 602,443
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Total Mortgage-Backed Obligations
(Cost $95,874,587) 95,373,005
7 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
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PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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U.S. GOVERNMENT OBLIGATIONS--9.0%
Federal Home Loan Bank
Unsec. Bonds, 4.875%, 11/15/13 $ 1,540,000 $ 1,559,680
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Federal Home Loan Mortgage
Corp. Unsec. Nts.:
2.375%, 4/15/06 5,000,000 5,022,505
4.50%, 1/15/13 3,435,000 3,423,936
4.875%, 3/15/07 5,000,000 5,326,520
5.50%, 7/15/06 11,100,000 11,966,788
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Federal National Mortgage
Assn. Unsec. Nts.:
4.25%, 7/15/07 8,840,000 9,239,957
5.25%, 6/15/06 5,150,000 5,512,272
7.25%, 1/15/10-5/15/30 9,000,000 10,802,841
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Resolution Funding Corp. Federal
Book Entry Principal Strips,
5.85%, 1/15/21 8 1,220,000 471,770
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U.S. Treasury Bonds:
8.875%, 2/15/19 335,000 479,050
8.875%, 8/15/17 9,10 1,630,000 2,308,998
STRIPS, 4.20%, 2/15/11 8 900,000 676,901
STRIPS, 4.96%, 2/15/16 8 171,000 94,307
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U.S. Treasury Nts., 1.75%, 12/31/04 1,000,000 1,005,352
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United States (Government of)
Gtd. Israel Aid Bonds,
5.50%, 12/4/23 960,000 971,339
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Total U.S. Government Obligations
(Cost $59,062,788) 58,862,216
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FOREIGN GOVERNMENT OBLIGATIONS--24.3%
- ----------------------------------------------------------------
ARGENTINA--1.1%
Argentina (Republic of) Bonds:
1.162%, 8/3/12 2 9,780,000 6,099,698
1.278%, 5/3/05 3 98,000 91,998
2%, 9/30/081 [ARP] 1,050,000 313,548
Series PR12, 2%, 1/3/16 1,3,11 [ARP] 15,300 4,357
- ----------------------------------------------------------------
Argentina (Republic of) Disc.
Bonds, 2.345%, 3/31/23 3 260,000 131,300
- ----------------------------------------------------------------
Argentina (Republic of) Par Bonds,
5.984%, 3/31/23 3 565,000 279,675
- ----------------------------------------------------------------
Argentina (Republic of) Treasury Bills,
14.75%, 10/8/04 8 [ARP] 17,000 5,384
- ----------------------------------------------------------------
Buenos Aires (Province of) Bonds,
Bonos de Consolidacion de Deudas,
Series PBA 1, 3.257%, 4/1/07 1,3 [ARP] 86,308 30,733
- ----------------------------------------------------------------
JPMorgan Chase Bank, Argentina
(Republic of) Treasury Bills, 8.84%,
2/20/04 1 [ARP] 35,000 11,410
--------------
6,968,103
- ----------------------------------------------------------------
AUSTRIA--0.7%
Austria (Republic of) Nts.:
5.50%, 10/20/07 [EUR] 2,440,000 3,314,740
Series 98-3, 3.90%, 10/20/05 [EUR] 475,000 613,371
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
AUSTRIA Continued
Austria (Republic of) Sr. Unsec.
Unsub. Nts., Series 1, 5%,
7/15/12 [EUR] 529,000 $ 704,808
--------------
4,632,919
- ----------------------------------------------------------------
BELGIUM--1.0%
Belgium (Kingdom of) Bonds:
5%, 9/28/11 [EUR] 540,000 721,180
Series 19, 6.50%, 3/31/05 [EUR] 1,180,000 1,563,558
Series 26, 6.25%, 3/28/07 [EUR] 2,170,000 2,996,063
Series 28, 5.75%, 3/28/08 [EUR] 755,000 1,038,409
--------------
6,319,210
- ----------------------------------------------------------------
BRAZIL--0.1%
Brazil (Federal Republic of) Bonds,
Series 15 yr., 2.063%, 4/15/09 2 16,177 15,368
- ----------------------------------------------------------------
Brazil (Federal Republic of) Unsec.
Unsub. Bonds, Cl. B, 8.875%, 4/15/24 958,000 935,248
--------------
950,616
- ----------------------------------------------------------------
COLOMBIA--0.1%
Colombia (Republic of) Unsec.
Unsub. Bonds, 8.375%, 2/15/27 615,000 568,875
- ----------------------------------------------------------------
DENMARK--0.3%
Denmark (Kingdom of) Nts., 4%,
8/15/08 [DKK] 12,095,000 2,081,279
- ----------------------------------------------------------------
DOMINICAN REPUBLIC--0.0%
Dominican Republic Unsec.
Unsub. Bonds, 9.50%, 9/27/06 196,000 165,620
- ----------------------------------------------------------------
FINLAND--0.0%
Finland (Republic of) Sr. Unsec.
Unsub. Bonds, 2.75%, 7/4/06 [EUR] 220,000 276,031
- ----------------------------------------------------------------
FRANCE--1.4%
France (Government of) Obligations
Assimilables du Tresor Bonds:
5%, 4/25/12 [EUR] 1,060,000 1,411,371
5.50%, 10/25/07 [EUR] 4,115,000 5,587,009
- ----------------------------------------------------------------
France (Government of)
Treasury Nts.:
3 yr., 3.50%, 1/12/05 [EUR] 1,460,000 1,865,448
5 yr., 4.75%, 7/12/07 [EUR] 120,000 159,072
--------------
9,022,900
- ----------------------------------------------------------------
GERMANY--1.7%
Germany (Republic of) Bonds:
2%, 6/17/05 [EUR] 2,120,000 2,659,088
5.375%, 1/4/10 [EUR] 1,285,000 1,758,039
Series 01, 5%, 7/4/11 [EUR] 3,685,000 4,933,469
Series 140, 4.50%, 8/17/07 [EUR] 1,395,000 1,834,014
--------------
11,184,610
8 | OPPENHEIMER STRATEGIC BOND FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
GREAT BRITAIN--0.6%
United Kingdom Treasury Nts.,
7.50%, 12/7/06 [GBP] 1,995,000 $ 3,860,631
- ----------------------------------------------------------------
GREECE--1.1%
Greece (Republic of) Bonds:
3.50%, 4/18/08 [EUR] 1,055,000 1,329,900
4.60%, 5/20/13 [EUR] 1,545,000 1,975,933
5.35%, 5/18/11 [EUR] 1,115,000 1,511,443
- ----------------------------------------------------------------
Greece (Republic of)
Sr. Unsub. Bonds,
4.65%, 4/19/07 [EUR] 1,610,000 2,125,541
--------------
6,942,817
- ----------------------------------------------------------------
GUATEMALA--0.1%
Guatemala (Republic of) Nts.:
10.25%, 11/8/11 7 250,000 291,875
10.25%, 11/8/11 355,000 414,463
--------------
706,338
- ----------------------------------------------------------------
ITALY--1.9%
Italy (Republic of) Treasury
Bonds, Buoni del Tesoro
Poliennali:
4%, 3/1/05 [EUR] 520,000 667,905
5%, 10/15/07 [EUR] 5,080,000 6,786,354
5.25%, 12/15/05 [EUR] 2,590,000 3,423,709
5.25%, 8/1/11 [EUR] 1,015,000 1,372,450
--------------
12,250,418
- ----------------------------------------------------------------
IVORY COAST--0.0%
Ivory Coast (Government of)
Past Due Interest Bonds,
1.90%, 3/29/18 1,3,11 [FRF] 2,194,500 70,155
- ----------------------------------------------------------------
JAPAN--7.5%
Japan (Government of) Bonds,
5 yr., Series 14,
0.40%, 6/20/06 [JPY] 5,194,000,000 48,718,770
- ----------------------------------------------------------------
MEXICO--0.5%
United Mexican States Bonds:
6.75%, 6/6/06 [JPY] 80,000,000 850,760
7.50%, 4/8/33 930,000 964,875
8.30%, 8/15/31 400,000 452,000
- ----------------------------------------------------------------
United Mexican States Unsec.
Unsub. Nts., Series 6 BR, 6.75%,
6/6/06 [JPY] 75,000,000 797,588
--------------
3,065,223
- ----------------------------------------------------------------
NEW ZEALAND--0.3%
New Zealand (Government of)
Bonds, 6.50%, 2/15/06 [NZD] 2,655,000 1,773,719
- ----------------------------------------------------------------
NIGERIA--0.1%
Central Bank of Nigeria Gtd.
Bonds, Series WW, 6.25%,
11/15/20 275,000 244,750
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
NIGERIA Continued
Nigeria (Federal Republic of)
Promissory Nts., Series RC,
5.092%, 1/5/10 $ 272,611 $ 235,786
--------------
480,536
- ----------------------------------------------------------------
PERU--0.1%
Peru (Republic of) Sr. Nts.,
4.53%, 2/28/16 8 1,643,896 1,008,037
- ----------------------------------------------------------------
PHILIPPINES--0.1%
Philippines (Republic of) Nts.,
9.875%, 3/16/10 250,000 278,125
- ----------------------------------------------------------------
Philippines (Republic of) Unsec.
Bonds, 8.875%, 4/15/08 400,000 433,000
--------------
711,125
- ----------------------------------------------------------------
POLAND--0.5%
Poland (Republic of) Bonds,
Series 0K0805, 5.15%,
8/12/05 8 [PLZ] 12,605,000 3,076,403
- ----------------------------------------------------------------
PORTUGAL--0.6%
Portugal (Republic of) Obrig
Do Tes Medio Prazo Nts.,
4.875%, 8/17/07 [EUR] 1,620,000 2,153,915
- ----------------------------------------------------------------
Portugal (Republic of) Obrig
Do Tes Medio Prazo Unsec.
Unsub. Bonds, 5.85%, 5/20/10 [EUR] 1,415,000 1,975,706
--------------
4,129,621
- ----------------------------------------------------------------
RUSSIA--1.3%
Ministry Finance of Russia Debs.,
Series V, 3%, 5/14/08 1,870,000 1,678,699
- ----------------------------------------------------------------
Russian Federation Unsec.
Unsub. Bonds, 7.50%, 3/31/30 7 5,000 4,838
- ----------------------------------------------------------------
Russian Federation Unsec.
Unsub. Nts.:
8.75%, 7/24/05 3,360,000 3,637,200
10%, 6/26/07 2,590,000 3,043,250
- ----------------------------------------------------------------
Russian Federation
Unsub. Nts., 5%, 3/31/30 2 4,875 4,704
--------------
8,368,691
- ----------------------------------------------------------------
SOUTH AFRICA--0.2%
South Africa (Republic of)
Unsec. Nts., 8.375%, 10/17/06 1,415,000 1,606,025
- ----------------------------------------------------------------
SPAIN--1.0%
Spain (Kingdom of) Bonds,
Bonos y Obligacion del Estado,
4.80%, 10/31/06 [EUR] 2,530,000 3,350,698
- ----------------------------------------------------------------
Spain (Kingdom of) Treasury
Bills, 2.07%, 2/20/04 8 [EUR] 2,680,000 3,371,695
--------------
6,722,393
9 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
SWEDEN--0.9%
Sweden (Kingdom of) Debs.,
Series 1040, 6.50%, 5/5/08 [SEK] 37,205,000 $ 5,674,211
- ----------------------------------------------------------------
THE NETHERLANDS--0.7%
The Netherlands
(Government of) Bonds:
4%, 7/15/05 [EUR] 175,000 225,615
5%, 7/15/11 [EUR] 475,000 637,007
Series 1, 5.75%, 2/15/07 [EUR] 2,865,000 3,892,752
--------------
4,755,374
- ----------------------------------------------------------------
TURKEY--0.2%
Turkey (Republic of) Nts.,
7.20%, 2/16/06 [JPY] 125,000,000 1,272,511
- ----------------------------------------------------------------
UKRAINE--0.2%
Ukraine (Government of) Bonds,
7.65%, 6/11/13 665,000 694,925
- ----------------------------------------------------------------
Ukraine (Government of) Sr.
Unsec. Nts., 11%, 3/15/07 359,337 401,451
--------------
1,096,376
--------------
Total Foreign Government
Obligations (Cost $146,096,804) 158,459,537
- ----------------------------------------------------------------
LOAN PARTICIPATIONS--0.7%
Algeria (Republic of) Loan
Participation Nts.,
2.063%, 3/4/10 1,2 504,833 494,106
- ----------------------------------------------------------------
Deutsche Bank AG, OAO
Gazprom Loan Participation
Nts., 6.50%, 8/4/05 1,520,000 1,532,312
- ----------------------------------------------------------------
Deutsche Bank AG, Indonesia
Rupiah Loan Participation Nts.:
2.636%, 3/25/05 1,490,000 1,363,350
2.636%, 5/21/04 1 1,330,000 1,260,175
--------------
Total Loan Participations
(Cost $4,361,704) 4,649,943
- ----------------------------------------------------------------
CORPORATE BONDS AND NOTES--32.0%
- ----------------------------------------------------------------
CONSUMER DISCRETIONARY--9.0%
- ----------------------------------------------------------------
AUTO COMPONENTS--0.6%
Cambridge Industries, Inc.,
Liquidating Trust Interests,
7/15/07 1,12 77,456 --
- ----------------------------------------------------------------
Collins & Aikman
Floorcoverings, Inc., 9.75%
Sr. Sub. Nts., Series B, 2/15/10 200,000 215,000
- ----------------------------------------------------------------
Collins & Aikman
Products Co., 10.75%
Sr. Nts., 12/31/11 400,000 395,000
- ----------------------------------------------------------------
Dana Corp.:
9% Unsec. Nts., 8/15/11 420,000 508,200
10.125% Nts., 3/15/10 200,000 234,000
- ----------------------------------------------------------------
Dura Operating Corp.:
9% Sr. Sub. Nts., Series B,
5/1/09 [EUR] 200,000 245,963
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
AUTO COMPONENTS Continued
9% Sr. Unsec. Sub. Nts.,
Series D, 5/1/09 $ 500,000 $ 502,500
- ----------------------------------------------------------------
Eagle-Picher, Inc., 9.75%
Sr. Nts., 9/1/13 7 300,000 325,500
- ----------------------------------------------------------------
Metaldyne Corp.:
10% Sr. Nts., 11/1/13 7 200,000 203,000
11% Sr. Sub. Nts., 6/15/12 300,000 277,500
- ----------------------------------------------------------------
Stoneridge, Inc., 11.50% Sr.
Nts., 5/1/12 600,000 711,000
- ----------------------------------------------------------------
Tenneco Automotive, Inc.,
10.25% Sr. Sec. Nts.,
Series B, 7/15/13 150,000 171,375
- ----------------------------------------------------------------
United Components, Inc.,
9.375% Sr. Sub. Nts., 6/15/13 200,000 219,500
--------------
4,008,538
- ----------------------------------------------------------------
AUTOMOBILES--0.2%
DirecTV Holdings LLC/DirecTV
Financing Co., Inc., 8.375% Sr.
Unsec. Nts., 3/15/13 800,000 932,000
- ----------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--2.7%
Apcoa, Inc., 9.25% Sr. Unsec.
Sub. Nts., 3/15/08 1 100,000 36,500
- ----------------------------------------------------------------
Aztar Corp., 9% Sr. Unsec. Sub.
Nts., 8/15/11 850,000 937,125
- ----------------------------------------------------------------
Boca Resorts, Inc., 9.875% Sr.
Sub. Nts., 4/15/09 450,000 481,500
- ----------------------------------------------------------------
Boyd Gaming Corp., 8.75% Sr.
Sub. Nts., 4/15/12 300,000 330,750
- ----------------------------------------------------------------
Coast Hotels & Casinos, Inc.,
9.50% Sr. Unsec. Sub. Nts., 4/1/09 300,000 318,750
- ----------------------------------------------------------------
Dominos, Inc., 8.25% Sr. Sub.
Nts., 7/1/11 7 400,000 430,500
- ----------------------------------------------------------------
Gaylord Entertainment Co.,
8% Sr. Nts., 11/15/13 7 300,000 318,000
- ----------------------------------------------------------------
Hilton Hotels Corp., 7.625%
Nts., 12/1/12 600,000 677,250
- ----------------------------------------------------------------
Hollywood Park, Inc., 9.25%
Sr. Unsec. Sub. Nts.,
Series B, 2/15/07 325,000 338,000
- ----------------------------------------------------------------
Intrawest Corp., 7.50% Sr. Nts.,
10/15/13 7 625,000 653,125
- ----------------------------------------------------------------
Isle of Capri Casinos, Inc., 9%
Sr. Sub. Nts., 3/15/12 500,000 558,750
- ----------------------------------------------------------------
John Q. Hammons Hotels, Inc.,
8.875% Sr. Nts., Series B, 5/15/12 300,000 332,250
- ----------------------------------------------------------------
Jupiters Ltd., 8.50% Sr. Unsec.
Nts., 3/1/06 1 400,000 438,000
- ----------------------------------------------------------------
Mandalay Resort Group,
10.25% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 650,000 754,000
10 | OPPENHEIMER STRATEGIC BOND FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE Continued
MGM Mirage, Inc., 8.375%
Sr. Unsec. Sub. Nts., 2/1/11 6 $ 1,200,000 $ 1,365,000
- ----------------------------------------------------------------
Mohegan Tribal Gaming
Authority:
6.375% Sr. Sub. Nts., 7/15/09 250,000 259,375
8% Sr. Sub. Nts., 4/1/12 400,000 435,000
8.375% Sr. Sub. Nts., 7/1/11 1 600,000 657,000
- ----------------------------------------------------------------
Park Place Entertainment Corp.,
7.875% Sr. Sub. Nts., 3/15/10 200,000 222,500
- ----------------------------------------------------------------
Premier Cruise Ltd., 11%
Sr. Nts., 3/15/08 1,3,11 250,000 --
- ----------------------------------------------------------------
Premier Parks, Inc., 9.75%
Sr. Nts., 6/15/07 500,000 524,375
- ----------------------------------------------------------------
Prime Hospitality Corp., 8.375%
Sr. Sub. Nts., 5/1/12 400,000 415,000
- ----------------------------------------------------------------
River Rock Entertainment LLC,
9.75% Sr. Nts., 11/1/11 7 300,000 324,000
- ----------------------------------------------------------------
Royal Caribbean Cruises Ltd.:
8% Sr. Unsec. Nts., 5/15/10 250,000 273,750
8.75% Sr. Unsub. Nts., 2/2/11 300,000 340,500
- ----------------------------------------------------------------
Six Flags, Inc.:
8.875% Sr. Nts., 2/1/10 800,000 825,000
9.75% Sr. Nts., 4/15/13 1,000,000 1,057,500
- ----------------------------------------------------------------
Starwood Hotels &
Resorts Worldwide,
Inc., 7.875% Sr. Nts., 5/1/12 900,000 1,017,000
- ----------------------------------------------------------------
Station Casinos, Inc., 9.875%
Sr. Unsec. Sub. Nts., 7/1/10 800,000 884,000
- ----------------------------------------------------------------
Sun International Hotels Ltd.,
8.875% Sr. Unsec. Sub. Nts.,
8/15/11 700,000 768,250
- ----------------------------------------------------------------
Trump Atlantic City Associates/
Trump Atlantic City Funding, Inc.,
11.25% First Mtg. Nts., 5/1/06 25,000 19,188
- ----------------------------------------------------------------
Trump Casino Holdings LLC/
Trump Casino Funding, Inc.,
11.625% Sr. Sec. Nts., 3/15/10 350,000 336,875
- ----------------------------------------------------------------
Universal City Development
Partners Ltd., 11.75% Sr. Nts.,
4/1/10 7 500,000 587,500
- ----------------------------------------------------------------
Vail Resorts, Inc., 8.75% Sr.
Unsec. Sub. Nts., 5/15/09 200,000 212,000
- ----------------------------------------------------------------
Venetian Casino Resort LLC/
Las Vegas Sands, Inc.,
11% Sec. Nts., 6/15/10 400,000 466,000
--------------
17,594,313
- ----------------------------------------------------------------
HOUSEHOLD DURABLES--0.8%
Beazer Homes USA, Inc., 8.375%
Sr. Nts., 4/15/12 400,000 443,000
- ----------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts.,
8/1/09 300,000 324,750
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
HOUSEHOLD DURABLES Continued
D.R. Horton, Inc.:
9.375% Sr. Unsec. Sub. Nts.,
3/15/11 $ 400,000 $ 456,000
9.75% Sr. Sub. Nts., 9/15/10 400,000 478,000
- ----------------------------------------------------------------
KB Home:
7.75% Sr. Nts., 10/15/04 300,000 309,000
8.625% Sr. Sub. Nts., 12/15/08 250,000 281,250
9.50% Sr. Unsec. Sub. Nts.,
2/15/11 400,000 448,000
- ----------------------------------------------------------------
Meritage Corp., 9.75% Sr.
Unsec. Nts., 6/1/11 350,000 392,875
- ----------------------------------------------------------------
Salton, Inc., 10.75% Sr. Unsec.
Sub. Nts., 12/15/05 425,000 435,625
- ----------------------------------------------------------------
Standard Pacific Corp.,
9.25% Sr. Sub. Nts., 4/15/12 200,000 224,000
- ----------------------------------------------------------------
WCI Communities, Inc.,
9.125% Sr. Sub. Nts., 5/1/12 300,000 331,500
- ----------------------------------------------------------------
William Lyon Homes, Inc.,
10.75% Sr. Nts., 4/1/13 400,000 457,000
- ----------------------------------------------------------------
Williams Scotsman, Inc.,
9.875% Sr. Unsec. Nts., 6/1/07 800,000 814,000
--------------
5,395,000
- ----------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS--0.0%
Remington Arms Co., Inc.,
10.50% Sr. Unsec. Nts., 2/1/11 200,000 214,000
- ----------------------------------------------------------------
MEDIA--3.8%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 3,11 350,000 322,000
10.25% Sr. Unsec. Nts., 11/1/06 3,11 400,000 374,000
10.25% Sr. Unsec. Sub. Nts.,
6/15/11 3,11 400,000 380,000
10.875% Sr. Unsec. Nts.,
10/1/10 3,11 400,000 376,000
- ----------------------------------------------------------------
Allbritton Communications Co.,
7.75% Sr. Unsec. Sub. Nts.,
12/15/12 1,200,000 1,251,000
- ----------------------------------------------------------------
AMC Entertainment, Inc.,
9.50% Sr. Unsec. Sub. Nts., 2/1/11 500,000 527,500
- ----------------------------------------------------------------
Block Communications, Inc.,
9.25% Sr. Sub. Nts., 4/15/09 400,000 432,000
- ----------------------------------------------------------------
Charter Communications
Holdings LLC/Charter
Communications
Holdings Capital Corp.:
0%/9.92% Sr. Unsec.
Disc. Nts., 4/1/11 13 900,000 774,000
8.625% Sr. Unsec. Nts., 4/1/09 2,000,000 1,755,000
10.75% Sr. Unsec. Nts., 10/1/09 1,100,000 1,014,750
11.125% Sr. Unsec. Nts., 1/15/11 500,000 461,250
- ----------------------------------------------------------------
Cinemark USA, Inc., 9% Sr.
Unsec. Sub. Nts., 2/1/13 400,000 452,000
11 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
MEDIA Continued
Corus Entertainment, Inc., 8.75%
Sr. Sub. Nts., 3/1/12 $ 300,000 $ 331,500
- ----------------------------------------------------------------
CSC Holdings, Inc.,
7.625% Sr. Unsec.
Unsub. Nts., Series B, 4/1/11 1,750,000 1,850,625
- ----------------------------------------------------------------
EchoStar DBS Corp.:
9.375% Sr. Unsec. Nts., 2/1/09 750,000 788,438
10.375% Sr. Unsec. Nts., 10/1/07 800,000 881,000
- ----------------------------------------------------------------
Emmis Communications Corp.:
0%/12.50% Sr. Unsec.
Disc. Nts., 3/15/11 13 548,000 510,325
8.125% Sr. Unsec. Sub. Nts.,
Series B, 3/15/09 600,000 632,250
- ----------------------------------------------------------------
Entravision Communications
Corp., 8.125% Sr. Sub. Nts.,
3/15/09 400,000 430,000
- ----------------------------------------------------------------
Granite Broadcasting Corp.,
9.75% Sr. Sec. Nts., 12/1/10 600,000 601,500
- ----------------------------------------------------------------
Hollinger International
Publishing, Inc., 9% Sr.
Unsec. Nts., 12/15/10 400,000 427,000
- ----------------------------------------------------------------
Houghton Mifflin Co., 8.25%
Sr. Unsec. Nts., 2/1/11 400,000 430,000
- ----------------------------------------------------------------
Insight Midwest LP/Insight
Capital, Inc., 9.75% Sr. Nts.,
10/1/09 200,000 212,500
- ----------------------------------------------------------------
Lin Television Corp., 6.50%
Sr. Sub. Nts., 5/15/13 7 400,000 402,500
- ----------------------------------------------------------------
LodgeNet Entertainment Corp.,
9.50% Sr. Sub. Debs., 6/15/13 1 200,000 220,000
- ----------------------------------------------------------------
Mediacom LLC/Mediacom
Capital Corp., 9.50% Sr. Unsec.
Nts., 1/15/13 500,000 532,500
- ----------------------------------------------------------------
News America Holdings, Inc.,
8.875% Sr. Debs., 4/26/23 625,000 803,294
- ----------------------------------------------------------------
PanAmSat Corp., 8.50% Sr.
Unsec. Nts., 2/1/12 900,000 1,003,500
- ----------------------------------------------------------------
PRIMEDIA, Inc., 8% Sr. Nts.,
5/15/13 7 900,000 922,500
- ----------------------------------------------------------------
R.H. Donnelley Financial Corp. I,
10.875% Sr. Sub. Nts., 12/15/12 7 400,000 476,500
- ----------------------------------------------------------------
Radio One, Inc., 8.875% Sr.
Unsec. Sub. Nts., Series B, 7/1/11 200,000 221,500
- ----------------------------------------------------------------
Regal Cinemas, Inc., 9.375%
Sr. Sub. Nts., Series B, 2/1/12 200,000 227,000
- ----------------------------------------------------------------
Shaw Communications, Inc.,
8.54% Debs., 9/30/27 [CAD] 340,000 253,169
- ----------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8% Sr. Unsec. Sub. Nts., 3/15/12 1,050,000 1,139,250
8.75% Sr. Sub. Nts., 12/15/11 300,000 334,500
- ----------------------------------------------------------------
Spanish Broadcasting System, Inc.,
9.625% Sr. Unsec. Sub. Nts., 11/1/09 800,000 858,000
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
MEDIA Continued
Vertis, Inc., 9.75% Sr. Sec. Nts.,
4/1/09 $ 200,000 $ 218,250
- ----------------------------------------------------------------
Videotron Ltee, 6.875%
Sr. Nts., 1/15/14 7 200,000 207,500
- ----------------------------------------------------------------
Vivendi Universal SA, 9.25%
Sr. Nts., 4/15/10 7 550,000 654,500
- ----------------------------------------------------------------
Von Hoffmann Corp., 10.25%
Sr. Unsec. Nts., 3/15/09 7 200,000 214,000
- ----------------------------------------------------------------
WRC Media, Inc./Weekly Reader
Corp./CompassLearning Inc.,
12.75% Sr. Sub. Nts., 11/15/09 500,000 480,000
--------------
24,383,101
- ----------------------------------------------------------------
MULTILINE RETAIL--0.3%
J.C. Penney Co., Inc., 8% Nts.,
3/1/10 800,000 921,000
- ----------------------------------------------------------------
Saks, Inc.:
8.25% Sr. Unsec. Nts., 11/15/08 700,000 780,500
9.875% Nts., 10/1/11 400,000 478,000
--------------
2,179,500
- ----------------------------------------------------------------
SPECIALTY RETAIL--0.4%
Asbury Automotive Group, Inc.,
9% Sr. Sub. Nts., 6/15/12 300,000 318,750
- ----------------------------------------------------------------
AutoNation, Inc., 9% Sr.
Unsec. Nts., 8/1/08 500,000 576,250
- ----------------------------------------------------------------
CSK Auto, Inc., 12%
Sr. Unsec. Nts., 6/15/06 400,000 461,000
- ----------------------------------------------------------------
Eye Care Centers of America, Inc.,
9.125% Sr. Unsec. Sub. Nts., 5/1/08 1 200,000 201,000
- ----------------------------------------------------------------
Finlay Enterprises, Inc.,
9% Debs., 5/1/08 100,000 102,875
- ----------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%
Sr. Nts., 5/1/08 300,000 312,000
- ----------------------------------------------------------------
Hollywood Entertainment Corp.,
9.625% Sr. Sub. Nts., 3/15/11 1 400,000 432,000
- ----------------------------------------------------------------
Petco Animal Supplies, Inc.,
10.75% Sr. Sub. Nts., 11/1/11 1 200,000 235,000
- ----------------------------------------------------------------
Rent-A-Center, Inc., 7.50%
Sr. Sub. Nts., Cl. B, 5/1/10 150,000 159,000
--------------
2,797,875
- ----------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.2%
Broder Bros. Co., 11.25%
Sr. Nts., 10/15/10 7 400,000 396,000
- ----------------------------------------------------------------
Galey & Lord, Inc., 9.125%
Sr. Unsec. Sub. Nts., 3/1/08 1,3,11 400,000 5,000
- ----------------------------------------------------------------
Levi Strauss & Co., 12.25%
Sr. Nts., 12/15/12 600,000 393,000
- ----------------------------------------------------------------
Oxford Industries, Inc., 8.875%
Sr. Nts., 6/1/11 7 250,000 274,688
12 | OPPENHEIMER STRATEGIC BOND FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS Continued
Phillips/Van Heusen Corp.,
9.50% Sr. Unsec. Sub. Nts., 5/1/08 $ 200,000 $ 209,000
- ----------------------------------------------------------------
Russell Corp., 9.25% Sr. Nts.,
5/1/10 200,000 208,250
--------------
1,485,938
- ----------------------------------------------------------------
CONSUMER STAPLES--1.2%
- ----------------------------------------------------------------
BEVERAGES--0.1%
Constellation Brands, Inc.,
8.125% Sr. Sub. Nts., 1/15/12 300,000 330,000
- ----------------------------------------------------------------
FOOD & STAPLES RETAILING--0.4%
Delhaize America, Inc., 8.125%
Unsub. Debs., 4/15/11 1,132,000 1,307,460
- ----------------------------------------------------------------
Fleming Cos., Inc.:
10.125% Sr. Unsec. Nts., 4/1/08 3,11 400,000 90,000
10.625% Sr. Unsec. Sub. Nts.,
Series D, 7/31/07 1,3 200,000 1,500
- ----------------------------------------------------------------
Great Atlantic & Pacific Tea
Co., Inc. (The), 9.125% Sr. Nts.,
12/15/11 400,000 368,000
- ----------------------------------------------------------------
Pantry, Inc. (The), 10.25%
Sr. Sub. Nts., 10/15/07 200,000 208,000
- ----------------------------------------------------------------
Real Time Data Co., 13%
Disc. Nts., 5/31/09 1,3,11,14 142,981 --
- ----------------------------------------------------------------
Rite Aid Corp.:
8.125% Sr. Sec. Nts., 5/1/10 450,000 486,000
9.50% Sr. Sec. Nts., 2/15/11 200,000 226,500
--------------
2,687,460
- ----------------------------------------------------------------
FOOD PRODUCTS--0.6%
American Seafoods Group LLC,
10.125% Sr. Sub. Nts., 4/15/10 1 200,000 238,750
- ----------------------------------------------------------------
Aurora Foods, Inc., 8.75% Sr.
Sub. Nts., Series B, 7/1/08 3 200,000 157,000
- ----------------------------------------------------------------
Burns Philp Capital Pty Ltd.,
9.75% Sr. Sub. Nts., 7/15/12 7 450,000 483,750
- ----------------------------------------------------------------
Del Monte Corp., 8.625%
Sr. Sub. Nts., 12/15/12 400,000 440,000
- ----------------------------------------------------------------
Doane Pet Care Co., 10.75%
Sr. Nts., 3/1/10 1 350,000 364,000
- ----------------------------------------------------------------
Dole Food Co., Inc.:
8.625% Sr. Nts., 5/1/09 400,000 441,000
8.875% Sr. Unsec. Nts., 3/15/11 200,000 220,500
- ----------------------------------------------------------------
Hines Nurseries, Inc.,
10.25% Sr. Nts., 10/1/11 7 200,000 219,000
- ----------------------------------------------------------------
Michael Foods, Inc., 8%
Sr. Sub. Nts., 11/15/13 7 200,000 209,500
- ----------------------------------------------------------------
Pinnacle Foods Holding Corp.,
8.25% Sr. Sub. Nts., 12/1/13 7 200,000 208,000
- ----------------------------------------------------------------
Smithfield Foods, Inc.,
7.625% Sr. Unsec.
Sub. Nts., 2/15/08 400,000 406,000
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
FOOD PRODUCTS Continued
United Biscuits Finance plc,
10.75% Sr. Sub. Nts.,
4/15/11 1 [GBP] 400,000 $ 801,988
--------------
4,189,488
- ----------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.1%
AKI, Inc., 10.50% Sr.
Unsec. Nts., 7/1/08 1 350,000 365,750
- ----------------------------------------------------------------
Playtex Products, Inc., 9.375% Sr.
Unsec. Sub. Nts., 6/1/11 500,000 507,500
- ----------------------------------------------------------------
Styling Technology Corp.,
10.875% Sr. Unsec. Sub. Nts.,
7/1/08 1,3,11 70,000 --
--------------
873,250
- ----------------------------------------------------------------
ENERGY--2.8%
- ----------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--0.5%
Dresser, Inc., 9.375%
Sr. Sub. Nts., 4/15/11 300,000 327,750
- ----------------------------------------------------------------
Hanover Compress Co., 8.625%
Sr. Nts., 12/15/10 300,000 313,500
- ----------------------------------------------------------------
Hanover Equipment Trust
2001A, 8.50% Sr. Sec. Nts.,
Series A, 9/1/08 500,000 532,500
- ----------------------------------------------------------------
Hornbeck-Leevac
Marine Services, Inc.,
10.625% Sr. Nts., 8/1/08 1,000,000 1,110,000
- ----------------------------------------------------------------
Ocean Rig Norway AS, 10.25%
Sr. Sec. Nts., 6/1/08 700,000 661,500
- ----------------------------------------------------------------
Petroleum Helicopters, Inc.,
9.375% Sr. Nts., 5/1/09 200,000 213,500
- ----------------------------------------------------------------
Universal Compression, Inc.,
7.25% Sr. Unsec. Sub. Nts.,
5/15/10 400,000 418,000
--------------
3,576,750
- ----------------------------------------------------------------
OIL & GAS--2.3%
Chesapeake Energy Corp.,
8.125% Sr. Unsec. Nts., 4/1/11 600,000 669,000
- ----------------------------------------------------------------
Forest Oil Corp., 7.75%
Sr. Nts., 5/1/14 300,000 318,750
- ----------------------------------------------------------------
Frontier Oil Corp.,
11.75% Sr. Nts., 11/15/09 400,000 454,000
- ----------------------------------------------------------------
GulfTerra Energy Partners LP:
8.50% Sr. Unsec. Sub. Nts.,
Series B, 6/1/10 255,000 290,700
10.625% Sr. Sub. Nts., 12/1/12 235,000 292,575
- ----------------------------------------------------------------
Leviathan Gas Pipeline Partners
LP/Leviathan Finance Corp.,
10.375% Sr. Unsec. Sub. Nts.,
Series B, 6/1/09 1 400,000 436,000
13 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
OIL & GAS Continued
Newfield Exploration Co.,
8.375% Sr. Sub. Nts., 8/15/12 $ 500,000 $ 562,500
- ----------------------------------------------------------------
Paramount Resources Ltd.,
7.875% Sr. Nts., 11/1/10 400,000 400,000
- ----------------------------------------------------------------
Pemex Project Funding
Master Trust:
6.625% Nts., 4/4/10 [EUR] 690,000 903,840
8.50% Unsub. Nts., 2/15/08 420,000 480,900
- ----------------------------------------------------------------
Petroleos Mexicanos:
6.50% Unsub. Nts., 2/1/05 4,115,000 4,315,606
9.375% Sr. Unsec. Bonds, 12/2/08 585,000 699,075
- ----------------------------------------------------------------
Pioneer Natural Resources Co.,
7.50% Sr. Nts., 4/15/12 600,000 690,689
- ----------------------------------------------------------------
Premcor Refining Group, Inc.,
9.50% Sr. Nts., 2/1/13 1 900,000 1,030,500
- ----------------------------------------------------------------
Tesoro Petroleum Corp., 8%
Sr. Sec. Nts., 4/15/08 1,000,000 1,067,500
- ----------------------------------------------------------------
Tom Brown, Inc., Units (each
unit consists of $512 principal
amount of 7.25% sr. sub. nts.,
due 2013 and $488 principal
amount of Tom Brown
Resources Funding Corp.,
7.25% sr. sub. nts., due 2013) 15 150,000 159,375
- ----------------------------------------------------------------
Westport Resources Corp.:
8.25% Sr. Sub. Nts., 11/1/11 7 800,000 884,000
8.25% Sr. Unsec. Sub. Nts., 11/1/11 400,000 442,000
- ----------------------------------------------------------------
XTO Energy, Inc., 7.50%
Sr. Nts., 4/15/12 500,000 567,500
--------------
14,664,510
- ----------------------------------------------------------------
FINANCIALS--1.5%
- ----------------------------------------------------------------
CAPITAL MARKETS--0.2%
American Color Graphics, Inc.,
10% Sr. Sec. Nts., 6/15/10 7 200,000 206,000
- ----------------------------------------------------------------
Berry Plastics Corp.:
10.75% Sr. Sub. Nts., 7/15/12 7 350,000 404,688
10.75% Sr. Sub. Nts., 7/15/12 400,000 462,500
--------------
1,073,188
- ----------------------------------------------------------------
COMMERCIAL BANKS--0.1%
Bank Plus Corp., 12%
Sr. Nts., 7/18/07 1 7,000 7,525
- ----------------------------------------------------------------
BankUnited Capital Trust, 10.25%
Capital Securities, 12/31/26 1 100,000 109,750
- ----------------------------------------------------------------
Local Financial Corp., 11%
Sr. Nts., 9/8/04 1 150,000 157,125
- ----------------------------------------------------------------
Ongko International Finance
Co. BV, 10.50% Sec. Nts.,
3/29/04 1,3,11 90,000 563
- ----------------------------------------------------------------
Western Financial Bank, 9.625%
Unsec. Sub. Debs., 5/15/12 500,000 560,000
--------------
834,963
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--0.3%
Bombardier Recreational, Inc.,
8.375% Sr. Sub. Nts., 12/15/13 7 $ 200,000 $ 210,000
- ----------------------------------------------------------------
Couche-Tard US LP/Couche-Tard
Finance Corp., 7.50% Sr. Sub. Nts.,
12/15/13 7 150,000 157,875
- ----------------------------------------------------------------
Finova Group, Inc. (The),
7.50% Nts., 11/15/09 900,000 544,500
- ----------------------------------------------------------------
LaBranche & Co., Inc., 12% Sr.
Unsec. Sub. Nts., 3/2/07 200,000 203,000
- ----------------------------------------------------------------
Pemex Project Funding Master
Trust, 7.375% Unsec. Unsub.
Nts., 12/15/14 740,000 793,650
- ----------------------------------------------------------------
SBS Agro Finance BV, 10.25%
Bonds, 7/21/00 1,3,11 339,000 --
--------------
1,909,025
- ----------------------------------------------------------------
INSURANCE--0.1%
Arbor I Ltd., 16.67% Nts.,
6/15/06 1,2 500,000 502,550
- ----------------------------------------------------------------
Conseco, Inc., Escrow Shares,
6/15/09 11,12 300,000 --
--------------
502,550
- ----------------------------------------------------------------
REAL ESTATE--0.7%
Capstar Hotel Co., 8.75%
Sr. Sub. Nts., 8/15/07 1 175,000 178,063
- ----------------------------------------------------------------
Corrections Corp. of America:
7.50% Sr. Nts., 5/1/11 200,000 211,000
9.875% Sr. Nts., 5/1/09 300,000 336,375
- ----------------------------------------------------------------
Felcor Lodging LP,
9% Sr. Nts., 6/1/11 406,000 442,540
- ----------------------------------------------------------------
Felcor Suites LP,
7.375% Sr. Nts., 10/1/04 400,000 411,500
- ----------------------------------------------------------------
HMH Properties, Inc.,
7.875% Sr. Nts., Series B, 8/1/08 800,000 836,000
- ----------------------------------------------------------------
Host Marriott LP, 9.50%
Sr. Nts., 1/15/07 400,000 447,000
- ----------------------------------------------------------------
MeriStar Hospitality Corp.:
8.75% Sr. Unsec. Sub. Nts., 8/15/07 325,000 330,688
9.125% Sr. Unsec. Nts., 1/15/11 1,300,000 1,384,500
- ----------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 9.75% Sr. Sec. Nts.,
Series B, 4/1/08 245,000 256,944
--------------
4,834,610
- ----------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--0.1%
WMC Finance Co., 11.75%
Sr. Nts., 12/15/08 7 450,000 451,125
14 | OPPENHEIMER STRATEGIC BOND FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
HEALTH CARE--1.7%
- ----------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.2%
Fisher Scientific International, Inc.,
8.125% Sr. Sub. Nts., 5/1/12 $ 261,000 $ 281,228
- ----------------------------------------------------------------
HMP Equity Holdings Corp.,
Units (each unit consists of
$1,000 principal amount of
15.43% sr. sec. disc. nts., 5/15/08
and one warrant to purchase
2.8094 shares of Huntsman
Corp. common stock) 8,15 300,000 184,500
- ----------------------------------------------------------------
Sybron Dental Specialties, Inc.,
8.125% Sr. Sub. Nts., 6/15/12 300,000 327,750
- ----------------------------------------------------------------
Universal Hospital Services, Inc.,
10.125% Sr. Nts., 11/1/11 7 300,000 316,500
- ----------------------------------------------------------------
Vanguard Health Systems, Inc.,
9.75% Sr. Unsec. Sub. Nts., 8/1/11 300,000 327,000
--------------
1,436,978
- ----------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.4%
AmeriPath, Inc., 10.50% Sr. Unsec.
Sub. Nts., 4/1/13 300,000 321,000
- ----------------------------------------------------------------
AmerisourceBergen Corp., 7.25%
Sr. Unsec. Nts., 11/15/12 300,000 324,750
- ----------------------------------------------------------------
Beverly Enterprises, Inc., 9.625%
Sr. Unsec. Nts., 4/15/09 800,000 886,000
- ----------------------------------------------------------------
Extendicare Health Services, Inc.,
9.50% Sr. Unsec. Sub. Nts., 7/1/10 1 300,000 334,500
- ----------------------------------------------------------------
Fresenius Medical Care Capital
Trust II, 7.875% Nts., 2/1/08 1 900,000 965,250
- ----------------------------------------------------------------
Fresenius Medical Care
Capital Trust III, 7.375% Nts.,
2/1/08 1 [DEM] 25,000 17,090
- ----------------------------------------------------------------
Fresenius Medical Care
Capital Trust IV, 7.875%
Trust Preferred Nts., 6/15/11 600,000 651,000
- ----------------------------------------------------------------
Genesis Healthcare Corp.,
8% Sr. Sub. Nts., 10/15/13 7 200,000 209,500
- ----------------------------------------------------------------
Hanger Orthopedic Group, Inc.,
10.375% Sr. Nts., 2/15/09 1 125,000 142,500
- ----------------------------------------------------------------
HCA, Inc., 6.30% Sr. Unsec.
Nts., 10/1/12 500,000 516,372
- ----------------------------------------------------------------
Healthsouth Corp., 7.625%
Nts., 6/1/12 1,000,000 940,000
- ----------------------------------------------------------------
Magellan Health Services,
Inc., 9.375% Sr. Nts., 11/15/07 7 700,000 738,500
- ----------------------------------------------------------------
Medquest, Inc., 11.875% Sr.
Unsec. Sub. Nts., Series B,
8/15/12 600,000 658,500
- ----------------------------------------------------------------
NDCHealth Corp., 10.50%
Sr. Unsec. Sub. Nts., 12/1/12 250,000 282,500
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES Continued
PacifiCare Health Systems, Inc.,
10.75% Sr. Unsec. Unsub. Nts.,
6/1/09 $ 585,000 $ 693,225
- ----------------------------------------------------------------
Quintiles Transnational Corp.,
10% Sr. Sub. Nts., 10/1/13 7 300,000 325,500
- ----------------------------------------------------------------
Tenet Healthcare Corp.,
6.375% Sr. Nts., 12/1/11 544,000 524,960
- ----------------------------------------------------------------
Triad Hospitals, Inc., 8.75%
Sr. Unsec. Nts., Series B, 5/1/09 400,000 435,500
- ----------------------------------------------------------------
US Oncology, Inc., 9.625%
Sr. Sub. Nts., 2/1/12 300,000 330,750
--------------
9,297,397
- ----------------------------------------------------------------
PHARMACEUTICALS--0.1%
aaiPharma, Inc.,
11% Sr. Sub. Nts., 4/1/10 200,000 228,000
- ----------------------------------------------------------------
Valeant Pharmaceuticals
International, Inc., 7%
Sr. Nts., 12/15/11 7 350,000 362,250
--------------
590,250
- ----------------------------------------------------------------
INDUSTRIALS--3.8%
- ----------------------------------------------------------------
AEROSPACE & DEFENSE--0.5%
Alliant Techsystems, Inc., 8.50%
Sr. Unsec. Sub. Nts., 5/15/11 300,000 331,500
- ----------------------------------------------------------------
American Plumbing &
Mechanical, Inc., 11.625%
Sr. Sub. Nts., Series B, 10/15/08 1,3 425,000 106,781
- ----------------------------------------------------------------
BE Aerospace, Inc.:
8.50% Sr. Nts., 10/1/10 7 200,000 215,500
8.875% Sr. Unsec. Sub. Nts., 5/1/11 200,000 188,500
- ----------------------------------------------------------------
K&F Industries, Inc., 9.625%
Sr. Unsec. Sub. Nts., 12/15/10 225,000 253,406
- ----------------------------------------------------------------
L-3 Communications Corp., 7.625%
Sr. Sub. Nts., 6/15/12 300,000 326,625
- ----------------------------------------------------------------
Rexnord Corp., 10.125% Sr. Unsec.
Sub. Nts., 12/15/12 350,000 385,000
- ----------------------------------------------------------------
TransDigm, Inc., 8.375%
Sr. Sub. Nts., 7/15/11 400,000 427,500
- ----------------------------------------------------------------
TRW Automotive, Inc.:
9.375% Sr. Nts., 2/15/13 250,000 286,875
11% Sr. Sub. Nts., 2/15/13 300,000 354,750
- ----------------------------------------------------------------
Vought Aircraft Industries, Inc.,
8% Sr. Nts., 7/15/11 7 200,000 205,250
--------------
3,081,687
- ----------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.0%
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 3,11 100,000 37,500
9.375% Sr. Unsec. Nts., 11/15/06 3,11 650,000 243,750
--------------
281,250
15 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
AIRLINES--0.2%
America West Airlines, Inc.,
10.75% Sr. Nts., 9/1/05 $ 450,000 $ 438,750
- ----------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts.,
8/1/04 700,000 607,250
--------------
1,046,000
- ----------------------------------------------------------------
BUILDING PRODUCTS--0.3%
Associated Materials, Inc.,
9.75% Sr. Sub. Nts., 4/15/12 200,000 220,000
- ----------------------------------------------------------------
Jacuzzi Brands, Inc., 9.625%
Sr. Sec. Nts., 7/1/10 7 311,000 343,655
- ----------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Unsec. Nts.,
Series B, 9/1/07 650,000 675,188
9.25% Sr. Nts., Series B, 3/15/07 150,000 154,875
9.875% Sr. Unsec. Sub.
Nts., 6/15/11 250,000 276,875
- ----------------------------------------------------------------
North America Energy Partners,
Inc., 8.75% Sr. Unsec. Nts.,
12/1/11 7 150,000 158,250
--------------
1,828,843
- ----------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.4%
Allied Waste
North America, Inc.:
7.875% Sr. Nts., 4/15/13 400,000 435,000
8.50% Sr. Sub. Nts., 12/1/08 900,000 1,005,750
8.875% Sr. Nts., Series B, 4/1/08 800,000 900,000
9.25% Sr. Sec. Debs., Series B,
9/1/12 1,450,000 1,653,000
10% Sr. Unsec. Sub. Nts.,
Series B, 8/1/09 500,000 542,500
- ----------------------------------------------------------------
Budget Group, Inc., 9.125%
Sr. Unsec. Nts., 4/1/06 3,11 700,000 129,500
- ----------------------------------------------------------------
Buhrmann US, Inc., 12.25%
Sr. Unsec. Sub. Nts., 11/1/09 500,000 562,500
- ----------------------------------------------------------------
Coinmach Corp., 9% Sr. Nts.,
2/1/10 250,000 272,500
- ----------------------------------------------------------------
Hydrochem Industrial
Services, Inc., 10.375% Sr. Sub.
Nts., 8/1/07 1 150,000 143,625
- ----------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Unsec.
Sub. Nts., Series B, 4/1/09 1,3,11 400,000 --
- ----------------------------------------------------------------
Kindercare Learning
Centers, Inc., 9.50% Sr. Sub. Nts.,
2/15/09 1 500,000 510,000
- ----------------------------------------------------------------
Mail-Well I Corp., 9.625%
Sr. Nts., 3/15/12 400,000 446,000
- ----------------------------------------------------------------
Moore North American
Finance, Inc., 7.875% Sr. Nts.,
1/15/11 7 200,000 227,500
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES Continued
Protection One, Inc./Protection
One Alarm Monitoring, Inc.,
7.375% Sr. Unsec. Nts., 8/15/05 1 $ 400,000 $ 370,000
- ----------------------------------------------------------------
Safety-Kleen Corp., 9.25% Sr.
Unsec. Nts., 5/15/09 1,3,11 400,000 20,000
- ----------------------------------------------------------------
Synagro Technologies, Inc.,
9.50% Sr. Sub. Nts., 4/1/09 200,000 218,000
- ----------------------------------------------------------------
United Rentals (North
America), Inc.:
9.25% Sr. Unsec. Sub. Nts.,
Series B, 1/15/09 250,000 263,750
10.75% Sr. Unsec. Nts.,
Series B, 4/15/08 300,000 339,000
10.75% Sr. Unsec. Nts.,
Series B, 4/15/08 900,000 1,017,000
--------------
9,055,625
- ----------------------------------------------------------------
CONSTRUCTION & ENGINEERING--0.2%
Integrated Electrical Services,
Inc., 9.375% Sr. Sub. Nts.,
Series C, 2/1/09 700,000 738,500
- ----------------------------------------------------------------
URS Corp.:
11.50% Sr. Unsec. Nts., 9/15/09 1 150,000 170,438
12.25% Sr. Sub. Nts.,
Series B, 5/1/09 1 375,000 402,656
--------------
1,311,594
- ----------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.0%
Dayton Superior Corp.,
13% Sr. Unsec. Sub. Nts.,
6/15/09 1 200,000 175,000
- ----------------------------------------------------------------
General Cable Corp.,
9.50% Sr. Nts., 11/15/10 7 200,000 215,000
--------------
390,000
- ----------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.3%
Great Lakes Dredge & Dock Co.,
7.75% Sr. Sub. Nts., 12/15/13 7 250,000 258,438
- ----------------------------------------------------------------
Tyco International Group SA:
6.375% Nts., 10/15/11 1,600,000 1,718,000
6.75% Sr. Unsub. Nts., 2/15/11 300,000 329,250
--------------
2,305,688
- ----------------------------------------------------------------
MACHINERY--0.6%
Actuant Corp., 13%
Sr. Sub. Nts., 5/1/09 208,000 271,440
- ----------------------------------------------------------------
AGCO Corp., 9.50%
Sr. Unsec. Nts., 5/1/08 800,000 880,000
- ----------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts.,
8/15/07 1,3,11 400,000 3,650
- ----------------------------------------------------------------
Manitowoc Co., Inc. (The),
10.50% Sr. Sub. Nts., 8/1/12 500,000 571,875
16 | OPPENHEIMER STRATEGIC BOND FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
MACHINERY Continued
NMHG Holding Co., 10%
Sr. Nts., 5/15/09 1 $ 300,000 $ 333,000
- ----------------------------------------------------------------
Roller Bearing Co. of America,
Inc., 9.625% Sr. Sub. Nts.,
Series B, 6/15/07 540,000 505,575
- ----------------------------------------------------------------
SPX Corp., 7.50% Sr. Nts., 1/1/13 600,000 655,500
- ----------------------------------------------------------------
Terex Corp., 9.25% Sr. Unsec.
Sub. Nts., 7/15/11 400,000 442,000
--------------
3,663,040
- ----------------------------------------------------------------
MARINE--0.1%
CP Ships Ltd., 10.375% Sr. Nts.,
7/15/12 600,000 699,000
- ----------------------------------------------------------------
Millenium Seacarriers, Inc., 12%
Sr. Sec. Nts., 7/15/05 1,3,11 250,000 96,175
- ----------------------------------------------------------------
Navigator Gas Transport plc,
10.50% First Priority Ship Mtg.
Nts., 6/30/07 1,3,11 175,000 74,375
--------------
869,550
- ----------------------------------------------------------------
ROAD & RAIL--0.2%
Kansas City Southern
Railway Co. (The), 7.50%
Sr. Nts., 6/15/09 400,000 412,000
- ----------------------------------------------------------------
Stena AB:
7.50% Sr. Nts., 11/1/13 387,000 400,545
9.625% Sr. Nts., 12/1/12 250,000 283,125
--------------
1,095,670
- ----------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE--0.0%
Worldspan LP/Worldspan
Financial Corp., 9.625% Sr. Nts.,
6/15/11 7 150,000 155,250
- ----------------------------------------------------------------
INFORMATION TECHNOLOGY--1.0%
- ----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.1%
Orion Network Systems, Inc.,
12.50% Sr. Disc. Nts., 1/15/07 1,3 675,000 356,063
- ----------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.1%
Seagate Technology Hdd
Holdings, 8% Sr. Nts., 5/15/09 200,000 216,500
- ----------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.2%
Communications & Power
Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 1 250,000 256,875
- ----------------------------------------------------------------
Ingram Micro, Inc., 9.875%
Sr. Unsec. Sub. Nts., 8/15/08 1 700,000 777,000
- ----------------------------------------------------------------
Sensus Metering Systems, Inc.,
8.625% Sr. Sub. Nts., 12/15/13 7 450,000 464,063
--------------
1,497,938
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.0%
Exodus Communications, Inc.,
10.75% Sr. Nts., 12/15/09 1,3,11 [EUR] 338,620 $ 19,220
- ----------------------------------------------------------------
Globix Corp., 11% Sr. Nts.,
4/26/08 1 65,615 58,069
- ----------------------------------------------------------------
NorthPoint Communications
Group, Inc., 12.875% Nts.,
2/15/10 1,3 200,173 20
- ----------------------------------------------------------------
PSINet, Inc.:
10.50% Sr. Unsec. Nts.,
12/1/06 1,3,11 [EUR] 100,000 5,203
11% Sr. Nts., 8/1/09 1,3,11,13 270,467 15,552
- ----------------------------------------------------------------
Verado Holdings, Inc., 0%/13%
Sr. Disc. Nts., 4/15/08 1,3,11,13 250,000 25
--------------
98,089
- ----------------------------------------------------------------
IT SERVICES--0.1%
Iron Mountain, Inc.,
7.75% Sr. Sub. Nts., 1/15/15 400,000 421,000
- ----------------------------------------------------------------
Titan Corp. (The),
8% Sr. Sub. Nts., 5/15/11 7 100,000 114,000
--------------
535,000
- ----------------------------------------------------------------
OFFICE ELECTRONICS--0.0%
ASAT Finance LLC, 12.50%
Sr. Unsec. Nts., 11/1/06 1 162,500 173,266
- ----------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.5%
AMI Semiconductor, Inc.,
10.75% Sr. Unsec. Sub. Nts., 2/1/13 389,000 465,828
- ----------------------------------------------------------------
Amkor Technology, Inc.:
7.75% Sr. Nts., 5/15/13 950,000 1,023,625
9.25% Sr. Unsec. Sub. Nts.,
2/15/08 250,000 285,000
- ----------------------------------------------------------------
ChipPAC International Co. Ltd.,
12.75% Sr. Unsec. Sub. Nts.,
Series B, 8/1/09 600,000 666,000
- ----------------------------------------------------------------
Micron Technology, Inc.,
6.50% Sub. Nts., 9/30/05 1 1,000,000 995,000
--------------
3,435,453
- ----------------------------------------------------------------
MATERIALS--4.4%
- ----------------------------------------------------------------
CHEMICALS--1.5%
Compass Minerals Group, Inc.,
10% Sr. Sub. Nts., 8/15/11 450,000 506,250
- ----------------------------------------------------------------
Equistar Chemicals LP/Equistar
Funding Corp.:
8.75% Sr. Unsec. Nts., 2/15/09 600,000 630,000
10.625% Sr. Nts., 5/1/11 7 500,000 555,000
10.625% Sr. Unsec. Nts., 5/1/11 400,000 444,000
- ----------------------------------------------------------------
Huntsman Corp./ICI
Chemical Co. plc:
10.125% Sr. Unsec. Sub.
Nts., 7/1/09 1,000,000 1,035,000
17 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
CHEMICALS Continued
Huntsman Corp./ICI Chemical
Co. plc: Continued
10.125% Sr. Unsec. Sub. Nts.,
7/1/09 [EUR] 200,000 $ 247,540
13.09% Sr. Unsec. Disc.
Nts., 12/31/09 8 600,000 292,500
- ----------------------------------------------------------------
Huntsman International LLC:
9.875% Sr. Nts., 3/1/09 300,000 330,000
9.875% Sr. Nts., 3/1/09 7 450,000 495,000
- ----------------------------------------------------------------
ISP Holdings, Inc., 10.625%
Sr. Sec. Nts., 12/15/09 1 200,000 221,000
- ----------------------------------------------------------------
Koppers Industry, Inc.,
9.875% Sr. Sec. Nts., 10/15/13 7 300,000 332,250
- ----------------------------------------------------------------
Kraton Polymers LLC/Capital
Corp., 8.125% Sr. Sub. Nts.,
1/15/14 7 150,000 156,750
- ----------------------------------------------------------------
Lyondell Chemical Co.:
9.50% Sec. Nts., 12/15/08 300,000 315,000
9.625% Sr. Sec. Nts.,
Series A, 5/1/07 6 400,000 426,000
9.875% Sec. Nts., Series B, 5/1/07 1,400,000 1,484,000
- ----------------------------------------------------------------
Millennium America, Inc.,
9.25% Sr. Nts., 6/15/08 7 450,000 492,750
- ----------------------------------------------------------------
OM Group, Inc., 9.25%
Sr. Sub. Nts., 12/15/11 200,000 209,000
- ----------------------------------------------------------------
PCI Chemicals Canada,
10% Sr. Sec. Nts., 12/31/08 113,061 102,886
- ----------------------------------------------------------------
Pioneer Cos., Inc.,
4.64% Sr. Sec. Nts., 12/31/06 1,2 35,804 32,582
- ----------------------------------------------------------------
Polyone Corp., 8.875%
Sr. Unsec. Nts., 5/1/12 600,000 555,000
- ----------------------------------------------------------------
Resolution Performance
Products LLC, 8% Sec. Nts.,
12/15/09 7 250,000 260,000
- ----------------------------------------------------------------
Sterling Chemicals, Inc.:
10% Sr. Sec. Nts., 12/19/07 1 170,473 164,933
11.25% Sr. Sub. Nts., 8/15/06 1,3,11 540,000 --
- ----------------------------------------------------------------
Westlake Chemical Corp.,
8.75% Sr. Nts., 7/15/11 7 400,000 440,000
--------------
9,727,441
- ----------------------------------------------------------------
CONSTRUCTION MATERIALS--0.1%
Formica Corp., 10.875% Sr.
Unsec. Sub. Nts.,
Series B, 3/1/09 1,3,11 200,000 36,000
- ----------------------------------------------------------------
Texas Industries, Inc., 10.25%
Sr. Unsec. Nts., 6/15/11 7 400,000 454,000
--------------
490,000
- ----------------------------------------------------------------
CONTAINERS & PACKAGING--1.1%
Ball Corp.:
6.875% Sr. Unsec. Nts., 12/15/12 7 300,000 315,000
7.75% Sr. Unsec. Nts., 8/1/06 125,000 135,000
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
CONTAINERS & PACKAGING Continued
Consumers International, Inc.,
10.25% Sr. Sec. Nts., 4/1/05 1,3,11 $ 250,000 $ 625
- ----------------------------------------------------------------
Crown Euro Holdings SA:
9.50% Sr. Sec. Nts., 3/1/11 500,000 568,750
10.875% Sr. Sec. Nts., 3/1/13 200,000 236,250
- ----------------------------------------------------------------
Graphic Packaging
International Corp.:
8.50% Sr. Nts., 8/15/11 7 500,000 550,000
9.50% Sr. Sub. Nts., 8/15/13 7 350,000 388,500
- ----------------------------------------------------------------
Jefferson Smurfit Corp., 8.25%
Sr. Unsec. Nts., 10/1/12 250,000 272,500
- ----------------------------------------------------------------
MDP Acquisitions plc, 9.625%
Sr. Nts., 10/1/12 400,000 450,000
- ----------------------------------------------------------------
Owens-Brockway Glass
Container, Inc.:
7.75% Sr. Sec. Nts., 5/15/11 450,000 485,438
8.25% Sr. Unsec. Nts., 5/15/13 400,000 431,500
8.75% Sr. Sec. Nts., 11/15/12 1,000,000 1,118,750
8.875% Sr. Sec. Nts., 2/15/09 200,000 220,250
- ----------------------------------------------------------------
Stone Container Corp.:
8.375% Sr. Nts., 7/1/12 600,000 654,000
9.25% Sr. Unsec. Nts., 2/1/08 200,000 222,000
9.75% Sr. Unsec. Nts., 2/1/11 600,000 666,000
- ----------------------------------------------------------------
TriMas Corp., 9.875% Sr. Unsec.
Sub. Nts., 6/15/12 500,000 523,750
--------------
7,238,313
- ----------------------------------------------------------------
METALS & MINING--0.9%
AK Steel Corp., 7.875%
Sr. Unsec. Nts., 2/15/09 500,000 441,250
- ----------------------------------------------------------------
Arch Western Finance LLC,
6.75% Sr. Nts., 7/1/13 7 400,000 413,000
- ----------------------------------------------------------------
Better Minerals & Aggregates Co.,
13% Sr. Unsec. Sub. Nts., 9/15/09 1 100,000 55,500
- ----------------------------------------------------------------
California Steel Industries Corp.,
8.50% Sr. Unsec. Nts.,
Series B, 4/1/09 200,000 210,750
- ----------------------------------------------------------------
Century Aluminum Co.,
11.75% Sr. Sec. Nts., 4/15/08 500,000 560,000
- ----------------------------------------------------------------
IMCO Recycling, Inc.,
10.375% Sr. Sec. Nts., 10/15/10 7 300,000 309,750
- ----------------------------------------------------------------
International Utility
Structures, Inc.,
13% Unsec. Sub. Nts., 2/1/08 1,3 71,000 710
- ----------------------------------------------------------------
Jorgensen (Earle M.) Co., 9.75%
Sr. Sec. Nts., 6/1/12 500,000 557,500
- ----------------------------------------------------------------
Kaiser Aluminum & Chemical
Corp., 10.875% Sr. Nts., Series B,
10/15/06 1,3,11 500,000 452,500
- ----------------------------------------------------------------
Massey Energy Co.,
6.625% Sr. Nts.,
11/15/10 7 200,000 206,000
18 | OPPENHEIMER STRATEGIC BOND FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
METALS & MINING Continued
Metallurg, Inc., 11% Sr. Nts.,
12/1/07 $ 500,000 $ 282,500
- ----------------------------------------------------------------
Oregon Steel Mills, Inc.,
10% Sr. Nts., 7/15/09 400,000 353,000
- ----------------------------------------------------------------
Peabody Energy Corp., 6.875%
Sr. Unsec. Nts., Series B, 3/15/13 400,000 424,000
- ----------------------------------------------------------------
Steel Dynamics, Inc., 9.50%
Sr. Nts., 3/15/09 200,000 223,000
- ----------------------------------------------------------------
UCAR Finance, Inc., 10.25%
Sr. Nts., 2/15/12 300,000 346,500
- ----------------------------------------------------------------
United States Steel Corp.:
9.75% Sr. Nts., 5/15/10 400,000 452,000
10.75% Sr. Nts., 8/1/08 800,000 940,000
--------------
6,227,960
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.8%
Abitibi-Consolidated, Inc.,
8.55% Nts., 8/1/10 200,000 223,060
- ----------------------------------------------------------------
Ainsworth Lumber Co. Ltd.:
12.50% Sr. Nts., 7/15/07 1,14 400,000 472,000
13.875% Sr. Sec. Nts., 7/15/07 400,000 462,000
- ----------------------------------------------------------------
Buckeye Technologies, Inc.,
8.50% Sr. Nts., 10/1/13 100,000 107,500
- ----------------------------------------------------------------
Doman Industries Ltd.,
8.75% Sr. Nts., 3/15/04 1,3,11 900,000 157,500
- ----------------------------------------------------------------
Fort James Corp., 6.875%
Sr. Nts., 9/15/07 500,000 530,000
- ----------------------------------------------------------------
Georgia-Pacific Corp.:
8.125% Sr. Unsec. Nts., 5/15/11 1,450,000 1,602,250
9.375% Sr. Unsec. Nts., 2/1/13 800,000 924,000
- ----------------------------------------------------------------
Inland Fiber Group LLC,
9.625% Sr. Unsec. Nts., 11/15/07 3 300,000 157,500
- ----------------------------------------------------------------
Tekni-Plex, Inc., 8.75%
Sr. Sec. Nts., 11/15/13 7 300,000 314,250
--------------
4,950,060
- ----------------------------------------------------------------
TELECOMMUNICATION SERVICES--3.3%
- ----------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.6%
360networks, Inc., 13% Sr.
Unsec. Nts., 5/1/08 1,3,11 [EUR] 250,000 32
- ----------------------------------------------------------------
Adelphia Business Solutions,
Inc., 12% Sr. Sub. Nts.,
11/1/07 1,3,11 200,000 1,500
- ----------------------------------------------------------------
American Tower Corp.,
9.375% Sr. Nts., 2/1/09 700,000 749,000
- ----------------------------------------------------------------
COLO.com, Inc., 13.875%
Sr. Nts., 3/15/10 1,3,11 336,404 2,523
- ----------------------------------------------------------------
Comcast UK Cable Partner Ltd.,
11.20% Sr. Unsec. Disc.
Debs., 11/15/07 250,000 253,750
- ----------------------------------------------------------------
Concentric Network Corp.,
Escrow Shares, 12/15/07 1,12 80,000 --
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES Continued
Crown Castle International
Corp., 7.50% Sr. Nts., 12/1/13 7 $ 300,000 $ 303,000
- ----------------------------------------------------------------
Dex Media East LLC/Dex Media
East Finance Co., 9.875% Sr.
Unsec. Nts., 11/15/09 200,000 230,000
- ----------------------------------------------------------------
Dex Media West LLC/Dex
Media West Finance Co.:
8.50% Sr. Nts., 8/15/10 7 300,000 335,625
9.875% Sr. Sub. Nts., 8/15/13 7 600,000 700,500
- ----------------------------------------------------------------
Dex Media, Inc., 8% Nts.,
11/15/13 7 700,000 738,500
- ----------------------------------------------------------------
Focal Communications Corp.:
11.875% Sr. Unsec. Nts.,
Series B, 1/15/10 1,3,11 75,000 6,000
12.125% Sr. Unsec. Disc.
Nts., 2/15/08 1,3,11 80,000 6,400
- ----------------------------------------------------------------
Intermedia Communications,
Inc., 0%/12.25% Sr. Disc. Nts.,
Series B, 3/1/09 3,11,13 200,000 75,000
- ----------------------------------------------------------------
IPC Acquisition Corp., 11.50%
Sr. Sub. Nts., 12/15/09 200,000 219,000
- ----------------------------------------------------------------
Level 3 Communications, Inc.,
0%/10.50% Sr. Disc. Nts.,
12/1/08 13 700,000 663,250
- ----------------------------------------------------------------
MCI Communications Corp.,
7.75% Sr. Unsec. Debs., 3/23/25 3,11 200,000 162,000
- ----------------------------------------------------------------
Metromedia Fiber Network,
Inc., 10% Sr. Unsec. Nts.,
Series B, 11/15/08 1,3,11 400,000 26,000
- ----------------------------------------------------------------
Nextlink Communications, Inc.:
Escrow Shares, 10/1/07 1,12 200,000 --
Escrow Shares, 11/15/08 1,12 300,000 --
Escrow Shares, 3/15/08 1,12 250,000 --
Escrow Shares, 6/1/09 1,12 400,000 --
- ----------------------------------------------------------------
Qwest Corp.:
7.20% Unsec. Nts., 11/1/04 1,600,000 1,644,000
8.875% Nts., 3/15/12 7 300,000 345,750
- ----------------------------------------------------------------
Qwest Services Corp.,
13.50% Nts., 12/15/10 7 300,000 366,000
- ----------------------------------------------------------------
Sprint Capital Corp.,
8.375% Nts., 3/15/12 950,000 1,111,650
- ----------------------------------------------------------------
Telewest Communications plc:
0%/9.25% Sr. Disc. Nts.,
4/15/09 3,11,13 600,000 315,000
0%/9.875% Sr. Disc. Nts.,
4/15/09 3,11,13 [GBP] 200,000 182,595
- ----------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts.,
12/1/07 1,3,11 500,000 --
- ----------------------------------------------------------------
Telus Corp., 7.50% Nts., 6/1/07 790,000 884,929
- ----------------------------------------------------------------
Time Warner Telecom LLC/
Time Warner Telecom, Inc.,
9.75% Sr. Nts., 7/15/08 1,200,000 1,242,000
19 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES Continued
Viatel, Inc., 11.25% Sr. Sec. Nts.,
4/15/08 1,3,11 $ 500,000 $ --
- ----------------------------------------------------------------
Winstar Communications, Inc.,
12.75% Sr. Nts., 4/15/10 1,3,11 250,000 25
--------------
10,564,029
- ----------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--1.7%
Alamosa Delaware, Inc., 12.50%
Sr. Unsec. Nts., 2/1/11 650,000 666,250
- ----------------------------------------------------------------
American Tower Escrow Corp.,
12.25% Sr. Sub. Disc. Nts., 8/1/08 8 800,000 556,000
- ----------------------------------------------------------------
AT&T Corp., 8.75% Sr. Nts.,
11/15/31 2 500,000 586,300
- ----------------------------------------------------------------
CellNet Data Systems, Inc., Sr.
Unsec. Disc. Nts., 10/1/07 1,3,11 400,000 --
- ----------------------------------------------------------------
Centennial Cellular
Operating Co./Centennial
Communications Corp.,
10.125% Sr. Nts., 6/15/13 600,000 661,500
- ----------------------------------------------------------------
Dobson Communications Corp.,
8.875% Sr. Nts., 10/1/13 7 400,000 407,000
- ----------------------------------------------------------------
IPCS, Inc., 0%/14% Sr. Unsec.
Disc. Nts., 7/15/10 1,3,11,13 300,000 42,000
- ----------------------------------------------------------------
Leap Wireless International, Inc.:
0%/14.50% Sr. Unsec. Disc. Nts.,
4/15/10 1,3,11,13 700,000 87,500
12.50% Sr. Nts., 4/15/10 1,3 100,000 14,500
- ----------------------------------------------------------------
Nextel Communications, Inc.:
7.375% Sr. Nts., 8/1/15 280,000 302,400
9.375% Sr. Unsec. Nts., 11/15/09 2,200,000 2,409,000
- ----------------------------------------------------------------
Nextel Partners, Inc.:
11% Sr. Nts., 3/15/10 500,000 555,000
11% Sr. Unsec. Nts., 3/15/10 150,000 166,500
12.50% Sr. Nts., 11/15/09 342,000 398,430
- ----------------------------------------------------------------
Orbcomm Global LP,
Escrow Shares, 8/15/04 1,12 200,000 --
- ----------------------------------------------------------------
Rural Cellular Corp.:
9.625% Sr. Sub. Nts.,
Series B, 5/15/08 500,000 490,000
9.875% Sr. Nts., 2/1/10 400,000 428,000
- ----------------------------------------------------------------
SBA Communications Corp.:
10.25% Sr. Unsec. Nts., 2/1/09 200,000 197,500
12% Sr. Unsec. Disc. Nts., 3/1/08 1 296,000 323,380
- ----------------------------------------------------------------
SBA Telecommunications, Inc./
SBA Communications Corp.,
0%/9.75% Sr. Disc. Nts., 12/15/11 7,13 650,000 461,500
- ----------------------------------------------------------------
SpectraSite, Inc., 8.25% Sr. Nts.,
5/15/10 1 200,000 214,500
- ----------------------------------------------------------------
Triton PCS, Inc.:
8.50% Sr. Unsec. Nts., 6/1/13 400,000 432,000
8.75% Sr. Unsec. Sub. Nts.,
11/15/11 200,000 198,000
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES Continued
US Unwired, Inc., 0%/13.375% Sr.
Unsec. Sub. Disc. Nts., Series B,
11/1/09 13 $ 900,000 $ 657,000
- ----------------------------------------------------------------
Western Wireless Corp., 9.25%
Sr. Unsec. Nts., 7/15/13 450,000 477,000
--------------
10,731,260
- ----------------------------------------------------------------
UTILITIES--3.3%
- ----------------------------------------------------------------
ELECTRIC UTILITIES--1.8%
AES Corp. (The):
8.75% Sr. Sec. Nts., 5/15/13 7 1,300,000 1,459,250
8.75% Sr. Unsec. Unsub. Nts.,
6/15/08 244,000 262,910
8.875% Sr. Unsec. Nts., 2/15/11 103,000 112,785
9.375% Sr. Unsec. Nts., 9/15/10 97,000 108,034
- ----------------------------------------------------------------
AES Drax Holdings Ltd., 10.41%
Sr. Sec. Sub. Nts., Series B,
12/31/20 1,3 300,000 261,000
- ----------------------------------------------------------------
Caithness Coso Funding Corp.,
9.05% Sr. Sec. Nts., Series B,
12/15/09 334,800 364,932
- ----------------------------------------------------------------
Calpine Corp.:
8.25% Sr. Unsec. Nts., 8/15/05 200,000 194,500
8.50% Sr. Sec. Nts., 7/15/10 7 1,300,000 1,274,000
8.75% Sr. Nts., 7/15/07 400,000 330,000
8.75% Sr. Sec. Nts., 7/15/13 7 650,000 637,000
9.875% Sr. Sec. Nts., 12/1/11 7 700,000 722,750
- ----------------------------------------------------------------
Central Termica Guemes SA,
2% Nts., 1/1/12 1 90,000 9,000
- ----------------------------------------------------------------
CMS Energy Corp.:
7.75% Sr. Nts., 8/1/10 7 200,000 211,250
8.50% Sr. Nts., 4/15/11 250,000 271,250
9.875% Sr. Unsec. Nts., 10/15/07 900,000 1,008,000
- ----------------------------------------------------------------
CMS Energy X-TRAS Pass-
Through Trust I, 7% Sr. Unsec.
Pass-Through Certificates,
1/15/05 300,000 309,000
- ----------------------------------------------------------------
Edison Mission Energy, 10% Sr.
Unsec. Nts., 8/15/08 800,000 834,000
- ----------------------------------------------------------------
Funding Corp./Beaver Valley
Funding Corp., 9% Second Lease
Obligation Bonds, 6/1/17 199,000 229,129
- ----------------------------------------------------------------
Mirant Americas
Generation LLC, 7.625% Sr.
Unsec. Nts., 5/1/06 3 200,000 170,000
- ----------------------------------------------------------------
MSW Energy Holdings LLC/
MSW Energy Finance Co., Inc.:
7.375% Sr. Sec. Nts., 9/1/10 7 350,000 367,500
8.50% Sr. Sec. Nts., 9/1/10 7 200,000 219,000
- ----------------------------------------------------------------
NRG Energy, Inc.,
8% Sr. Sec. Nts.,
12/15/13 7 800,000 845,000
20 | OPPENHEIMER STRATEGIC BOND FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
ELECTRIC UTILITIES Continued
PG&E Corp., 6.875% Sr. Sec. Nts.,
7/15/08 7 $ 400,000 $ 435,000
- ----------------------------------------------------------------
Reliant Resources, Inc.:
9.25% Sr. Sec. Nts., 7/15/10 7 250,000 266,250
9.50% Sr. Sec. Nts., 7/15/13 7 250,000 268,750
- ----------------------------------------------------------------
Westar Energy, Inc., 9.75% Sr.
Unsec. Nts., 5/15/07 600,000 684,750
--------------
11,855,040
- ----------------------------------------------------------------
GAS UTILITIES--0.5%
AmeriGas Partners LP/AmeriGas
Eagle Finance Corp., 8.875% Sr.
Unsec. Nts., Series B, 5/20/11 500,000 552,500
- ----------------------------------------------------------------
El Paso Energy Corp.,
7.625% Nts., 7/15/11 200,000 186,250
- ----------------------------------------------------------------
SEMCO Energy, Inc.:
7.125% Sr. Nts., 5/15/08 7 150,000 156,938
7.75% Sr. Nts., 5/15/13 150,000 158,438
- ----------------------------------------------------------------
Southern Natural Gas Co., 8% Sr.
Unsub. Nts., 3/1/32 300,000 311,250
- ----------------------------------------------------------------
Tennessee Gas Pipeline Co.,
7.50% Bonds, 4/1/17 800,000 830,000
- ----------------------------------------------------------------
Williams Cos., Inc. (The), 7.125%
Nts., 9/1/11 1,100,000 1,168,750
--------------
3,364,126
- ----------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--1.0%
AES Red Oak LLC, 8.54% Sr. Sec.
Bonds, Series A, 11/30/19 576,863 625,869
- ----------------------------------------------------------------
Consumers Energy Co.,
7.375% Nts., 9/15/23 250,000 256,316
- ----------------------------------------------------------------
Dynegy Holdings, Inc.:
6.875% Sr. Unsec. Unsub. Nts.,
4/1/11 1,100,000 1,018,875
8.75% Sr. Nts., 2/15/12 850,000 861,688
10.125% Sr. Sec. Nts., 7/15/13 7 800,000 924,000
- ----------------------------------------------------------------
El Paso Production Holding Co.,
7.75% Sr. Nts., 6/1/13 7 650,000 643,500
- ----------------------------------------------------------------
Mirant Mid-Atlantic LLC, 8.625%
Sec. Pass-Through Certificates,
Series A, 6/30/12 1 467,843 470,475
- ----------------------------------------------------------------
Williams Cos., Inc. (The):
8.625% Sr. Nts., 6/1/10 400,000 451,000
9.25% Sr. Unsec. Unsub. Nts.,
3/15/04 800,000 814,000
--------------
6,065,723
--------------
Total Corporate Bonds and Notes
(Cost $200,857,848) 208,852,267
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------
PREFERRED STOCKS--0.4%
AmeriKing, Inc., 13% Cum. Sr.
Exchangeable, Non-Vtg. 1,11,14 4,253 $ 43
- ----------------------------------------------------------------
Doane Pet Care Co., 14.25% Jr.
Sub. Debs., Non-Vtg. 1,11 5,000 231,250
- ----------------------------------------------------------------
Dobson Communications Corp.,
6% Cv., Series F (converts into
Dobson Communications Corp.,
Cl. A common stock), Non-Vtg. 550 99,000
- ----------------------------------------------------------------
e.spire Communications, Inc.,
12.75% Jr. Redeemable,
Non-Vtg. 1,11,14 216 22
- ----------------------------------------------------------------
Eagle-Picher Holdings, Inc.,
11.75% Cum. Exchangeable,
Series B, Non-Vtg. 1,11 5,000 366,250
- ----------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable, Non-Vtg. 1,11,14 151 --
- ----------------------------------------------------------------
Nebco Evans Holdings, Inc.,
11.25% Sr. Redeemable
Exchangeable, Non-Vtg. 1,11,14 6,061 --
- ----------------------------------------------------------------
NTL Europe, Inc., 10% Cum.,
Series A, Non-Vtg. 8 66
- ----------------------------------------------------------------
Paxson Communications Corp.:
14.25% Cum. 11,14 1 8,626
14.25% Cum. Jr. Exchangeable,
Non-Vtg. 14 38 350,550
- ----------------------------------------------------------------
Pennsylvania Real Estate
Investment Trust, 11% 2,000 122,000
- ----------------------------------------------------------------
Rural Cellular Corp., 11.375%
Cum., Series B, Non-Vtg. 14 630 492,975
- ----------------------------------------------------------------
Sovereign Real Estate
Investment Trust, 12%
Non-Cum., Series A 1 4,600 688,850
--------------
Total Preferred Stocks
(Cost $2,986,921) 2,359,632
- ----------------------------------------------------------------
COMMON STOCKS--1.0%
Adelphia Business
Solutions, Inc. 11 363 3
- ----------------------------------------------------------------
Banco Bradesco SA,
Sponsored ADR 10,745 283,775
- ----------------------------------------------------------------
Banco Itau Holding
Financeira SA, ADR 5,320 259,456
- ----------------------------------------------------------------
Bank Pekao SA, GDR 6,900 202,377
- ----------------------------------------------------------------
Brasil Telecom Participacoes
SA, ADR 9,530 360,234
- ----------------------------------------------------------------
Cesky Telecom AS, GDR 14,391 161,899
- ----------------------------------------------------------------
Charles River Laboratories
International, Inc. 11 2,660 91,318
- ----------------------------------------------------------------
Classic Cable, Inc. 11 529 --
- ----------------------------------------------------------------
Companhia de Bebidas das
Americas, ADR 17,425 444,512
21 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
- ----------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------
COMMON STOCKS Continued
Conseco, Inc. 11 13,986 $ 304,895
- ----------------------------------------------------------------
Covad Communications
Group, Inc. 11 16,528 59,501
- ----------------------------------------------------------------
Criimi MAE, Inc. 11 71,447 745,192
- ----------------------------------------------------------------
Dobson Communications
Corp., Cl. A 11 35,400 186,062
- ----------------------------------------------------------------
Equinix, Inc. 11 3,287 92,693
- ----------------------------------------------------------------
Gedeon Richter Rt,
Sponsored GDR 1,065 125,670
- ----------------------------------------------------------------
Geotek Communications, Inc.,
Liquidating Trust 1,11,12 90 --
- ----------------------------------------------------------------
Geotek Communications, Inc.,
Series B, Escrow Shares 1,11,12 210 --
- ----------------------------------------------------------------
Globix Corp.11 6,880 27,520
- ----------------------------------------------------------------
Horizon Natural
Resources Co. 1,11 6,667 --
- ----------------------------------------------------------------
ICO Global Communication
Holdings Ltd. 1,11 6,016 3,068
- ----------------------------------------------------------------
KGHM Polska
Miedz SA, GDR 11 6,162 83,803
- ----------------------------------------------------------------
Komercni Banka AS, GDR 9,215 285,481
- ----------------------------------------------------------------
Magyar Tavkozlesi Rt,
Sponsored ADR 7,267 135,966
- ----------------------------------------------------------------
Microcell Telecommunications, Inc. 11 770 10,277
- ----------------------------------------------------------------
Microcell Telecommunications,
Inc., Cl. A 11 6 90
- ----------------------------------------------------------------
Microcell Telecommunications,
Inc., Cl. B 11 766 10,245
- ----------------------------------------------------------------
MOL Magyar Olaj-es Gazipari
Rt, Sponsored GDR 4,581 139,721
- ----------------------------------------------------------------
NTL, Inc. 11 7,842 546,980
- ----------------------------------------------------------------
Orbital Sciences Corp.11 745 8,955
- ----------------------------------------------------------------
OTP Bank Rt, GDR 11 8,952 234,990
- ----------------------------------------------------------------
Petroleo Brasileiro SA, ADR 16,400 479,536
- ----------------------------------------------------------------
Pioneer Cos., Inc. 11 7,312 59,593
- ----------------------------------------------------------------
Polski Koncern Naftowy Orlen
SA, GDR 16,081 215,485
- ----------------------------------------------------------------
Prandium, Inc. 11 24,165 967
- ----------------------------------------------------------------
Premier Holdings Ltd. 1,11 18,514 --
- ----------------------------------------------------------------
Southern Pacific Funding Corp.,
Liquidating Trust 1,12 83,868 --
- ----------------------------------------------------------------
Star Gas Partners LP 187 4,572
- ----------------------------------------------------------------
Sterling Chemicals, Inc. 11 686 18,008
- ----------------------------------------------------------------
Telekomunikacja Polska SA, GDR 53,266 213,064
- ----------------------------------------------------------------
TVMAX Holdings, Inc. 1,11 1,000 2,500
- ----------------------------------------------------------------
UnitedGlobalCom, Inc., Cl. A 11 45,361 384,661
- ----------------------------------------------------------------
Viatel Holding Ltd.
(Bermuda) 1,11 1,958 4,308
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------
COMMON STOCKS Continued
Wilshire Financial Services
Group, Inc. 11 6,273 $ 37,575
- ----------------------------------------------------------------
WRC Media Corp. 1,11 1,082 22
- ----------------------------------------------------------------
XO Communications, Inc. 11 1,100 6,325
--------------
Total Common Stocks
(Cost $6,061,070) 6,231,299
UNITS
- ----------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.9%
American Tower Corp. Wts.,
Exp. 8/1/08 1,11 800 100,400
- ----------------------------------------------------------------
ASAT Finance LLC Wts.,
Exp. 11/1/06 1,11 250 281
- ----------------------------------------------------------------
Chesapeake Energy Corp. Wts.:
Exp. 5/1/05 1,11 416 4
Exp. 9/1/04 11 534 60
- ----------------------------------------------------------------
Citigroup, Inc. Litigation Wts.,
Exp. 12/31/50 11 2,404 2,548
- ----------------------------------------------------------------
COLO.com, Inc. Wts.,
Exp. 3/15/10 1,11 400 4
- ----------------------------------------------------------------
Concentric Network Corp. Wts.,
Exp. 12/15/07 1,11 100 --
- ----------------------------------------------------------------
Covergent Communications, Inc.
Wts., Exp. 4/1/08 1,11 400 4
- ----------------------------------------------------------------
HF Holdings, Inc. Wts.,
Exp. 9/27/09 1,11 530 72
- ----------------------------------------------------------------
Horizon PCS, Inc. Wts.,
Exp. 10/1/10 1,11 1,000 --
- ----------------------------------------------------------------
ICG Communications, Inc.
Wts., Exp. 9/15/05 1,11 825 8
- ----------------------------------------------------------------
ICO Global Communication
Holdings Ltd. Wts.:
Exp. 5/16/06 1,11 1,509 8
Exp. 5/16/06 1,11 2 --
- ----------------------------------------------------------------
Imperial Credit Industries, Inc.
Wts., Exp. 1/31/08 1,11 2,135 --
- ----------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07 1,11 270 --
- ----------------------------------------------------------------
IPCS, Inc. Wts., Exp. 6/15/10 1,11 300 3
- ----------------------------------------------------------------
Leap Wireless International, Inc.
Wts., Exp. 4/15/10 1,11 275 --
- ----------------------------------------------------------------
Long Distance International, Inc.
Wts., Exp. 4/13/08 1,11 200 --
- ----------------------------------------------------------------
Loral Space & Communications
Ltd. Wts., Exp. 1/15/07 1,11 150 2
- ----------------------------------------------------------------
Microcell
Telecommunications, Inc.:
Cl. A Wts., Exp. 5/1/05 11 284 434
Cl. B Wts., Exp. 5/1/08 11 474 1,009
- ----------------------------------------------------------------
Millenium Seacarriers, Inc. Wts.,
Exp. 7/15/05 1,11 250 3
22 | OPPENHEIMER STRATEGIC BOND FUND/VA
MARKET VALUE
UNITS SEE NOTE 1
- ----------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES Continued
Morgan Stanley Capital I, Inc.
All Country Asia Free (except
for Japan) Wts., Exp. 3/4/05 11 105,050 $ 1,528,183
- ----------------------------------------------------------------
Morgan Stanley Capital I, Inc.
Basket of Countries Wts.,
Exp. 3/4/05 11 117,454 1,589,787
- ----------------------------------------------------------------
Morgan Stanley Capital III, Inc.
All Country Asia Free (except
for Japan) Wts., Exp. 3/4/05 11 203,221 2,451,638
- ----------------------------------------------------------------
Ntelos, Inc. Wts., Exp. 8/15/10 1,11 450 225
- ----------------------------------------------------------------
Occidente y Caribe Celular SA
Wts., Exp. 3/15/04 1,11 800 --
- ----------------------------------------------------------------
Pathmark Stores, Inc. Wts.,
Exp. 9/19/10 11 5,710 5,367
- ----------------------------------------------------------------
PLD Telekom, Inc. Wts., Exp.
6/1/06 (cv. into Metromedia
International Group, Inc.) 1,11 300 3
- ----------------------------------------------------------------
Real Time Data Co. Wts.,
Exp. 5/31/04 1,11 36,431 --
- ----------------------------------------------------------------
Republic Technologies
International LLC Wts.,
Exp. 7/15/09 1,11 200 --
- ----------------------------------------------------------------
Sterling Chemicals, Inc.
Wts., Exp. 12/19/08 1,11 1,115 --
- ----------------------------------------------------------------
Telus Corp. Wts., Exp. 9/15/05 11 269 2,198
- ----------------------------------------------------------------
Verado Holdings, Inc., Cl. B Wts.,
Exp. 4/15/08 1,11 175 71
- ----------------------------------------------------------------
XO Communications, Inc.:
Cl. A Wts., Exp. 1/16/10 11 2,204 4,298
Cl. B Wts., Exp. 1/16/10 11 1,653 2,810
Cl. C Wts., Exp. 1/16/10 11 1,653 1,818
--------------
Total Rights, Warrants and
Certificates (Cost $4,265,347) 5,691,238
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------
STRUCTURED NOTES--9.6%
Citigroup Global Capital
Markets Holdings, Inc., Brazilian
Real Linked Nts., 23.18%,
5/20/04 8 [BRR] 559,878 183,411
- ----------------------------------------------------------------
Citigroup Global Markets
Holdings, Inc., Argentine Peso
Unsec. Linked Nts., 7/6/04 265,000 269,797
- ----------------------------------------------------------------
Credit Suisse First Boston
Corp. (Cayman), Russia
(Government of) Linked Bonds:
Series 24, 15%, 9/2/05 [RUR] 22,279,000 846,819
Series 26, 15%, 3/11/05 [RUR] 22,587,000 836,899
- ----------------------------------------------------------------
Credit Suisse First Boston Corp.
(Nassau Branch), U.S. Dollar/
Philippine Peso Linked Nts.,
12.50%, 3/5/12 2 [PHP] 47,430,000 836,518
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
STRUCTURED NOTES Continued
Credit Suisse First Boston Corp.
(New York Branch), Russian
Obligatzii Federal'nogo Zaima
Linked Nts., Series 28001,
10.028%, 1/21/04 1,2 [RUR] 277,180 $ 9,517
- ----------------------------------------------------------------
Credit Suisse First Boston
International, U.S. Dollar/South
African Rand Linked Nts., Series
FBi 43, 1.10%, 5/23/22 2 825,000 797,693
- ----------------------------------------------------------------
Deutsche Bank AG, Basket of
Emerging Market Currencies
Linked Nts.:
0.85%, 1/20/04 2,045,000 2,048,477
0.85%, 3/24/04 2,100,000 2,100,630
- ----------------------------------------------------------------
Deutsche Bank AG, Indonesia
(Republic of) Rupiah Linked Nts.:
14%, 6/22/09 963,196 1,071,170
14%, 6/22/09 524,383 551,389
14%, 6/22/09 470,000 515,355
- ----------------------------------------------------------------
Deutsche Bank AG, Moscow
(City of) Linked Nts.,
15%, 9/2/05 [RUR] 30,255,000 1,125,671
- ----------------------------------------------------------------
Deutsche Bank AG, Peru
(Republic of) Credit Default
Linked Bonds, 4.621%, 4/29/06 2 575,000 598,518
- ----------------------------------------------------------------
Deutsche Bank AG, Venezuela
(Republic of) Credit Linked
Certificate of Deposit, 8.18%,
9/20/06 2 1,630,000 1,724,051
- ----------------------------------------------------------------
Deutsche Bank AG, Venezuela
(Republic of) Credit Linked Nts.:
7.32%, 12/20/06 2 2,570,000 2,654,039
11.39%, 6/15/04 2 775,000 806,310
- ----------------------------------------------------------------
JPMorgan Chase Bank, EMBI
Plus Turkey (Republic of) Linked
Certificate of Deposit, 1.50%,
4/22/04 1,212,000 1,082,634
- ----------------------------------------------------------------
JPMorgan Chase Bank, Polish
Zloty/Euro Linked Certificate of
Deposit, 0.91%, 4/7/04 505,000 490,217
- ----------------------------------------------------------------
JPMorgan Chase Bank, TRAC-X
NA High Yield T1 Credit Default
Swap Bonds, 7.375%, 3/25/09 7 8,200,000 8,589,500
- ----------------------------------------------------------------
JPMorgan Chase Bank, TRAC-X
NA High Yield T3 Credit Default
Swap Bonds, 8%, 3/25/09 7 17,700,000 18,562,875
- ----------------------------------------------------------------
JPMorgan Chase Bank,
Venezuela (Republic of) Credit
Linked Certificate of Deposit:
8.028%, 9/20/05 2 1,150,000 1,198,645
8.078%, 9/20/05 2 1,150,000 1,199,680
- ----------------------------------------------------------------
JPMorgan Chase Bank, Venezuela
(Republic of) Credit Linked
Default Bonds, 8.178%, 9/20/05 2 1,150,000 1,201,520
23 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF INVESTMENTS Continued
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
STRUCTURED NOTES Continued
Lehman Brothers Special Financing,
Inc., High Yield Index Linked Nts.,
0.97%, 1/1/05 2,4 $10,000,000 $ 10,000,000
- ----------------------------------------------------------------
Morgan Stanley Capital Services,
Inc., Venezuela ( Republic of) Credit
Swap Bonds, 6.05%, 12/20/06 1,560,000 1,494,667
- ----------------------------------------------------------------
Pioneer 2002 Ltd. Sec. Catastrophe
Linked Nts.:
Series 2002-1, Cl. E-A,
5.42%, 6/15/06 2 500,000 500,775
Series 2003-II, Cl. A,
7.17%, 6/15/06 1,2 500,000 514,900
Series 2003-II, Cl. B,
6.17%, 6/15/06 1,2 500,000 505,475
Series 2003-II, Cl. C,
6.92%, 6/15/06 1,2 500,000 504,950
--------------
Total Structured Notes
(Cost $61,691,382) 62,822,102
DATE STRIKE CONTRACTS
- ----------------------------------------------------------------
OPTIONS PURCHASED--0.1%
Euro Call 1,11 1/8/04 1.25EUR 22,955,000 188,745
- ----------------------------------------------------------------
Japanese
Yen Call 1,11 4/22/04 102.92JPY 3,594,000,000 405,403
- ----------------------------------------------------------------
Japanese
Yen Call 1,11 6/1/04 107JPY 660,000,000 155,826
- ----------------------------------------------------------------
Japanese
Yen Put 1,11 2/25/04 122JPY/EUR 16 3,255,000 65
--------------
Total Options Purchased (Cost $666,194) 750,039
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--11.1% 17
Undivided interest of 4.51% in joint
repurchase agreement (Principal
Amount/Market Value $1,603,898,000, with
a maturity value of $1,603,979,086) with
PaineWebber, Inc., 0.91%, dated
12/31/03, to be repurchased at
$72,415,661 on 1/2/04, collateralized by
Federal Home Loan Mortgage Corp.,
5%--5.50%, 9/1/33--11/1/33, with a value
of $405,980,626 and Federal National
Mortgage Assn., 4.50%, 10/1/33, with a
value of $1,234,398,060
(Cost $72,412,000) $72,412,000 $ 72,412,000
- ----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $690,811,899) 109.0% 711,070,155
- ----------------------------------------------------------------
LIABILITIES IN EXCESS
OF OTHER ASSETS (9.0) (59,842,335)
----------------------------
NET ASSETS 100.0% $651,227,820
============================
24 | OPPENHEIMER STRATEGIC BOND FUND/VA
FOOTNOTES TO STATEMENT OF INVESTMENTS
Principal amount, strike, contracts and notional amount are reported in U.S.
Dollars, except for those denoted in the following currencies:
ARP Argentine Peso HUF Hungarian Forints
BRR Brazilian Real JPY Japanese Yen
CAD Canadian Dollar NZD New Zealand Dollar
DEM German Mark PHP Philippines Peso
DKK Danish Krone PLZ Polish Zloty
EUR Euro RUR Russian Ruble
FRF French Franc SEK Swedish Krona
GBP British Pound Sterling
1. Identifies issues considered to be illiquid or restricted. See Note 11 of
Notes to Financial Statements.
2. Represents the current interest rate for a variable or increasing rate
security.
3. Issue is in default. See Note 1 of Notes to Financial Statements.
4. When-issued security to be delivered and settled after December 31, 2003. 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 $701,573 or 0.11% of the Fund's net assets as
of December 31, 2003.
6. Securities with an aggregate market value of $1,907,993 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
7. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $60,904,317 or 9.35% of the Fund's net
assets as of December 31, 2003.
8. Zero coupon bond reflects effective yield on the date of purchase.
9. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
10. A sufficient amount of liquid assets has been designated to cover
outstanding written options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM MARKET VALUE
SUBJECT TO CALL DATES PRICE RECEIVED SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------
Japanese Yen [JPY] 3,255,000EUR 2/25/04 132.000JPY/EUR $ 37,407 $ 86,713
Japanese Yen [JPY] 6,510,000EUR 4/28/04 141.000JPY/EUR 90,723 30,792
--------------------------
128,130 117,505
--------------------------
CONTRACTS
SUBJECT TO PUT
- --------------------------------------------------------------------------------------------------------------
Japanese Yen [JPY] 744,000,000JPY 6/1/04 120.000JPY 138,880 8,482
--------------------------
$267,010 $125,987
==========================
11. Non-income producing security.
12. Received as the result of issuer reorganization. Currently has minimal
market value.
13. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
14. Interest or dividend is paid-in-kind.
15. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units, which
represent debt securities, principal amount disclosed represents total
underlying principal.
16. Represents cross currency strike price.
17. The Fund may have elements of risk due to concentrated investments. Such
concentrations may subject the Fund to additional risks.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF ASSETS AND LIABILITIES December 31, 2003
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (including cost and market value of $72,412,000 in repurchase agreements)
(including securities loaned of approximately $41,571,000) (cost $690,811,899)--see accompanying statement $711,070,155
- ---------------------------------------------------------------------------------------------------------------------------
Cash 10,239,032
- ---------------------------------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $4,746) 4,685
- ---------------------------------------------------------------------------------------------------------------------------
Collateral for securities loaned 42,384,437
- ---------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 1,717,081
- ---------------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 7,934,046
Investments sold on a when-issued basis 1,823,418
Shares of beneficial interest sold 1,145,075
Closed foreign currency contracts 85,522
Futures margins 5,441
Other 4,987
-------------
Total assets 776,413,879
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Return of collateral for securities loaned 42,384,437
- ---------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 584,268
- ---------------------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $267,010)--see accompanying statement 125,987
- ---------------------------------------------------------------------------------------------------------------------------
Swaptions written, at value (premiums received $19,758) 4,216
- ---------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $69,252,091 purchased on a when-issued basis) 80,812,128
Swap contracts 955,652
Shares of beneficial interest redeemed 200,849
Distribution and service plan fees 40,448
Shareholder reports 33,511
Trustees' compensation 3,843
Transfer and shareholder servicing agent fees 1,667
Other 39,053
-------------
Total liabilities 125,186,059
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS $651,227,820
=============
- ---------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Par value of shares of beneficial interest $ 128,798
- ---------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital 621,211,693
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated net investment income 32,618,798
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (23,178,329)
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 20,446,860
-------------
NET ASSETS $651,227,820
=============
- ---------------------------------------------------------------------------------------------------------------------------
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 $571,445,412 and 113,250,972 shares of beneficial interest outstanding) $5.05
- ---------------------------------------------------------------------------------------------------------------------------
Service shares:
Net asset value, redemption price per share and offering price per share (based on net assets of
$79,782,408 and 15,547,173 shares of beneficial interest outstanding) $5.13
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENT OF OPERATIONS For the Year Ended December 31, 2003
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $29,938,358
- ---------------------------------------------------------------------------------------------
Fee income 1,758,979
- ---------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $12,964) 263,694
- ---------------------------------------------------------------------------------------------
Portfolio lending fees 38,905
------------
Total investment income 31,999,936
- ---------------------------------------------------------------------------------------------
EXPENSES
Management fees 3,673,166
- ---------------------------------------------------------------------------------------------
Distribution and service plan fees--Service shares 86,361
- ---------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Non-Service shares 10,405
Service shares 8,378
- ---------------------------------------------------------------------------------------------
Shareholder reports 52,830
- ---------------------------------------------------------------------------------------------
Custodian fees and expenses 32,408
- ---------------------------------------------------------------------------------------------
Trustees' compensation 19,802
- ---------------------------------------------------------------------------------------------
Other 43,360
------------
Total expenses 3,926,710
Less reduction to custodian expenses (4,396)
------------
Net expenses 3,922,314
- ---------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 28,077,622
- ---------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 7,465,283
Closing of futures contracts (1,399,854)
Closing and expiration of option contracts written 82,666
Foreign currency transactions 7,491,181
------------
Net realized gain 13,639,276
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 32,105,619
Translation of assets and liabilities denominated in foreign currencies 9,856,289
Futures contracts 37,808
------------
Net change in unrealized appreciation (depreciation) 41,999,716
- ---------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $83,716,614
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER STRATEGIC BOND FUND/VA
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2003 2002
- -------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $28,077,622 $25,945,473
- -------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 13,639,276 (2,441,898)
- -------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 41,999,716 4,037,800
-----------------------------
Net increase in net assets resulting from operations 83,716,614 27,541,375
- -------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Non-Service shares (28,473,133) (28,654,014)
Service shares (842,251) (2,128)
- -------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from beneficial interest transactions:
Non-Service shares 115,808,103 55,824,134
Service shares 66,753,974 7,864,978
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase 236,963,307 62,574,345
- -------------------------------------------------------------------------------------------------------------------
Beginning of period 414,264,513 351,690,168
-----------------------------
End of period [including accumulated net investment income of
$32,618,798 and $26,988,087, respectively] $651,227,820 $414,264,513
=============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER STRATEGIC BOND FUND/VA
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NON-SERVICE SHARES YEAR ENDED DECEMBER 31 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $4.57 $4.62 $4.69 $4.97 $5.12
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .22 .29 .41 .41 .45
Net realized and unrealized gain (loss) .56 .03 (.19) (.28) (.31)
---------------------------------------------------
Total from investment operations .78 .32 .22 .13 .14
- ---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.30) (.37) (.29) (.41) (.29)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.05 $4.57 $4.62 $4.69 $4.97
===================================================
- ---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 18.07% 7.44% 4.85% 2.63% 2.83%
- ---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $571,445 $406,126 $351,686 $304,562 $282,086
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $472,213 $374,519 $330,711 $289,923 $278,668
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 5.61% 6.89% 8.78% 9.23% 9.08%
Total expenses 0.75% 0.79% 0.79% 0.79% 0.78%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses N/A 3 0.78% N/A 3 N/A 3 N/A 3
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 117% 65% 104% 104% 81%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Total returns are not annualized for
periods less than one full year. Total return information does not reflect
expenses that apply at the separate account level or to related insurance
products. Inclusion of these charges would reduce the total return figures for
all periods shown. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER STRATEGIC BOND FUND/VA
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SERVICE SHARES YEAR ENDED DECEMBER 31 2003 2002 2001 1
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $4.67 $4.73 $4.64
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .03 .15
Net realized and unrealized gain (loss) .49 .28 (.06)
-----------------------------------
Total from investment operations .76 .31 .09
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.30) (.37) --
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.13 $4.67 $4.73
===================================
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.16% 7.03% 1.94%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $79,782 $8,138 $4
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $34,744 $2,307 $2
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.57% 5.40% 8.17%
Total expenses 1.02% 1.06% 0.92%
Expenses after expense reimbursement or fee waiver and reduction to custodian expense N/A 4 1.03% N/A 4
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 117% 65% 104%
1. For the period from March 19, 2001 (inception of offering) to December 31,
2001.
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER STRATEGIC BOND FUND/VA
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Strategic Bond Fund/VA (the Fund) is a separate series of
Oppenheimer Variable Account Funds (the Trust), an open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek a high level of current
income principally derived from interest on debt securities. The Trust's
investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers two classes of shares. Both classes are sold at their
offering price, which is the net asset value per share, to separate investment
accounts of participating insurance companies as an underlying investment for
variable life insurance policies, variable annuity contracts or other investment
products. The class of shares designated as Service shares is subject to a
distribution and service plan. All 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 by minor amounts due to each class having its
own expenses directly attributable to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. 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. Securities (including restricted securities)
for which quotations are not readily available are valued primarily using
dealer-supplied valuations, a portfolio pricing service authorized by the Board
of Trustees, or at their fair value. 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 foreign 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 foreign currency-linked structured notes
whose market values and redemption prices are linked to foreign currency
exchange rates. The Fund also invests in "index-linked" notes whose principal
and/or interest payments depend on the performance of an underlying index. The
structured notes are leveraged, increasing the volatility of each note's market
value relative to the change in the underlying foreign currency exchange rate or
underlying index. Fluctuations in value of these securities are recorded as
unrealized gains and losses in the accompanying financial statements. The Fund
records a realized gain or loss when a structured note is sold or matures. As of
December 31, 2003, the market value of these securities comprised 9.6% of the
Fund's net assets and resulted in unrealized gains of $1,130,720. The Fund also
hedges a portion of the foreign currency exposure generated by these securities,
as discussed in Note 5.
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN ISSUED BASIS. Delivery and payment for securities that have
been purchased by the Fund on a when issued basis can take place a month or more
after the trade date. Normally the settlement date occurs within six months
after the trade date; however, the Fund may, from time to time, purchase
securities whose settlement date extends six months or more beyond trade date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Fund maintains segregated assets with a market value equal to or greater than
the amount of its purchase commitments. The purchase of securities on a when
issued basis may increase the volatility of the Fund's net asset value to the
extent the Fund executes such purchases while remaining substantially fully
invested. As of December 31, 2003, the Fund had entered into net when issued
commitments of $67,428,673.
31 | OPPENHEIMER STRATEGIC BOND FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
In connection with its ability to purchase securities on a when issued basis,
the Fund may enter into forward roll transactions with respect to
mortgage-related securities. Forward roll transactions require the sale of
securities for delivery in the current month, and a simultaneous agreement with
the same counterparty to repurchase similar (same type, coupon and maturity) but
not identical securities on a specified future date. The Fund records the
incremental difference between the forward purchase and sale of each forward
roll as fee income or realized gain (loss) on investments.
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 to what was sold to the counterparty
at redelivery; 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, 2003, securities with an
aggregate market value of $5,583,555, representing 0.86% 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 at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. 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. Secured by U.S. government securities, 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.
32 | OPPENHEIMER STRATEGIC BOND FUND/VA
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
------------------------------------------------------------------------------
$34,467,108 $-- $22,875,637 $20,144,190
1. As of December 31, 2003, the Fund had $22,767,348 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2003,
details of the capital loss carryforwards were as follows:
EXPIRING
-------------------------
2006 $ 347,976
2007 5,399,072
2008 253,735
2009 9,904,928
2010 6,861,637
-----------
Total $22,767,348
===========
2. During the fiscal year December 31, 2003, the Fund utilized $666,406 of
capital loss carryforward to offset capital gains realized in that fiscal year.
During the fiscal year December 31, 2002, the Fund did not utilize any capital
loss carryforwards.
3. As of December 31, 2003, the Fund had $11,337 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2012.
4. The Fund had $96,952 of straddle losses which were deferred.
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, 2003. Net assets of
the Fund were unaffected by the reclassifications.
INCREASE TO INCREASE TO
ACCUMULATED ACCUMULATED NET
NET INVESTMENT REALIZED LOSS ON
INCOME INVESTMENTS
-----------------------------------------------
$6,868,473 $6,868,473
The tax character of distributions paid during the years ended December 31, 2003
and December 31, 2002 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
--------------------------------------------------------------------------
Distributions paid from:
Ordinary income $29,315,384 $28,656,142
33 | OPPENHEIMER STRATEGIC BOND FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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, 2003 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 $ 691,392,501
Federal tax cost of other investments 127,440,995
-------------
Total federal tax cost $ 818,833,496
=============
Gross unrealized appreciation $ 39,036,965
Gross unrealized depreciation (18,892,775)
-------------
Net unrealized appreciation $ 20,144,190
=============
- --------------------------------------------------------------------------------
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. Under the plan, deferred amounts are treated as though
equal dollar amounts had been invested in shares of the Fund or are invested in
other Oppenheimer funds selected by the Trustee. 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.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable,
represents earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
34 | OPPENHEIMER STRATEGIC BOND FUND/VA
- --------------------------------------------------------------------------------
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, 2003 YEAR ENDED DECEMBER 31, 2002
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------
NON-SERVICE SHARES
Sold 46,663,574 $ 222,213,838 39,611,608 $ 174,444,145
Dividends and/or distributions reinvested 6,471,166 28,473,133 6,617,555 28,654,014
Redeemed (28,764,717) (134,878,868) (33,471,553) (147,274,025)
-----------------------------------------------------------------
Net increase 24,370,023 $ 115,808,103 12,757,610 $ 55,824,134
=================================================================
- -----------------------------------------------------------------------------------------------------------------
SERVICE SHARES
Sold 14,341,848 $ 69,419,263 1,855,564 $ 8,365,056
Dividends and/or distributions reinvested 187,166 842,251 479 2,128
Redeemed (725,688) (3,507,540) (113,038) (502,206)
-----------------------------------------------------------------
Net increase 13,803,326 $ 66,753,974 1,743,005 $ 7,864,978
=================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended December 31, 2003, were
$686,345,267 and $576,876,531, respectively.
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust which provides for a fee at an
annual rate of 0.75% of the first $200 million of average annual net assets,
0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the
next $200 million, 0.60% of the next $200 million and 0.50% of average annual
net assets over $1 billion.
- --------------------------------------------------------------------------------
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, 2003, the Fund paid
$17,581 OFS for services to the Fund.
Additionally, funds offered in variable annuity separate accounts are subject
to minimum fees of $5,000 for assets of less than $10 million and $10,000 for
assets of $10 million or more. The Fund is subject to the minimum fee in the
event that the per account fee does not equal or exceed the applicable minimum
fee.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% of average net assets of the Fund. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FOR SERVICE SHARES. The Fund has adopted a
Distribution and Service Plan for Service shares to pay OppenheimerFunds
Distributor, Inc., the Distributor, for distribution-related services for the
Fund's Service shares. Under the Plan, payments are made quarterly at an annual
rate of up to 0.25% of the average annual net assets of the Service shares of
the Fund. Fees incurred by the Fund under the plan are detailed in the Statement
of Operations.
- --------------------------------------------------------------------------------
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.
35 | OPPENHEIMER STRATEGIC BOND FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
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, 2003, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT
EXPIRATION AMOUNT VALUATION AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000S) DECEMBER 31, 2003 APPRECIATION DEPRECIATION
- --------------------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Argentine Peso [ARP] 2/2/04-6/8/04 6,330ARP $ 2,132,494 $ 61,063 $ 3,224
Australian Dollar [AUD] 1/8/04 1,780AUD 1,339,826 67,126 --
British Pound Sterling [GBP] 1/8/04-2/18/04 1,860GBP 3,320,581 105,173 --
Euro [EUR] 1/12/04-3/15/04 15,435EUR 19,449,007 792,783 --
Japanese Yen [JPY] 2/10/04-2/13/04 2,302,860JPY 21,516,924 650,835 --
Mexican Nuevo Peso [MXN] 1/12/04-2/2/04 68,835MXN 6,105,936 -- 26,651
New Zealand Dollar [NZD] 1/8/04 1,920NZD 1,259,301 40,101 --
-----------------------------
1,717,081 29,875
-----------------------------
CONTRACTS TO SELL
British Pound Sterling [GBP] 3/9/04 580GBP 1,032,740 -- 124,170
Canadian Dollar [CAD] 2/23/04 420CAD 324,241 -- 27,222
Euro [EUR] 3/11/04-4/13/04 2,720EUR 3,423,657 -- 186,473
Japanese Yen [JPY] 1/8/04-5/12/04 495,000JPY 4,633,433 -- 146,088
Swiss Franc [CHF] 1/8/04 1,425CHF 1,152,445 -- 70,440
-----------------------------
-- 554,393
-----------------------------
Total Unrealized Appreciation and Depreciation $1,717,081 $584,268
=============================
- --------------------------------------------------------------------------------
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 stock and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts 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 fixed income
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities (initial margin) in an amount equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or 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 on the Statement of
36 | OPPENHEIMER STRATEGIC BOND FUND/VA
Operations as closing and expiration of futures contracts. The net change in
unrealized appreciation and depreciation is reported on the Statement of
Operations.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of December 31, 2003, the Fund had outstanding futures contracts as follows:
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS DECEMBER 31, 2003 (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
DAX Index 3/19/04 4 $ 503,910 $ 14,127
Euro-Bundesobligation 3/8/04 10 1,426,840 3,656
FTSE 100 Index 3/19/04 1 79,957 1,933
NASDAQ 100 Index 3/18/04 10 1,471,000 53,413
Nikkei 225 Index 3/11/04 2 107,500 3,200
United Kingdom Long Gilt 3/29/04 2 388,391 1,612
U.S. Long Bonds 3/22/04 105 11,477,813 45,991
U.S. Treasury Nts., 5 yr. 3/22/04 34 3,795,250 20,857
U.S. Treasury Nts., 10 yr. 3/22/04 49 5,501,016 (28,859)
----------
115,930
----------
CONTRACTS TO SELL
Japan (Government of) Bonds, 10 yr. 3/11/04 5 6,431,371 (20,995)
Standard & Poor's 500 E-Mini 3/19/04 51 2,831,775 (94,426)
Standard & Poor's 500 Index 3/18/04 10 2,776,500 (95,001)
U.S. Treasury Nts., 2 yr. 3/30/04 220 47,090,313 (183,106)
----------
(393,528)
----------
$(277,598)
==========
- --------------------------------------------------------------------------------
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. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.
37 | OPPENHEIMER STRATEGIC BOND FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY Continued
Written option activity for the year ended December 31, 2003 was as follows:
CALL OPTIONS PUT OPTIONS
------------------------------ --------------------------
PRINCIPAL/ PRINCIPAL/
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- --------------------------------------------------------------------------------------------------------------------------
Options outstanding as of December 31, 2002 7,895,000 $ 59,288 -- $ --
Options written 2,569,185,945 512,599 747,746,695 276,313
Options closed or expired (3,203,835) (51,602) (3,746,695) (137,433)
Options exercised (2,564,112,110) (392,155) -- --
------------------------------------------------------------------
Options outstanding as of December 31, 2003 9,765,000 $ 128,130 744,000,000 $ 138,880
==================================================================
- --------------------------------------------------------------------------------
8. CREDIT SWAP CONTRACTS
The Fund may enter into a credit swap transaction to maintain a total return on
a particular investment or portion of its portfolio, or for other
non-speculative purposes. Because the principal amount is not exchanged, it
represents neither an asset nor a liability to either counterparty, and is
referred to as a notional principal amount. The Fund records an increase or
decrease to interest income, in the amount due to or owed by the Fund at
termination or settlement. Credit swaps are subject to credit risks (if the
counterparty fails to meet its obligations). The Fund pays an annual interest
fee on the notional amount in exchange for the counterparty paying in a
potential credit event.
During the year ended December 31, 2003 the Fund entered into transactions to
hedge credit risk. Information regarding the credit swaps is as follows:
UNREALIZED
EXPIRATION NOTIONAL VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES AMOUNT DECEMBER 31, 2003 (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Colombia
(Republic of) Credit Nts. 9/20/13 $ 290,000 $ (8,591) $ (8,591)
Deutsche Bank AG, Colombia
Republic of) Credit Nts. 9/20/13 290,000 (12,445) (12,445)
Deutsche Bank AG, United Mexican
States Credit Bonds 9/20/13 1,235,000 (29,992) (29,992)
Deutsche Bank AG, Peru (Republic
of) Credit Bonds 10/20/08 305,000 (10,368) (10,368)
Deutsche Bank AG, Philippines
(Republic of) 5 yr. Credit Nts. 7/25/08 930,000 (1,016) (1,016)
Deutsche Bank AG, Philippines
(Republic of) 10 yr. Credit Bonds 7/25/13 930,000 258 258
Deutsche Bank AG, Philippines
(Republic of) Credit Nts. 12/20/08 315,000 2,575 2,575
Deutsche Bank AG,
Russian Federation Credit Bonds 9/20/13 1,540,000 (37,623) (37,623)
Deutsche Bank AG,
Russian Federation Credit Bonds 9/10/13 1,225,000 (25,554) (25,554)
Deutsche Bank AG,
Russian Federation Credit Bonds 10/30/13 2,560,000 (54,743) (54,743)
Deutsche Bank AG,
Turkey (Republic of ) Credit Bonds 10/10/13 630,000 (74,407) (74,407)
JPMorgan Chase Bank,
Jordan (Kingdom of) Credit Nts. 6/6/06 250,000 945 945
JPMorgan Chase Bank,
Peru (Republic of) Credit Bonds 9/20/08 230,000 (21,371) (21,371)
JPMorgan Chase Bank, Peru
(Republic of) Credit Bonds 9/20/08 460,000 (41,761) (41,761)
JPMorgan Chase Bank,
Russian Federation Credit Bonds 10/9/13 730,000 15,724 15,724
38 | OPPENHEIMER STRATEGIC BOND FUND/VA
UNREALIZED
EXPIRATION NOTIONAL VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES AMOUNT DECEMBER 31, 2003 (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, TRAC-X
Emerging Markets Default Bonds1 12/20/08 $ 860,000 $(57,306) $ (57,306)
Morgan Stanley Capital Services, Inc.,
Brazil (Republic of) Credit Nts. 3/20/14 3,450,000 (26,945) (26,945)
Morgan Stanley Capital Services, Inc.,
Hungary (Republic of) Credit Bonds 12/2/13 1,880,000 (17,747) (17,747)
Morgan Stanley Capital Services, Inc.,
Russian Federation Credit Bonds 11/19/13 2,240,000 (35,418) (35,418)
Morgan Stanley Capital Services, Inc.,
Turkey (Republic of) Credit Bonds 2/16/06 1,300,000 (19,511) (19,511)
----------
$(455,296)
==========
1. Comprised of emerging markets credit swaps of which the underlying is
comprised of a pool of emerging market entities and associated benchmark
obligations. The Fund received a premium and is obligated to pay a rate that
resets every six months primarily based upon default by an emerging market
entity within the pool.
- --------------------------------------------------------------------------------
9. INTEREST RATE SWAP CONTRACTS
The Fund may enter into an interest rate swap transaction to maintain a total
return or yield spread on a particular investment, or portion of its portfolio,
or for other non-speculative purposes. Interest rate swaps involve the exchange
of commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. The coupon payments are based on an agreed
upon principal amount and a specified index. Because the principal amount is not
exchanged, it represents neither an asset nor a liability to either
counterparty, and is referred to as notional. The Fund records an increase or
decrease to interest income, in the amount due to or owed by the Fund at
termination or settlement.
Interest rate swaps are subject to credit risk (if the counterparty fails to
meet its obligations) and interest rate risk. The Fund could be obligated to pay
more under its swap agreements than it receives under them, as a result of
interest rate changes. As of December 31, 2003, the Fund had entered into the
following interest rate swap agreements:
FIXED FLOATING RATE
RATE PAID BY RECEIVED BY UNREALIZED
NOTIONAL THE FUND AT THE FUND AT FLOATING TERMINATION APPRECIATION
SWAP COUNTERPARTY AMOUNT DECEMBER 31, 2003 DECEMBER 31, 2003 RATE INDEX DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
Three-Month
Deutsche Bank AG $ 3,185,000 3.1025% 1.18% LIBOR flat 3/4/08 $ 30,679
Three-Month
JPMorgan Chase Bank 6,625,000 3.052 1.17 LIBOR flat 3/10/08 78,030
Six-Month
JPMorgan Chase Bank 880,000EUR 3.135 2.081 LIBOR flat 7/14/08 20,128
Six-Month
JPMorgan Chase Bank 245,400,000HUF 9.13 7 LIBOR flat 7/14/08 (88,830)
Morgan Stanley Capital Three-Month
Services, Inc. 31,000,000 3.82 1.17 LIBOR flat 11/10/08 (399,577)
Morgan Stanley Capital Three-Month
Services, Inc. 22,000,000 2.32 1.17 LIBOR flat 11/10/05 (140,786)
----------
$(500,356)
==========
- --------------------------------------------------------------------------------
10. SWAPTION TRANSACTIONS
The Fund may enter into a swaption transaction, whereby a contract that grants
the holder, in return for payment of the purchase price (the "premium") of the
option, the right, but not the obligation, to enter into an interest rate swap
at a preset rate within a specified period of time, with the writer of the
contract. The writer receives premiums and bears the risk of unfavorable changes
in the preset rate on the underlying interest rate swap. Swaption contracts
written by the Fund do not give rise to counterparty credit risk as they
obligate the Fund, not its counterparty, to perform. Swaptions written are
reported as a liability in the Statement of Assets and Liabilities.
39 | OPPENHEIMER STRATEGIC BOND FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. SWAPTION TRANSACTIONS Continued
As of December 31, 2003, the Fund had entered into the following swaption
contracts:
NOTIONAL EXPIRATION EXERCISE PREMIUM MARKET VALUE
SWAPTIONS AMOUNT DATE PRICE RECEIVED SEE NOTE 1
- -------------------------------------------------------------------------------------------------------
Deutsche Bank $2,220,000 5/17/04 2.825% $19,758 $4,216
- --------------------------------------------------------------------------------
11. ILLIQUID OR RESTRICTED SECURITIES
As of December 31, 2003, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of December 31, 2003 was $27,674,473,
which represents 4.25% of the Fund's net assets, of which $4,685 is considered
restricted. Information concerning restricted securities is as follows:
ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATES COST DECEMBER 31, 2003 DEPRECIATION
- --------------------------------------------------------------------------------------------------------------------
STOCKS AND/OR WARRANTS
Geotek Communications, Inc., Liquidating Trust 4/6/00 $ -- $ -- $ --
Geotek Communications, Inc., Series B, Escrow Shares 1/4/01 840 -- 840
Real Time Data Co. Wts., Exp. 5/31/04 6/30/99 364 -- 364
CURRENCY
Argentine Peso 8/6/03-12/10/03 4,746 4,685 61
- --------------------------------------------------------------------------------
12. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of US
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the collateral.
Cash collateral is invested in cash equivalents. As of December 31, 2003, the
Fund had on loan securities valued at approximately $41,571,000. Cash of
$42,384,437 was received as collateral for the loans, and has been invested in
approved instruments.
- --------------------------------------------------------------------------------
13. BORROWING AND LENDING ARRANGEMENTS
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission (the SEC) to allow these
affiliated funds to lend money to, and borrow money from, each other, in an
attempt to reduce borrowing costs below those of bank loan facilities. The SEC's
order requires the Fund's Board of Trustees to adopt operating policies and
procedures to administer interfund borrowing and lending. Under the arrangement
the Fund may lend money to other Oppenheimer funds and may borrow from other
Oppenheimer funds at a rate set by the Fund's Board of Trustees, based upon a
recommendation by the Manager. The Fund's borrowings, if any, are subject to
asset coverage requirements under the Investment Company Act and the provisions
of the SEC order and other applicable regulations. If the Fund borrows money,
there is a risk that the loan could be called on one day's notice, in which case
the Fund might have to borrow from a bank at higher rates if a loan were not
available from another
40 | OPPENHEIMER STRATEGIC BOND FUND/VA
Oppenheimer fund. If the Fund lends money to another fund, it will be subject to
the risk that the other fund might not repay the loan in a timely manner, or at
all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at December 31, 2003.
41 | OPPENHEIMER STRATEGIC BOND FUND/VA
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER STRATEGIC BOND FUND/VA:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Strategic Bond Fund/VA, a series of Oppenheimer Variable Account
Funds, including the statement of investments, as of December 31, 2003, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for the periods indicated. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2003, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer Strategic Bond Fund/VA as of December 31, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 12, 2004
42 | OPPENHEIMER STRATEGIC BOND FUND/VA
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record received information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends of $0.3013 and $0.2994 per share were paid to Non-Service and
Service shareholders, respectively, on March 14, 2003, all of which was
designated as ordinary income for federal income tax purposes.
None of the dividends paid by the Fund during the year ended December 31,
2003 are 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 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
1.800.225.5677, (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 will be
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 first such
filing is due no later than August 31, 2004, for the twelve months ended June
30, 2004. Once filed, the Fund's Form N-PX filing will be available (i) without
charge, upon request, by calling the Fund toll-free at 1.800.225.5677, and (ii)
on the SEC's website at www.sec.gov.
43 | OPPENHEIMER STRATEGIC BOND FUND/VA
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD BY TRUSTEE;
FUND, LENGTH OF SERVICE, AGE NUMBER OF FUNDS 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 following private mortgage banking companies: Cherry Creek Mortgage Company
Chairman of the Board (since 1991), Centennial State Mortgage Company (since 1994), The El Paso Mortgage Company
(since 2003) and (since 1993), Transland Financial Services, Inc. (since 1997); Chairman of the following
Trustee (since 1999) private companies: Great Frontier Insurance (insurance agency) (since 1995), Ambassador Media
Age: 66 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 private
Trustee (since 1993) equity funds) (until February 2001); Chairman, President and Chief Executive Officer of A.G.
Age: 72 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 (until April 1999): Senior Vice President (from September 1987) and Treasurer (from
Trustee (since 1997) March 1985) of OppenheimerFunds, Inc. (the Manager); Vice President (from June 1983) and
Age: 67 Treasurer (since March 1985) of OppenheimerFunds Distributor, Inc. (a subsidiary of the
Manager); Senior Vice President (since February 1992), Treasurer (since July 1991) Assistant
Secretary and a director (since December 1991) of Centennial Asset Management Corporation; Vice
President (since October 1989) and Treasurer (since April 1986) of HarbourView Asset Management
Corporation (an investment advisory subsidiary of the Manager); President, Treasurer and a
director (June 1989-January 1990) of Centennial Capital Corporation (an investment advisory
subsidiary of the Manager); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of Shareholder Services, Inc. (a transfer agent subsidiary of the Manager);
Vice President, Treasurer and Secretary (since November 1989) of Shareholder Financial
Services, Inc. (a transfer agent subsidiary of the Manager); Assistant Treasurer (since March
1998) of Oppenheimer Acquisition Corp. (the Manager's parent corporation); Treasurer (since
November 1989) of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the
Manager); Vice President and Treasurer (since July 1996) of Oppenheimer Real Asset Management,
Inc. (an investment advisory subsidiary of the Manager); Chief Executive Officer and director
(since March 1996) of MultiSource Services, Inc. (a broker-dealer subsidiary of the Manager);
Treasurer (since October 1997) of OppenheimerFunds International Ltd. and OppenheimerFunds plc
(offshore fund management subsidiaries of the Manager). Oversees 38 portfolios in the
OppenheimerFunds complex.
EDWARD L. CAMERON, A member of The Life Guard of Mount Vernon, George Washington's home (since June 2000).
Trustee (since 1999) Formerly (March 2001 - May 2002) Director of Genetic ID, Inc. and its subsidiaries (a privately
Age: 65 held biotech company); a partner with PricewaterhouseCoopers LLP (from 1974-1999) (an
accounting firm) and Chairman (from 1994-1998), Price Waterhouse LLP Global Investment
Management Industry Services Group. Oversees 38 portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Chairman and Director (since 1998) of Rocky Mountain Elk Foundation (a not-for-profit
Trustee (since 1993) foundation); and a director (since October 1999) of P.R. Pharmaceuticals (a privately held
Age: 61 company) and UNUMProvident (an insurance company) (since June 1, 2002). Formerly Chairman and a
director (until October 1996) and President and Chief Executive Officer (until October 1995) of
the Manager; President, Chief Executive Officer and a director of Oppenheimer Acquisition
Corp., Shareholders Services Inc. and Shareholder Financial Services, Inc. (until October
1995). Oversees 38 portfolios in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado Uplift (a non-profit charity) (since September 1984). Formerly (until
Trustee (since 1996) October 1994) Mr. Freedman held several positions in subsidiary or affiliated companies of the
Age: 63 Manager. Oversees 38 portfolios in the OppenheimerFunds complex.
44 | OPPENHEIMER STRATEGIC BOND FUND/VA
BEVERLY L. HAMILTON, Trustee (since 1996) of MassMutual Institutional Funds and of MML Series Investment Fund
Trustee (since 2002) (open-end investment companies); Director of MML Services (since April 1987) and America Funds
Age: 57 Emerging Markets Growth Fund (since October 1991) (both are investment companies), The
California Endowment (a philanthropy organization) (since April 2002), and Community Hospital
of Monterey Peninsula, (since February 2002); a trustee (since February 2000) of Monterey
International Studies (an educational organization), and an advisor to Unilever (Holland)'s
pension fund and to Credit Suisse First Boston's Sprout venture capital unit. Mrs. Hamilton
also is a member of the investment committees of the Rockefeller Foundation, the University of
Michigan and Hartford Hospital. Formerly, President (February 1991-April 2000) ARCO Investment
Management Company. Oversees 37 portfolios in the OppenheimerFunds complex.
ROBERT J. MALONE, Chairman and CEO (since 2003) of Steele Street State Bank (a commercial banking entity);
Trustee (since 2002) Director (since 2001) of Jones Knowledge, Inc. (a privately held company), U.S. Exploration,
Age: 59 Inc., (since 1997), Colorado UpLIFT (a non-profit organization) (since 1986) and a trustee of
the Gallagher Family Foundation (non-profit organization) (since 2000). Formerly, Chairman of
U.S. Bank (a subsidiary of U.S. Bancorp and formerly Colorado National Bank,) (July 1996-April
1, 1999) and a director of Commercial Assets, Inc. (a REIT) (1993-2000). Oversees 37 portfolios
in the OppenheimerFunds complex.
F. WILLIAM MARSHALL, JR., Trustee (since 1996) of MassMutual Institutional Funds and of MML Series Investment Fund
Trustee (since 2000) (open-end investment companies); Trustee (since 1987), Chairman of the Board (since 2003) and
Age: 61 Chairman of the investment committee (since 1994) for the Worcester Polytech Institute;
President and Treasurer (since January 1999) of the SIS Fund (a private not for profit
charitable fund); Trustee (since 1995) of the Springfield Library and Museum Association;
Trustee (since 1996) of the Community Music School of Springfield. 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); President,
Chief Executive Officer and Director (May 1993-December 1998) of SIS Bankcorp, Inc. and SIS
Bank (formerly Springfield Institution for Savings) and Executive Vice President (January
1999-July 1999) of Peoples Heritage Financial Group, Inc. Oversees 38 portfolios in the
OppenheimerFunds complex.
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET,
AND OFFICER NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR AN INDEFINITE TERM, UNTIL HIS RESIGNATION, DEATH
OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President (since September
President and Trustee 2000) of the Manager; President and a director or trustee of other Oppenheimer funds; President
(since 2001) and a director (since July 2001) of Oppenheimer Acquisition Corp. and of Oppenheimer
Age: 54 Partnership Holdings, Inc.; a director (since November 2001) of OppenheimerFunds Distributor,
Inc.; Chairman and a director (since July 2001) of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc.; President and a director (since July 2001) of
OppenheimerFunds Legacy Program (a charitable trust program established by the Manager); a
director of the following investment advisory subsidiaries of OppenheimerFunds, Inc.: OFI
Institutional Asset Management, Inc. and Centennial Asset Management Corporation (since
November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc.
(since July 2001); President (since November 1, 2001) and a director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; a director (since November 2001) of Trinity Investment
Management Corp. and Tremont Advisers, Inc. (investment advisory affiliates of the Manager);
Executive Vice President (since February 1997) of Massachusetts Mutual Life Insurance Company
(the Manager's parent company); a director (since June 1995) of DLB Acquisition Corporation (a
holding company that owns shares of David L. Babson & Company, Inc.); formerly, Chief Operating
Officer (September 2000-June 2001) of the Manager; President and trustee (November
1999-November 2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end
investment companies); a director (September 1999-August 2000) of C.M. Life Insurance Company;
President, Chief Executive Officer and director (September 1999-August 2000) of MML Bay State
Life Insurance Company; a director (June 1989-June 1998) of Emerald Isle Bancorp and Hibernia
Savings Bank (a wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 72 portfolios as a
Trustee/Officer and 10 portfolios as an Officer in the OppenheimerFunds complex.
45 | OPPENHEIMER STRATEGIC BOND FUND/VA
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. STEINMETZ AND ZACK,
TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NY 10281-1008, FOR MR. WIXTED, 6803
S. TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS
OR HER EARLIER RESIGNATION, DEATH OR REMOVAL.
ARTHUR P. STEINMETZ, Senior Vice President of the Manager (since March 1993) and of HarbourView Asset Management
Vice President and Portfolio Corporation (since March 2000); an officer of 6 portfolios in the OppenheimerFunds complex.
Manager (since 1993)
Age: 45
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer (since March
Treasurer (since 1999) 1999) of HarbourView Asset Management Corporation, Shareholder Services, Inc., Oppenheimer Real
Age: 44 Asset Management Corporation, Shareholder Financial Services, Inc., Oppenheimer Partnership
Holdings, Inc., OFI Private Investments, Inc. (since March 2000), OppenheimerFunds
International Ltd. and OppenheimerFunds plc (offshore fund management subsidiaries of the
Manager) (since May 2000) and OFI Institutional Asset Management, Inc. (since November 2000);
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. and OppenheimerFunds Legacy Program (since April 2000); formerly Principal and Chief
Operating Officer (March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division.
An officer of 82 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since February 2002) of the
Vice President and Secretary Manager; General Counsel and a director (since November 2001) of OppenheimerFunds Distributor,
(since 2001) Inc.; Senior Vice President and General Counsel (since November 2001) of HarbourView Asset
Age: 55 Management Corporation; Vice President and a director (since November 2000) of Oppenheimer
Partnership Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services, Inc., OFI Private
Investments, Inc., OFI Trust Company and OFI Institutional Asset Management, Inc.; General
Counsel (since November 2001) of Centennial Asset Management Corporation; a director (since
November 2001) of Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President (since November
2001) of OppenheimerFunds Legacy Program; Secretary (since November 2001) of Oppenheimer
Acquisition Corp.; formerly Senior Vice President (May 1985-January 2004), Acting General
Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of
the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November 2001),
Shareholder Financial Services, Inc. (November 1989-November 2001); OppenheimerFunds
International Ltd. And OppenheimerFunds plc (October 1997-November 2001). An officer of 82
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.
46 | OPPENHEIMER STRATEGIC BOND FUND/VA
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Fund 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 $16,500 in fiscal 2003 and $16,000 in
fiscal 2002.
(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 $75,000 in fiscal 2003 and $65,000 in
fiscal 2002 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 would include, among others: due diligence related to
mergers and acquisitions, accounting consultations and audits in
connection with acquisitions, internal control reviews and
consultation concerning financial accounting and reporting
standards.
(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 $11,600 in fiscal 2003 and $6,500 in
fiscal 2002 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 would include, among others: 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 $3,500 in fiscal 2003 and $3,500 in
fiscal 2002 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 would include services provided to the registrant's
Board of Trustees with respect to the annual renewal of the
registrant's investment advisory agreement.
(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.
Pre-approval of non-audit services is 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 $90,100 in fiscal 2003 and $75,000 in
fiscal 2002 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. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable for fiscal periods ending December 31, 2003.
ITEM 10. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of December 31, 2003, 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 significant changes in registrant's internal
controls over financial reporting that occurred during the registrant's
second fiscal half-year 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)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)