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 HIGH INCOME 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
-----------
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. During the Fund's 12-month period
that ended December 31, 2003, Oppenheimer High Income Fund/VA benefited most
from its investments in lower-rated securities related to the telecommunications
and cable industries. For instance, the largest position in the portfolio--and
the biggest contributor to total return--was Charter Communications, a provider
of broadband services (e.g., digital cable, high-speed internet access and video
on demand). Also making major contributions were SBA Communications Corp. and
Crown Castle International Corp., companies that build and operate towers for
wireless communications antennas.
One major reason we selected these and other companies was their focus on
deleveraging - that is, on reducing debt levels. Through deleveraging, the
companies have positioned themselves so that even relatively small increases in
sales may have a larger, more positive effect on profitability. Due to our
emphasis on deleveraging, the portfolio increased its holdings in securities
from telecommunications and cable companies but also included securities from a
wide range of other industries, from automotive parts suppliers and steel
manufacturers, to clothing, specialty chemicals companies and utilities.
In fact, utilities investments that the Fund initiated or augmented in
January 2003 helped boost performance very early in the period. Following a
prolonged period when utilities companies had difficulty securing financing,
lenders eased credit restrictions. The outlook for the energy-generation
industry brightened, triggering advances for the Fund's holdings of Tennessee
Gas Pipeline Co. and Dynegy Holdings, Inc.
There were some holdings that detracted from performance over the period. We
were disappointed with our investments in AK Steel Corp. and Levi Strauss & Co.
We did not accurately assess the degree to which foreign competition was hurting
AK Steel and were unpleasantly surprised by its weak September-quarter earnings.
We also discovered that the company understated the amount of its unfunded
pension liabilities. Even thorough research was no protection against this
intentional obfuscation.
As for Levi Strauss, their earnings fell short of expectations. We've
maintained our position, for two reasons. First, "Levi's" is a strong retail
brand name and has continued to give the company underlying value. Second, we
suspect the owners of this privately held company are highly motivated to make
its coupon payments; if not, they could lose control.
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. In the case of Non-Service, performance is
measured over a ten-year period. In the case of Service shares, performance is
measured from inception of the class on September 18, 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 graphs assume that all dividends and capital gains distributions were
reinvested in additional shares.
The Fund's performance is compared to the performance of the Merrill Lynch
High Yield Master Index, an unmanaged index of U.S. corporate and government
bonds that is a measure of the performance of the high-yield corporate bond
market. Index performance reflects the reinvestment of income but does not
consider the effect of transaction costs. The Fund's performance reflects the
effects of the Fund's business and operating expenses. While index comparisons
may be useful to provide a benchmark for the Fund's performance, it must be
noted that the Fund's investments are not limited to the investments in the
index.
3 | OPPENHEIMER HIGH INCOME FUND/VA
FUND PERFORMANCE DISCUSSION
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NON-SERVICE SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer High Income Fund/VA (Non-Service)
Merrill Lynch High Yield Master Index
[LINE GRAPH]
Oppenheimer High Income Merrill Lynch High Yield
Fund/VA (Non-Service) Master Index
12/31/1993 $10,000 $10,000
03/31/1994 9,812 9,815
06/30/1994 9,839 9,701
09/30/1994 9,934 9,834
12/31/1994 9,682 9,884
03/31/1995 10,109 10,480
06/30/1995 10,757 11,145
09/30/1995 11,162 11,470
12/31/1995 11,654 11,852
03/31/1996 12,083 12,024
06/30/1996 12,388 12,189
09/30/1996 12,911 12,665
12/31/1996 13,432 13,163
03/31/1997 13,487 13,301
06/30/1997 14,067 13,932
09/30/1997 14,841 14,477
12/31/1997 15,073 14,851
03/31/1998 15,667 15,265
06/30/1998 15,791 15,520
09/30/1998 14,666 14,965
12/31/1998 15,119 15,395
03/31/1999 15,649 15,561
06/30/1999 15,693 15,666
09/30/1999 15,517 15,470
12/31/1999 15,767 15,637
03/31/2000 15,554 15,355
06/30/2000 15,668 15,451
09/30/2000 15,865 15,661
12/31/2000 15,177 15,044
03/31/2001 15,820 15,979
06/30/2001 15,476 15,776
09/30/2001 14,588 15,139
12/31/2001 15,476 15,978
03/31/2002 15,568 16,290
06/30/2002 14,924 15,290
09/30/2002 14,381 14,807
12/31/2002 15,105 15,795
03/31/2003 15,919 16,885
06/30/2003 17,333 18,518
09/30/2003 17,789 18,986
12/31/2003 18,724 20,095
AVERAGE ANNUAL TOTAL RETURNS OF NON-SERVICE SHARES OF THE FUND AT 12/31/03
1-Year 23.96% 5-Year 4.37% 10-Year 6.47% Inception Date 4/30/86
SERVICE SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer High Income Fund/VA (Service)
Merrill Lynch High Yield Master Index
[LINE GRAPH]
Oppenheimer High Income Merrill Lynch High Yield
Fund/VA (Service Shares) Master Index
09/18/2001 $10,000 $10,000
09/30/2001 9,583 10,000
12/31/2001 10,167 10,554
03/31/2002 10,225 10,761
06/30/2002 9,789 10,100
09/30/2002 9,432 9,781
12/31/2002 9,895 10,433
03/31/2003 10,436 11,153
06/30/2003 11,350 12,232
09/30/2003 11,649 12,541
12/31/2003 12,249 13,274
AVERAGE ANNUAL TOTAL RETURNS OF SERVICE SHARES OF THE FUND AT 12/31/03
1-Year 23.79% Since Inception 9.28% Inception Date 9/18/01
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULT. 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 HIGH INCOME 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--0.1%
Consumer Credit Reference
Index Securities Program, Credit
Card Asset-Backed Certificates,
Series 2002-B, Cl. FX, 10.421%,
3/22/07 1 (Cost $497,606) $ 500,000 $ 526,130
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MORTGAGE-BACKED OBLIGATIONS--1.2%
Asset Securitization Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1996-D2,
Cl. A3, 7.515%, 2/14/29 2 3,000,000 3,156,246
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First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates:
Series 1997-CHL1, Cl. D,
7.96%, 4/29/39 1,2 300,000 299,813
Series 1997-CHL1, Cl. E,
7.96%, 4/29/39 1,2 1,500,000 1,216,875
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Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-RR,
Cl. D, 7.709%, 4/30/39 2,3 2,150,116 2,016,793
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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 1,2 255,525 222,147
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Total Mortgage-Backed
Obligations (Cost $6,655,477) 6,911,874
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LOAN PARTICIPATIONS--0.0%
Telergy, Inc., Sr. Sec. Credit Facilities
Term Loan Participation Nts.,
Tranche A, 11.111%, 1/1/02 1,4,5
(Cost $966,644) 986,362 --
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CORPORATE BONDS AND NOTES--74.3%
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CONSUMER DISCRETIONARY--21.9%
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AUTO COMPONENTS--2.3%
Collins & Aikman
Floorcoverings, Inc.,
9.75% Sr. Sub. Nts.,
Series B, 2/15/10 800,000 860,000
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Collins & Aikman Products Co.,
10.75% Sr. Nts., 12/31/11 500,000 493,750
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Dana Corp.:
9% Unsec. Nts., 8/15/11 1,480,000 1,790,800
10.125% Nts., 3/15/10 500,000 585,000
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Dura Operating Corp.:
8.625% Sr. Nts., Series B, 4/15/12 1,000,000 1,070,000
9% Sr. Sub. Nts., Series B,
5/1/09 [EUR] 100,000 122,982
9% Sr. Unsec. Sub. Nts., Series D,
5/1/09 200,000 201,000
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Eagle-Picher, Inc.,
9.75% Sr. Nts., 9/1/13 3 1,200,000 1,302,000
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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AUTO COMPONENTS Continued
Keystone Automotive Operations,
Inc., 9.75% Sr.
Sub. Nts., 11/1/13 3 $ 200,000 $ 216,000
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Lear Corp., 8.11% Sr. Unsec. Nts.,
Series B, 5/15/09 1,300,000 1,535,625
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Metaldyne Corp.:
10% Sr. Nts., 11/1/13 3 500,000 507,500
11% Sr. Sub. Nts., 6/15/12 750,000 693,750
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Stoneridge, Inc., 11.50%
Sr. Nts., 5/1/12 1,400,000 1,659,000
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Tenneco Automotive, Inc.,
10.25% Sr. Sec. Nts.,
Series B, 7/15/13 900,000 1,028,250
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United Components, Inc.,
9.375% Sr. Sub. Nts., 6/15/13 400,000 439,000
--------------
12,504,657
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AUTOMOBILES--0.5%
DirecTV Holdings LLC/DirecTV
Financing Co., Inc., 8.375%
Sr. Unsec. Nts., 3/15/13 2,300,000 2,679,500
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HOTELS, RESTAURANTS & LEISURE--5.6%
Apcoa, Inc., 9.25% Sr. Unsec.
Sub. Nts., 3/15/08 1 940,000 343,100
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Aztar Corp., 9% Sr.
Unsec. Sub. Nts., 8/15/11 450,000 496,125
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Boca Resorts, Inc., 9.875%
Sr. Sub. Nts., 4/15/09 800,000 856,000
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Boyd Gaming Corp., 8.75%
Sr. Sub. Nts., 4/15/12 800,000 882,000
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Capital Gaming International, Inc.,
11.50% Promissory Nts., 8/1/1995 1,4,5 9,500 --
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Coast Hotels & Casinos, Inc.,
9.50% Sr. Unsec. Sub. Nts., 4/1/09 1,100,000 1,168,750
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Dominos, Inc., 8.25%
Sr. Sub. Nts., 7/1/11 3 800,000 861,000
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Gaylord Entertainment Co.,
8% Sr. Nts., 11/15/13 3 700,000 742,000
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Herbst Gaming, Inc.,
10.75% Sr. Sec. Nts., 9/1/08 1 250,000 282,500
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Hilton Hotels Corp.:
7.625% Nts., 5/15/08 700,000 782,250
7.625% Nts., 12/1/12 500,000 564,375
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Hollywood Park, Inc., 9.25% Sr.
Unsec. Sub. Nts., Series B, 2/15/07 1,000,000 1,040,000
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Intrawest Corp., 7.50% Sr. Nts.,
10/15/13 3 917,000 958,265
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Isle of Capri Casinos, Inc., 9%
Sr. Sub. Nts., 3/15/12 600,000 670,500
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John Q. Hammons Hotels, Inc.,
8.875% Sr. Nts., Series B, 5/15/12 900,000 996,750
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Jupiters Ltd., 8.50%
Sr. Unsec. Nts., 3/1/06 1 1,000,000 1,095,000
5 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS CONTINUED
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PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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HOTELS, RESTAURANTS & LEISURE Continued
Mandalay Resort Group, 10.25%
Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 $ 800,000 $ 928,000
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MGM Mirage, Inc.:
8.375% Sr. Unsec. Sub. Nts., 2/1/11 1,700,000 1,933,750
9.75% Sr. Unsec. Sub. Nts., 6/1/07 500,000 572,500
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Mohegan Tribal Gaming Authority:
6.375% Sr. Sub. Nts., 7/15/09 800,000 830,000
8% Sr. Sub. Nts., 4/1/12 700,000 761,250
8.375% Sr. Sub. Nts., 7/1/11 1 1,200,000 1,314,000
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Park Place Entertainment Corp.:
7.875% Sr. Sub. Nts., 3/15/10 1,500,000 1,668,750
9.375% Sr. Unsec. Sub. Nts., 2/15/07 500,000 567,500
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Penn National Gaming, Inc., 8.875%
Sr. Sub. Nts., 3/15/10 1 600,000 654,000
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Prime Hospitality Corp., 8.375% Sr.
Sub. Nts., 5/1/12 400,000 415,000
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River Rock Entertainment LLC,
9.75% Sr. Nts., 11/1/11 3 600,000 648,000
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Royal Caribbean Cruises Ltd.:
8% Sr. Unsec. Nts., 5/15/10 200,000 219,000
8.75% Sr. Unsub. Nts., 2/2/11 600,000 681,000
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Six Flags, Inc.:
8.875% Sr. Nts., 2/1/10 400,000 412,500
9.75% Sr. Nts., 4/15/13 1,500,000 1,586,250
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Starwood Hotels & Resorts
Worldwide, Inc.,
7.875% Sr. Nts., 5/1/12 1,500,000 1,695,000
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Sun International Hotels Ltd.,
8.875% Sr. Unsec. Sub. Nts., 8/15/11 1,000,000 1,097,500
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Trump Casino Holdings LLC/Trump
Casino Funding, Inc., 11.625%
Sr. Sec. Nts., 3/15/10 600,000 577,500
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Universal City Development
Partners Ltd., 11.75% Sr. Nts.,
4/1/10 3 1,000,000 1,175,000
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Vail Resorts, Inc., 8.75%
Sr. Unsec. Sub. Nts., 5/15/09 700,000 742,000
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Venetian Casino Resort LLC/
Las Vegas Sands, Inc., 11%
Sec. Nts., 6/15/10 850,000 990,250
--------------
31,207,365
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HOUSEHOLD DURABLES--1.8%
Beazer Homes USA, Inc., 8.375%
Sr. Nts., 4/15/12 500,000 553,750
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Blount, Inc., 13% Sr. Sub.
Nts., 8/1/09 650,000 703,625
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D.R. Horton, Inc., 9.75% Sr. Sub. Nts.,
9/15/10 300,000 358,500
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K. Hovnanian Enterprises, Inc.,
8.875% Sr. Sub. Nts., 4/1/12 800,000 884,000
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KB Home:
8.625% Sr. Sub. Nts., 12/15/08 150,000 168,750
9.50% Sr. Unsec. Sub. Nts., 2/15/11 350,000 392,000
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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HOUSEHOLD DURABLES Continued
Meritage Corp., 9.75%
Sr. Unsec. Nts., 6/1/11 $ 1,200,000 $ 1,347,000
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Norcraft Cos. LP, 9%
Sr. Sub. Nts., 11/1/11 3 300,000 325,500
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Salton, Inc., 10.75% Sr. Unsec.
Sub. Nts., 12/15/05 500,000 512,500
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Standard Pacific Corp., 9.25%
Sr. Sub. Nts., 4/15/12 700,000 784,000
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Toll Corp., 8.25%
Sr. Sub. Nts., 12/1/11 500,000 554,375
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WCI Communities, Inc.:
9.125% Sr. Sub. Nts., 5/1/12 800,000 884,000
10.625% Sr. Unsec. Sub. Nts., 2/15/11 600,000 681,000
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William Lyon Homes, Inc.,
10.75% Sr. Nts., 4/1/13 800,000 914,000
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Williams Scotsman, Inc.,
9.875% Sr. Unsec. Nts., 6/1/07 1,000,000 1,017,500
--------------
10,080,500
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LEISURE EQUIPMENT & PRODUCTS--0.2%
Remington Arms Co., Inc.,
10.50% Sr. Unsec. Nts., 2/1/11 800,000 856,000
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MEDIA--9.3%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 4,5 360,000 331,200
8.125% Sr. Nts., Series B,
7/15/03 4,5 1,000,000 930,000
8.375% Sr. Nts., Series B,
2/1/08 4,5 1,000,000 937,500
10.875% Sr. Unsec. Nts.,
10/1/10 4,5 1,000,000 940,000
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Allbritton Communications Co.,
7.75% Sr. Unsec. Sub. Nts., 12/15/12 700,000 729,750
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AMC Entertainment, Inc., 9.50%
Sr. Unsec. Sub. Nts., 2/1/11 2,200,000 2,321,000
- ----------------------------------------------------------------
American Media Operations, Inc.,
8.875% Sr. Unsec. Sub. Nts., 1/15/11 600,000 654,000
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Block Communications, Inc.,
9.25% Sr. Sub. Nts., 4/15/09 600,000 648,000
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British Sky Broadcasting Group plc,
8.20% Sr. Unsec. Nts., 7/15/09 700,000 834,495
- ----------------------------------------------------------------
CanWest Media, Inc., 7.625%
Sr. Unsec. Sub. Nts., Cl. B, 4/15/13 300,000 330,000
- ----------------------------------------------------------------
Carmike Cinemas, Inc., 10.375%
Gtd. Sr. Sub. Nts., Series B, 2/1/09 1,250,000 1,318,750
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CBD Media LLC/CBD Finance, Inc.,
8.625% Sr. Sub. Nts., 6/1/11 3 200,000 221,000
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Charter Communications Holdings II,
10.25% Sr. Unsec. Nts., 9/15/10 3 1,600,000 1,688,000
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Charter Communications Holdings
LLC/Charter Communications
Holdings Capital Corp.:
0%/11.75% Sr. Unsec. Sub.
Disc. Nts., 5/15/11 6 1,500,000 1,012,500
6 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
MEDIA Continued
Charter Communications Holdings
LLC/Charter Communications
Holdings Capital Corp.: Continued
0%/9.92% Sr. Unsec.
Disc. Nts., 4/1/11 6 $ 3,200,000 $ 2,752,000
8.625% Sr. Unsec. Nts., 4/1/09 3,500,000 3,071,250
10% Sr. Nts., 4/1/09 500,000 447,500
11.125% Sr. Unsec. Nts., 1/15/11 600,000 553,500
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Cinemark USA, Inc., 9%
Sr. Unsec. Sub. Nts., 2/1/13 800,000 904,000
- ----------------------------------------------------------------
Corus Entertainment, Inc.,
8.75% Sr. Sub. Nts., 3/1/12 800,000 884,000
- ----------------------------------------------------------------
CSC Holdings, Inc., 7.625% Sr.
Unsec. Unsub. Nts., Series B, 4/1/11 2,800,000 2,961,000
- ----------------------------------------------------------------
Diva Systems Corp., 12.625% Sr.
Unsec. Disc. Nts., Series B,
3/1/08 1,4,5 500,000 32,500
- ----------------------------------------------------------------
EchoStar DBS Corp.:
9.125% Sr. Nts., 1/15/09 195,000 219,131
9.375% Sr. Unsec. Nts., 2/1/09 450,000 473,063
10.375% Sr. Unsec. Nts., 10/1/07 3,000,000 3,303,750
- ----------------------------------------------------------------
Emmis Communications Corp.:
0%/12.50% Sr. Unsec. Disc. Nts.,
3/15/11 6 500,000 465,625
8.125% Sr. Unsec. Sub. Nts.,
Series B, 3/15/09 1,300,000 1,369,875
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Entravision Communications Corp.,
8.125% Sr. Sub. Nts., 3/15/09 600,000 645,000
- ----------------------------------------------------------------
Granite Broadcasting Corp., 9.75%
Sr. Sec. Nts., 12/1/10 1,200,000 1,203,000
- ----------------------------------------------------------------
Gray Television, Inc., 9.25% Sr. Sub.
Nts., 12/15/11 500,000 560,000
- ----------------------------------------------------------------
Hollinger International Publishing,
Inc., 9% Sr. Unsec. Nts., 12/15/10 600,000 640,500
- ----------------------------------------------------------------
Houghton Mifflin Co., 8.25% Sr.
Unsec. Nts., 2/1/11 500,000 537,500
- ----------------------------------------------------------------
Lamar Media Corp., 7.25% Sr.
Unsec. Sub. Nts., 1/1/13 200,000 216,000
- ----------------------------------------------------------------
Liberty Media Corp., 7.875%
Sr. Nts., 7/15/09 1,750,000 2,029,937
- ----------------------------------------------------------------
Lin Television Corp., 6.50%
Sr. Sub. Nts., 5/15/13 3 500,000 503,125
- ----------------------------------------------------------------
LodgeNet Entertainment Corp.,
9.50% Sr. Sub. Debs., 6/15/13 1 400,000 440,000
- ----------------------------------------------------------------
Mediacom LLC/Mediacom Capital
Corp., 9.50% Sr. Unsec. Nts.,
1/15/13 1,000,000 1,065,000
- ----------------------------------------------------------------
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 1,200,000 1,338,000
- ----------------------------------------------------------------
PRIMEDIA, Inc., 8% Sr. Nts.,
5/15/13 3 1,700,000 1,742,500
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R.H. Donnelley Financial Corp. I:
8.875% Sr. Nts., 12/15/10 3 700,000 791,000
10.875% Sr. Sub. Nts., 12/15/12 3 1,000,000 1,191,250
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
MEDIA Continued
Radio One, Inc., 8.875% Sr. Unsec.
Sub. Nts., Series B, 7/1/11 $ 300,000 $ 332,250
- ----------------------------------------------------------------
Regal Cinemas, Inc., 9.375% Sr. Sub.
Nts., Series B, 2/1/12 1,200,000 1,362,000
- ----------------------------------------------------------------
Sinclair Broadcast Group, Inc., 8%
Sr. Unsec. Sub. Nts., 3/15/12 1,600,000 1,736,000
- ----------------------------------------------------------------
Spanish Broadcasting System, Inc.,
9.625% Sr. Unsec. Sub. Nts., 11/1/09 600,000 643,500
- ----------------------------------------------------------------
Time Warner, Inc.,
6.875% Nts., 5/1/12 850,000 958,358
- ----------------------------------------------------------------
Vertis, Inc.:
9.75% Sr. Sec. Nts., 4/1/09 500,000 545,625
10.875% Sr. Unsec. Nts.,
Series B, 6/15/09 200,000 213,500
- ----------------------------------------------------------------
Vivendi Universal SA,
9.25% Sr. Nts., 4/15/10 3 800,000 952,000
- ----------------------------------------------------------------
WRC Media, Inc./Weekly Reader
Corp./CompassLearning, Inc., 12.75%
Sr. Sub. Nts., 11/15/09 1,100,000 1,056,000
--------------
51,838,728
- ----------------------------------------------------------------
MULTILINE RETAIL--0.5%
J.C. Penney Co., Inc.:
7.60% Nts., 4/1/07 1,000,000 1,108,750
8% Nts., 3/1/10 800,000 921,000
- ----------------------------------------------------------------
Saks, Inc.:
8.25% Sr. Unsec. Nts., 11/15/08 250,000 278,750
9.875% Nts., 10/1/11 600,000 717,000
--------------
3,025,500
- ----------------------------------------------------------------
SPECIALTY RETAIL--1.3%
Asbury Automotive Group, Inc.,
9% Sr. Sub. Nts., 6/15/12 600,000 637,500
- ----------------------------------------------------------------
AutoNation, Inc.,
9% Sr. Unsec. Nts., 8/1/08 1,200,000 1,383,000
- ----------------------------------------------------------------
Building Materials Corp.,
8% Sr. Nts., 12/1/08 300,000 297,000
- ----------------------------------------------------------------
CSK Auto, Inc., 12% Sr.
Unsec. Nts., 6/15/06 900,000 1,037,250
- ----------------------------------------------------------------
Finlay Enterprises, Inc.,
9% Debs., 5/1/08 700,000 720,125
- ----------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%
Sr. Nts., 5/1/08 600,000 624,000
- ----------------------------------------------------------------
Gap, Inc. (The), 10.55% Unsub. Nts.,
12/15/08 200,000 247,500
- ----------------------------------------------------------------
Hollywood Entertainment Corp.,
9.625% Sr. Sub. Nts., 3/15/11 1 800,000 864,000
- ----------------------------------------------------------------
Petco Animal Supplies, Inc.,
10.75% Sr. Sub. Nts., 11/1/11 1 750,000 881,250
- ----------------------------------------------------------------
Rent-A-Center, Inc., 7.50%
Sr. Sub. Nts., Cl. B, 5/1/10 350,000 371,000
7 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS CONTINUED
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
SPECIALTY RETAIL--1.3%
United Auto Group, Inc.,
9.625% Sr. Unsec. Sub. Nts., 3/15/12 $ 200,000 $ 225,000
--------------
7,287,625
- ----------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.4%
Broder Bros. Co., 11.25%
Sr. Nts., 10/15/10 3 700,000 693,000
- ----------------------------------------------------------------
Galey & Lord, Inc., 9.125%
Sr. Unsec. Sub. Nts., 3/1/08 1,4,5 700,000 8,750
- ----------------------------------------------------------------
Levi Strauss & Co.:
7% Unsec. Nts., 11/1/06 300,000 194,250
11.625% Sr. Unsec. Nts., 1/15/08 100,000 65,750
12.25% Sr. Nts., 12/15/12 300,000 196,500
- ----------------------------------------------------------------
Oxford Industries, Inc.,
8.875% Sr. Nts., 6/1/11 3 500,000 549,375
- ----------------------------------------------------------------
Russell Corp., 9.25% Sr. Nts., 5/1/10 600,000 624,750
--------------
2,332,375
- ----------------------------------------------------------------
CONSUMER STAPLES--3.7%
- ----------------------------------------------------------------
BEVERAGES--0.1%
Constellation Brands, Inc.,
8.125% Sr. Sub. Nts., 1/15/12 500,000 550,000
- ----------------------------------------------------------------
FOOD & STAPLES RETAILING--0.7%
Delhaize America, Inc., 8.125%
Unsub. Debs., 4/15/11 1,500,000 1,732,500
- ----------------------------------------------------------------
Fleming Cos., Inc., 10.125%
Sr. Unsec. Nts., 4/1/08 4 500,000 112,500
- ----------------------------------------------------------------
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., 10/15/07 325,000 338,000
- ----------------------------------------------------------------
Real Time Data Co., 13%
Disc. Nts., 5/31/09 1,4,5,7 476,601 --
- ----------------------------------------------------------------
Rite Aid Corp.:
8.125% Sr. Sec. Nts., 5/1/10 900,000 972,000
9.50% Sr. Sec. Nts., 2/15/11 450,000 509,625
--------------
4,032,625
- ----------------------------------------------------------------
FOOD PRODUCTS--2.3%
American Seafoods Group LLC,
10.125% Sr. Sub. Nts., 4/15/10 1 500,000 596,875
- ----------------------------------------------------------------
Aurora Foods, Inc., 8.75%
Sr. Sub. Nts., Series B, 7/1/08 4 500,000 392,500
- ----------------------------------------------------------------
Burns Philp Capital Pty Ltd.,
9.75% Sr. Sub. Nts., 7/15/12 3 400,000 430,000
- ----------------------------------------------------------------
Del Monte Corp.:
8.625% Sr. Sub. Nts., 12/15/12 1,000,000 1,100,000
9.25% Sr. Unsec. Sub. Nts., 5/15/11 100,000 111,000
- ----------------------------------------------------------------
Doane Pet Care Co.:
9.75% Sr. Unsec. Sub. Nts., 5/15/07 700,000 630,000
10.75% Sr. Nts., 3/1/10 1 1,100,000 1,144,000
- ----------------------------------------------------------------
Dole Food Co., Inc.:
8.625% Sr. Nts., 5/1/09 900,000 992,250
8.875% Sr. Unsec. Nts., 3/15/11 400,000 441,000
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
FOOD PRODUCTS Continued
Hines Nurseries, Inc.,
10.25% Sr. Nts., 10/1/11 3 $ 600,000 $ 657,000
- ----------------------------------------------------------------
Michael Foods, Inc., 8%
Sr. Sub. Nts., 11/15/13 3 500,000 523,750
- ----------------------------------------------------------------
New World Pasta Co.,
9.25% Sr. Nts., 2/15/09 1 200,000 53,000
- ----------------------------------------------------------------
Pinnacle Foods Holding Corp.,
8.25% Sr. Sub. Nts., 12/1/13 3 500,000 520,000
- ----------------------------------------------------------------
Smithfield Foods, Inc.:
7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 938,875
8% Sr. Nts., Series B, 10/15/09 900,000 954,000
- ----------------------------------------------------------------
Swift & Co., 10.125% Sr.
Nts., 10/1/09 1,000,000 1,065,000
- ----------------------------------------------------------------
Tembec Industries, Inc., 7.75%
Sr. Nts., 3/15/12 700,000 700,000
- ----------------------------------------------------------------
United Biscuits Finance plc,
10.625% Sr. Sub. Nts.,
4/15/11 1 [EUR] 1,000,000 1,431,633
--------------
12,680,883
- ----------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.5%
AKI, Inc., 10.50%
Sr. Unsec. Nts., 7/1/08 1 1,000,000 1,045,000
- ----------------------------------------------------------------
Armkel LLC/Armkel Finance, Inc.,
9.50% Sr. Sub. Nts., 8/15/09 600,000 661,500
- ----------------------------------------------------------------
Holmes Products Corp., 9.875% Sr.
Unsec. Sub. Nts., Series B, 11/15/07 1 300,000 311,250
- ----------------------------------------------------------------
Playtex Products, Inc., 9.375%
Sr. Unsec. Sub. Nts., 6/1/11 500,000 507,500
- ----------------------------------------------------------------
Revlon Consumer Products Corp.,
12% Sr. Sec. Nts., 12/1/05 400,000 402,000
- ----------------------------------------------------------------
Styling Technology Corp., 10.875%
Sr. Unsec. Sub. Nts., 7/1/08 1,4,5 600,000 --
--------------
2,927,250
- ----------------------------------------------------------------
PERSONAL PRODUCTS--0.1%
French Fragrances, Inc., 10.375%
Sr. Unsec. Nts., Series B, 5/15/07 382,000 397,120
- ----------------------------------------------------------------
ENERGY--4.6%
- ----------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.4%
BRL Universal Equipment Corp.,
8.875% Sr. Sec. Nts., 2/15/08 1 750,000 808,125
- ----------------------------------------------------------------
Dresser, Inc., 9.375% Sr.
Sub. Nts., 4/15/11 400,000 437,000
- ----------------------------------------------------------------
Grant Prideco Escrow Corp., 9%
Sr. Unsec. Nts., 12/15/09 300,000 332,250
- ----------------------------------------------------------------
Hanover Compress Co.,
8.625% Sr. Nts., 12/15/10 700,000 731,500
- ----------------------------------------------------------------
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 1,750,000 1,942,500
- ----------------------------------------------------------------
Ocean Rig Norway AS,
10.25% Sr. Sec. Nts., 6/1/08 1,600,000 1,512,000
8 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES Continued
Petroleum Helicopters, Inc.,
9.375% Sr. Nts., 5/1/09 $ 600,000 $ 640,500
- ----------------------------------------------------------------
Universal Compression, Inc.,
7.25% Sr. Unsec. Sub. Nts., 5/15/10 800,000 836,000
--------------
7,772,375
- ----------------------------------------------------------------
OIL & GAS--3.2%
Belden & Blake Corp.,
9.875% Sr. Sub. Nts., 6/15/07 500,000 495,000
- ----------------------------------------------------------------
Chesapeake Energy Corp.:
8.125% Sr. Unsec. Nts., 4/1/11 1,000,000 1,115,000
8.375% Sr. Unsec. Nts., 11/1/08 1,000,000 1,105,000
9% Sr. Nts., 8/15/12 300,000 346,500
- ----------------------------------------------------------------
El Paso Energy Partners LP, 8.50%
Sr. Unsec. Sub. Nts., Series B, 6/1/11 469,000 529,970
- ----------------------------------------------------------------
Forest Oil Corp.,
7.75% Sr. Nts., 5/1/14 1,000,000 1,062,500
- ----------------------------------------------------------------
Frontier Oil Corp.,
11.75% Sr. Nts., 11/15/09 800,000 908,000
- ----------------------------------------------------------------
GulfTerra Energy Partners LP:
8.50% Sr. Unsec. Sub. Nts.,
Series B, 6/1/10 425,000 484,500
10.625% Sr. Sub. Nts., 12/1/12 469,000 583,905
- ----------------------------------------------------------------
Leviathan Gas Pipeline Partners
LP/Leviathan Finance Corp., 10.375%
Sr. Unsec. Sub. Nts.,
Series B, 6/1/09 1 500,000 545,000
- ----------------------------------------------------------------
Newfield Exploration Co., 8.375%
Sr. Sub. Nts., 8/15/12 600,000 675,000
- ----------------------------------------------------------------
Paramount Resources Ltd., 7.875%
Sr. Nts., 11/1/10 700,000 700,000
- ----------------------------------------------------------------
Pioneer Natural Resources Co.,
7.50% Sr. Nts., 4/15/12 1,000,000 1,151,148
- ----------------------------------------------------------------
Premcor Refining Group, Inc.,
9.50% Sr. Nts., 2/1/13 1 1,300,000 1,488,500
- ----------------------------------------------------------------
Stone Energy Corp., 8.25% Sr.
Unsec. Sub. Nts., 12/15/11 800,000 876,000
- ----------------------------------------------------------------
Teekay Shipping Corp., 8.875%
Sr. Nts., 7/15/11 575,000 655,500
- ----------------------------------------------------------------
Tesoro Petroleum Corp.:
8% Sr. Sec. Nts., 4/15/08 1,000,000 1,067,500
9.625% Sr. Sub. Nts., 4/1/12 700,000 770,000
- ----------------------------------------------------------------
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) 8 400,000 425,000
- ----------------------------------------------------------------
Westport Resources Corp., 8.25% Sr.
Unsec. Sub. Nts., 11/1/11 1,400,000 1,547,000
- ----------------------------------------------------------------
XTO Energy, Inc., 7.50%
Sr. Nts., 4/15/12 1,000,000 1,135,000
--------------
17,666,023
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
FINANCIALS--2.6%
- ----------------------------------------------------------------
CAPITAL MARKETS--0.6%
American Color Graphics, Inc.,
10% Sr. Sec. Nts., 6/15/10 3 $ 400,000 $ 412,000
- ----------------------------------------------------------------
Berry Plastics Corp.:
10.75% Sr. Sub. Nts., 7/15/12 800,000 925,000
10.75% Sr. Sub. Nts., 7/15/12 3 800,000 925,000
- ----------------------------------------------------------------
Decrane Aircraft Holdings, Inc.,
12% Sr. Unsec. Sub. Nts.,
Series B, 9/30/08 1,550,000 798,250
--------------
3,060,250
- ----------------------------------------------------------------
COMMERCIAL BANKS--0.3%
Bank Plus Corp.,
12% Sr. Nts., 7/18/07 1 517,000 555,775
- ----------------------------------------------------------------
Local Financial Corp.,
11% Sr. Nts., 9/8/04 1 800,000 838,000
- ----------------------------------------------------------------
Western Financial Bank,
9.625% Unsec. Sub. Debs., 5/15/12 400,000 448,000
--------------
1,841,775
- ----------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--0.3%
Bombardier Recreational, Inc.,
8.375% Sr. Sub. Nts., 12/15/13 3 550,000 577,500
- ----------------------------------------------------------------
Couche-Tard US LP/Couche-Tard
Finance Corp., 7.50% Sr. Sub.
Nts., 12/15/13 3 300,000 315,750
- ----------------------------------------------------------------
Finova Group, Inc. (The),
7.50% Nts., 11/15/09 500,000 302,500
- ----------------------------------------------------------------
LaBranche & Co., Inc., 12%
Sr. Unsec. Sub. Nts., 3/2/07 600,000 609,000
--------------
1,804,750
- ----------------------------------------------------------------
REAL ESTATE--1.2%
Capstar Hotel Co., 8.75% Sr. Sub.
Nts., 8/15/07 1 200,000 203,500
- ----------------------------------------------------------------
Corrections Corp. of America:
7.50% Sr. Nts., 5/1/11 500,000 527,500
9.875% Sr. Nts., 5/1/09 500,000 560,625
- ----------------------------------------------------------------
Felcor Lodging LP:
9% Sr. Nts., 6/1/11 780,000 850,200
10% Sr. Unsec. Nts., 9/15/08 200,000 217,000
- ----------------------------------------------------------------
Felcor Suites LP, 7.375%
Sr. Nts., 10/1/04 200,000 205,750
- ----------------------------------------------------------------
HMH Properties, Inc., 7.875%
Sr. Nts., Series B, 8/1/08 1,750,000 1,828,750
- ----------------------------------------------------------------
MeriStar Hospitality Corp.:
9.125% Sr. Unsec. Nts., 1/15/11 400,000 426,000
10.50% Sr. Unsec. Nts., 6/15/09 350,000 381,500
- ----------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 9.75% Sr. Sec. Nts.,
Series B, 4/1/08 1,300,000 1,363,375
--------------
6,564,200
9 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS CONTINUED
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--0.2%
WMC Finance Co., 11.75%
Sr. Nts., 12/15/08 3 $ 1,000,000 $ 1,002,500
- ----------------------------------------------------------------
HEALTH CARE--4.7%
- ----------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.7%
Dade Behring Holdings, Inc., 11.91%
Sr. Unsec. Sub. Nts., 10/3/10 1 200,000 231,000
- ----------------------------------------------------------------
Fisher Scientific International, Inc.,
8.125% Sr. Sub. Nts., 5/1/12 782,000 842,605
- ----------------------------------------------------------------
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) 8,9 1,000,000 615,000
- ----------------------------------------------------------------
Sybron Dental Specialties, Inc.,
8.125% Sr. Sub. Nts., 6/15/12 700,000 764,750
- ----------------------------------------------------------------
Universal Hospital Services, Inc.,
10.125% Sr. Nts., 11/1/11 3 800,000 844,000
- ----------------------------------------------------------------
Vanguard Health Systems, Inc.,
9.75% Sr. Unsec. Sub. Nts., 8/1/11 500,000 545,000
--------------
3,842,355
- ----------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--3.9%
Alderwoods Group, Inc.,
12.25% Sr. Nts., 1/2/09 700,000 791,000
- ----------------------------------------------------------------
Alliance Imaging, Inc., 10.375% Sr.
Unsec. Sub. Nts., 4/15/11 300,000 319,500
- ----------------------------------------------------------------
AmeriPath, Inc., 10.50% Sr.
Unsec. Sub. Nts., 4/1/13 700,000 749,000
- ----------------------------------------------------------------
AmerisourceBergen Corp.,
7.25% Sr. Unsec. Nts., 11/15/12 200,000 216,500
- ----------------------------------------------------------------
Beverly Enterprises, Inc.,
9.625% Sr. Unsec. Nts., 4/15/09 925,000 1,024,438
- ----------------------------------------------------------------
Extendicare Health Services, Inc.,
9.50% Sr. Unsec. Sub. Nts., 7/1/10 1 500,000 557,500
- ----------------------------------------------------------------
Fresenius Medical Care Capital
Trust II, 7.875% Nts., 2/1/08 1 1,600,000 1,716,000
- ----------------------------------------------------------------
Genesis Healthcare Corp., 8%
Sr. Sub. Nts., 10/15/13 3 400,000 419,000
- ----------------------------------------------------------------
Hanger Orthopedic Group, Inc.,
10.375% Sr. Nts., 2/15/09 1 400,000 456,000
- ----------------------------------------------------------------
HCA, Inc.:
6.30% Sr. Unsec. Nts., 10/1/12 300,000 309,823
6.95% Sr. Nts., 5/1/12 1,000,000 1,073,915
7.875% Sr. Nts., 2/1/11 305,000 348,336
8.75% Sr. Nts., 9/1/10 400,000 476,912
- ----------------------------------------------------------------
Healthsouth Corp.,
7.625% Nts., 6/1/12 1,000,000 940,000
- ----------------------------------------------------------------
InSight Health Services Corp.,
9.875% Sr. Sub. Nts., 11/1/11 500,000 532,500
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES Continued
Magellan Health Services, Inc.:
9% Sr. Sub. Nts., 2/15/08 4,5 $ 300,000 $ 223,500
9.375% Sr. Nts., 11/15/07 3 2,000,000 2,110,000
- ----------------------------------------------------------------
Medquest, Inc., 11.875% Sr.
Unsec. Sub. Nts., Series B, 8/15/12 700,000 768,250
- ----------------------------------------------------------------
National Nephrology Assn., 9%
Sr. Sub. Nts., 11/1/11 3 200,000 210,500
- ----------------------------------------------------------------
NDCHealth Corp., 10.50% Sr.
Unsec. Sub. Nts., 12/1/12 600,000 678,000
- ----------------------------------------------------------------
PacifiCare Health Systems, Inc.,
10.75% Sr. Unsec. Unsub. Nts., 6/1/09 714,000 846,090
- ----------------------------------------------------------------
Quintiles Transnational Corp., 10%
Sr. Sub. Nts., 10/1/13 3 600,000 651,000
- ----------------------------------------------------------------
Rotech Healthcare, Inc., 9.50% Sr.
Unsec. Sub. Nts., 4/1/12 600,000 630,000
- ----------------------------------------------------------------
Stewart Enterprises, Inc., 10.75% Sr.
Unsec. Sub. Nts., 7/1/08 1 1,800,000 2,043,000
- ----------------------------------------------------------------
Tenet Healthcare Corp., 6.375% Sr.
Nts., 12/1/11 760,000 733,400
- ----------------------------------------------------------------
Triad Hospitals, Inc., 7%
Sr. Sub. Nts., 11/15/13 3 1,420,000 1,437,750
- ----------------------------------------------------------------
US Oncology, Inc., 9.625%
Sr. Sub. Nts., 2/1/12 300,000 330,750
- ----------------------------------------------------------------
Vicar Operating, Inc.,
9.875% Sr. Sub. Nts., 12/1/09 1 1,000,000 1,115,000
--------------
21,707,664
- ----------------------------------------------------------------
PHARMACEUTICALS--0.1%
aaiPharma, Inc., 11%
Sr. Sub. Nts., 4/1/10 100,000 114,000
- ----------------------------------------------------------------
Valeant Pharmaceuticals
International, Inc., 7%
Sr. Nts., 12/15/11 3 800,000 828,000
--------------
942,000
- ----------------------------------------------------------------
INDUSTRIALS--8.1%
- ----------------------------------------------------------------
AEROSPACE & DEFENSE--1.0%
Alliant Techsystems, Inc., 8.50%
Sr. Unsec. Sub. Nts., 5/15/11 900,000 994,500
- ----------------------------------------------------------------
American Plumbing & Mechanical,
Inc., 11.625% Sr. Sub. Nts.,
Series B, 10/15/08 1,4 500,000 125,625
- ----------------------------------------------------------------
K&F Industries, Inc., 9.625%
Sr. Unsec. Sub. Nts., 12/15/10 300,000 337,875
- ----------------------------------------------------------------
L-3 Communications Corp.,
7.625% Sr. Sub. Nts., 6/15/12 800,000 871,000
- ----------------------------------------------------------------
Rexnord Corp., 10.125%
Sr. Unsec. Sub. Nts., 12/15/12 700,000 770,000
- ----------------------------------------------------------------
TransDigm, Inc., 8.375%
Sr. Sub. Nts., 7/15/11 800,000 855,000
10 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
AEROSPACE & DEFENSE Continued
TRW Automotive, Inc.:
9.375% Sr. Nts., 2/15/13 $ 650,000 $ 745,875
11% Sr. Sub. Nts., 2/15/13 700,000 827,750
- ----------------------------------------------------------------
Vought Aircraft Industries, Inc.,
8% Sr. Nts., 7/15/11 3 300,000 307,875
--------------
5,835,500
- ----------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.0%
Atlas Air, Inc., 9.25% Sr. Nts.,
4/15/08 4 500,000 187,500
- ----------------------------------------------------------------
AIRLINES--0.4%
America West Airlines, Inc.,
10.75% Sr. Nts., 9/1/05 1,000,000 975,000
- ----------------------------------------------------------------
Amtran, Inc., 10.50% Sr.
Nts., 8/1/04 1,500,000 1,301,250
--------------
2,276,250
- ----------------------------------------------------------------
BUILDING PRODUCTS--0.5%
Associated Materials, Inc.,
9.75% Sr. Sub. Nts., 4/15/12 700,000 770,000
- ----------------------------------------------------------------
Green Star Products, Inc.,
10.15% Bonds, 6/24/10 3 321,938 330,815
- ----------------------------------------------------------------
Jacuzzi Brands, Inc., 9.625%
Sr. Sec. Nts., 7/1/10 3 544,000 601,120
- ----------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Unsec. Nts.,
Series B, 9/1/07 200,000 207,750
9.875% Sr. Unsec. Sub. Nts., 6/15/11 400,000 443,000
- ----------------------------------------------------------------
North America Energy Partners, Inc.,
8.75% Sr. Unsec. Nts., 12/1/11 3 300,000 316,500
--------------
2,669,185
- ----------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--2.9%
Allied Waste North America, Inc.:
7.875% Sr. Nts., 4/15/13 800,000 870,000
7.875% Sr. Unsec. Nts.,
Series B, 1/1/09 400,000 419,000
8.50% Sr. Sub. Nts., 12/1/08 1,000,000 1,117,500
8.875% Sr. Nts., Series B, 4/1/08 1,900,000 2,137,500
9.25% Sr. Sec. Debs.,
Series B, 9/1/12 2,000,000 2,280,000
10% Sr. Unsec. Sub. Nts.,
Series B, 8/1/09 400,000 434,000
- ----------------------------------------------------------------
American Pad & Paper Co., 13%
Sr. Sub. Nts., Series B,
11/15/05 1,4,5 200,000 1,305
- ----------------------------------------------------------------
Budget Group, Inc., 9.125%
Sr. Unsec. Nts., 4/1/06 4,5 900,000 166,500
- ----------------------------------------------------------------
Buhrmann US, Inc., 12.25%
Sr. Unsec. Sub. Nts., 11/1/09 600,000 675,000
- ----------------------------------------------------------------
Coinmach Corp., 9% Sr. Nts., 2/1/10 800,000 872,000
- ----------------------------------------------------------------
Comforce Operating, Inc., 12%
Sr. Nts., Series B,12/1/07 1 350,000 229,250
- ----------------------------------------------------------------
Hydrochem Industrial Services, Inc.,
10.375% Sr. Sub. Nts., 8/1/07 1 250,000 239,375
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES Continued
IT Group, Inc., 11.25% Sr. Unsec.
Sub. Nts., Series B, 4/1/09 1,4,5 $ 550,000 $ --
- ----------------------------------------------------------------
Kindercare Learning Centers, Inc.,
9.50% Sr. Sub. Nts., 2/15/09 1 750,000 765,000
- ----------------------------------------------------------------
Mail-Well I Corp., 9.625% Sr.
Nts., 3/15/12 700,000 780,500
- ----------------------------------------------------------------
Moore North American Finance,
Inc., 7.875% Sr. Nts., 1/15/11 3 400,000 455,000
- ----------------------------------------------------------------
Protection One, Inc./Protection
One Alarm Monitoring, Inc.,
7.375% Sr. Unsec. Nts., 8/15/05 1 900,000 832,500
- ----------------------------------------------------------------
Stericycle, Inc., 12.375% Sr. Unsec.
Sub. Nts., Series B, 11/15/09 488,000 563,640
- ----------------------------------------------------------------
Synagro Technologies, Inc.,
9.50% Sr. Sub. Nts., 4/1/09 700,000 763,000
- ----------------------------------------------------------------
United Rentals
(North America), Inc.:
9% Sr. Unsec. Sub. Nts.,
Series B, 4/1/09 1,000,000 1,063,750
10.75% Sr. Unsec. Nts.,
Series B, 4/15/08 400,000 452,000
10.75% Sr. Unsec. Nts.,
Series B, 4/15/08 700,000 791,000
--------------
15,907,820
- ----------------------------------------------------------------
CONSTRUCTION & ENGINEERING--0.2%
Integrated Electrical Services, Inc.:
9.375% Sr. Sub. Nts.,
Series B, 2/1/09 1 100,000 105,500
9.375% Sr. Sub. Nts.,
Series C, 2/1/09 100,000 105,500
- ----------------------------------------------------------------
URS Corp., 11.50% Sr.
Unsec. Nts., 9/15/09 1 700,000 795,375
--------------
1,006,375
- ----------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.1%
Dayton Superior Corp., 13%
Sr. Unsec. Sub. Nts., 6/15/09 1 100,000 87,500
- ----------------------------------------------------------------
General Cable Corp., 9.50%
Sr. Nts., 11/15/10 3 500,000 537,500
--------------
625,000
- ----------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.8%
Great Lakes Dredge & Dock Co.,
7.75% Sr. Sub. Nts., 12/15/13 3 550,000 568,563
- ----------------------------------------------------------------
Norse CBO Ltd., 9.342% Sub. Bonds,
Series 1A, Cl. C2, 8/13/10 1 1,500,000 577,500
- ----------------------------------------------------------------
Tyco International Group SA:
6.375% Nts., 10/15/11 2,900,000 3,113,875
6.75% Sr. Unsub. Nts., 2/15/11 100,000 109,750
--------------
4,369,688
11 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS CONTINUED
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
MACHINERY--1.1%
Actuant Corp., 13%
Sr. Sub. Nts., 5/1/09 $ 378,000 $ 493,290
- ----------------------------------------------------------------
AGCO Corp., 9.50%
Sr. Unsec. Nts., 5/1/08 1,000,000 1,100,000
- ----------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts.,
8/15/07 1,4,5 1,200,000 10,950
- ----------------------------------------------------------------
Manitowoc Co., Inc. (The):
7.125% Sr. Nts., 11/1/13 150,000 155,813
10.50% Sr. Sub. Nts., 8/1/12 800,000 915,000
- ----------------------------------------------------------------
NMHG Holding Co., 10%
Sr. Nts., 5/15/09 1 600,000 666,000
- ----------------------------------------------------------------
Roller Bearing Co. of America, Inc.,
9.625% Sr. Sub. Nts.,
Series B, 6/15/07 560,000 524,300
- ----------------------------------------------------------------
SPX Corp., 7.50% Sr. Nts., 1/1/13 900,000 983,250
- ----------------------------------------------------------------
Terex Corp.:
9.25% Sr. Unsec. Sub. Nts., 7/15/11 800,000 884,000
10.375% Sr. Unsec. Sub. Nts.,
Series B, 4/1/11 1 500,000 562,500
--------------
6,295,103
- ----------------------------------------------------------------
MARINE--0.6%
CP Ships Ltd., 10.375%
Sr. Nts., 7/15/12 1,000,000 1,165,000
- ----------------------------------------------------------------
Millenium Seacarriers, Inc.,
12% Sr. Sec. Nts., 7/15/05 1,4,5 700,000 269,290
- ----------------------------------------------------------------
Navigator Gas Transport plc,
10.50% First Priority Ship Mtg. Nts.,
6/30/07 1,4,5 1,000,000 425,000
- ----------------------------------------------------------------
Pacific & Atlantic Holdings, Inc.,
3.75% Sec. Nts., 12/31/07 3 387,497 117,702
- ----------------------------------------------------------------
Sea Containers Ltd., 7.875%
Sr. Nts., 2/15/08 1,500,000 1,485,000
--------------
3,461,992
- ----------------------------------------------------------------
ROAD & RAIL--0.4%
Kansas City Southern Railway Co.
(The), 7.50% Sr. Nts., 6/15/09 500,000 515,000
- ----------------------------------------------------------------
Stena AB:
7.50% Sr. Nts., 11/1/13 928,000 960,480
9.625% Sr. Nts., 12/1/12 600,000 679,500
--------------
2,154,980
- ----------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE--0.1%
Worldspan LP/Worldspan Financial
Corp., 9.625% Sr. Nts., 6/15/11 3 350,000 362,250
- ----------------------------------------------------------------
INFORMATION TECHNOLOGY--1.8%
- ----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.1%
Orion Network Systems, Inc.,
12.50% Sr. Disc. Nts., 1/15/07 1,4 1,150,000 606,625
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.1%
Seagate Technology Hdd Holdings,
8% Sr. Nts., 5/15/09 $ 700,000 $ 757,750
- ----------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.4%
Ingram Micro, Inc., 9.875% Sr. Unsec.
Sub. Nts., 8/15/08 1 1,200,000 1,332,000
- ----------------------------------------------------------------
Sensus Metering Systems, Inc.,
8.625% Sr. Sub. Nts., 12/15/13 3 1,000,000 1,031,250
--------------
2,363,250
- ----------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.0%
Exodus Communications, Inc.,
10.75% Sr. Nts., 12/15/09 1,4 [EUR] 846,550 48,051
- ----------------------------------------------------------------
Globix Corp., 11% Sr. Nts., 4/26/08 1 109,359 96,783
- ----------------------------------------------------------------
NorthPoint Communications
Group, Inc., 12.875% Nts., 2/15/10 1,4 240,208 24
- ----------------------------------------------------------------
PSINet, Inc.:
10.50% Sr. Unsec. Nts.,
12/1/06 1,4,5 [EUR] 1,000,000 52,031
11% Sr. Nts., 8/1/09 1,4,5 901,558 51,840
- ----------------------------------------------------------------
Verado Holdings, Inc., 0%/13% Sr.
Disc. Nts., 4/15/08 1,4,5,6 500,000 50
--------------
248,779
- ----------------------------------------------------------------
IT SERVICES--0.5%
Iron Mountain, Inc.:
7.75% Sr. Sub. Nts., 1/15/15 500,000 526,250
8.625% Sr. Unsec. Sub. Nts., 4/1/13 1,600,000 1,736,000
- ----------------------------------------------------------------
Titan Corp. (The),
8% Sr. Sub. Nts., 5/15/11 3 400,000 456,000
--------------
2,718,250
- ----------------------------------------------------------------
OFFICE ELECTRONICS--0.1%
ASAT Finance LLC,
12.50% Sr. Unsec. Nts., 11/1/06 1 325,000 346,531
- ----------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.6%
AMI Semiconductor, Inc.,
10.75% Sr. Unsec. Sub. Nts., 2/1/13 682,000 816,695
- ----------------------------------------------------------------
Amkor Technology, Inc.:
7.75% Sr. Nts., 5/15/13 600,000 646,500
9.25% Sr. Unsec. Sub. Nts., 2/15/08 1,000,000 1,140,000
- ----------------------------------------------------------------
ChipPAC International Co. Ltd.,
12.75% Sr. Unsec. Sub. Nts.,
Series B, 8/1/09 500,000 555,000
--------------
3,158,195
- ----------------------------------------------------------------
MATERIALS--9.8%
- ----------------------------------------------------------------
CHEMICALS--3.6%
Applied Extrusion Technologies, Inc.,
10.75% Sr. Nts., Series B, 7/1/11 450,000 375,750
- ----------------------------------------------------------------
Avecia Group plc, 11%
Sr. Unsec. Nts., 7/1/09 200,000 181,000
12 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
CHEMICALS Continued
ClimaChem, Inc., 10.75% Sr. Unsec.
Nts., Series B, 12/1/07 1 $ 250,000 $ 101,250
- ----------------------------------------------------------------
Compass Minerals Group, Inc.,
10% Sr. Sub. Nts., 8/15/11 1,200,000 1,350,000
- ----------------------------------------------------------------
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 3 1,000,000 1,110,000
10.625% Sr. Unsec. Nts., 5/1/11 800,000 888,000
- ----------------------------------------------------------------
Huntsman Corp./
ICI Chemical Co. plc:
13.09% Sr. Unsec.
Disc. Nts., 12/31/09 9 400,000 195,000
10.125% Sr. Unsec. Sub. Nts., 7/1/09 1,800,000 1,863,000
10.125% Sr. Unsec.
Sub. Nts., 7/1/09 [EUR] 100,000 123,770
- ----------------------------------------------------------------
Huntsman International LLC,
9.875% Sr. Nts., 3/1/09 1,800,000 1,980,000
- ----------------------------------------------------------------
IMC Global, Inc.,
7.625% Bonds, 11/1/05 1 3,000 3,090
- ----------------------------------------------------------------
ISP Chemco, Inc., 10.25%
Sr. Unsec. Sub. Nts., 7/1/11 1 500,000 565,000
- ----------------------------------------------------------------
ISP Holdings, Inc., 10.625%
Sr. Sec. Nts., 12/15/09 1 300,000 331,500
- ----------------------------------------------------------------
Koppers Industry, Inc.,
9.875% Sr. Sec. Nts., 10/15/13 3 900,000 996,750
- ----------------------------------------------------------------
Kraton Polymers LLC/Capital
Corp., 8.125% Sr. Sub. Nts., 1/15/14 3 400,000 418,000
- ----------------------------------------------------------------
Lyondell Chemical Co.:
9.50% Sec. Nts., 12/15/08 500,000 525,000
9.50% Sr. Sec. Nts., 12/15//08 100,000 105,000
9.625% Sr. Sec. Nts., Series A, 5/1/07 900,000 958,500
9.875% Sec. Nts., Series B, 5/1/07 600,000 636,000
- ----------------------------------------------------------------
Millennium America, Inc.,
9.25% Sr. Nts., 6/15/08 3 800,000 876,000
- ----------------------------------------------------------------
Noveon, Inc., 11% Sr. Unsec.
Sub. Nts., Series B, 2/28/11 1 1,200,000 1,398,000
- ----------------------------------------------------------------
OM Group, Inc., 9.25%
Sr. Sub. Nts., 12/15/11 100,000 104,500
- ----------------------------------------------------------------
PCI Chemicals Canada,
10% Sr. Sec. Nts., 12/31/08 319,909 291,117
- ----------------------------------------------------------------
Pioneer Cos., Inc., 4.64%
Sr. Sec. Nts., 12/31/06 1,2 101,304 92,187
- ----------------------------------------------------------------
Polyone Corp., 8.875%
Sr. Unsec. Nts., 5/1/12 1,700,000 1,572,500
- ----------------------------------------------------------------
Resolution Performance Products
LLC, 8% Sec. Nts., 12/15/09 3 450,000 468,000
- ----------------------------------------------------------------
Rockwood Specialties Corp.,
10.625% Sr. Sub. Nts., 5/15/11 3 400,000 448,000
- ----------------------------------------------------------------
Sterling Chemicals, Inc.:
10% Sr. Sec. Nts., 12/19/07 1 409,135 395,838
11.25% Sr. Sub. Nts., 8/15/06 1,4,5 300,000 --
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
CHEMICALS Continued
Westlake Chemical Corp.,
8.75% Sr. Nts., 7/15/11 3 $ 800,000 $ 880,000
--------------
19,862,752
- ----------------------------------------------------------------
CONSTRUCTION MATERIALS--0.2%
Texas Industries, Inc., 10.25%
Sr. Unsec. Nts., 6/15/11 800,000 908,000
- ----------------------------------------------------------------
CONTAINERS & PACKAGING--2.5%
Ball Corp.:
6.875% Sr. Unsec. Nts., 12/15/12 3 300,000 315,000
7.75% Sr. Unsec. Nts., 8/1/06 700,000 756,000
- ----------------------------------------------------------------
Crown Euro Holdings SA,
9.50% Sr. Sec. Nts., 3/1/11 900,000 1,023,750
- ----------------------------------------------------------------
Graphic Packaging
International Corp.:
8.50% Sr. Nts., 8/15/11 3 1,000,000 1,100,000
9.50% Sr. Sub. Nts., 8/15/13 3 700,000 777,000
- ----------------------------------------------------------------
Jefferson Smurfit Corp., 8.25%
Sr. Unsec. Nts., 10/1/12 900,000 981,000
- ----------------------------------------------------------------
MDP Acquisitions plc,
9.625% Sr. Nts., 10/1/12 800,000 900,000
- ----------------------------------------------------------------
Owens-Brockway Glass
Container, Inc.:
7.75% Sr. Sec. Nts., 5/15/11 1,000,000 1,078,750
8.25% Sr. Unsec. Nts., 5/15/13 500,000 539,375
8.75% Sr. Sec. Nts., 11/15/12 1,350,000 1,510,313
8.875% Sr. Sec. Nts., 2/15/09 1,300,000 1,431,625
- ----------------------------------------------------------------
Stone Container Corp.:
8.375% Sr. Nts., 7/1/12 400,000 436,000
9.25% Sr. Unsec. Nts., 2/1/08 1,000,000 1,110,000
9.75% Sr. Unsec. Nts., 2/1/11 1,000,000 1,110,000
- ----------------------------------------------------------------
TriMas Corp., 9.875% Sr. Unsec.
Sub. Nts., 6/15/12 1,000,000 1,047,500
--------------
14,116,313
- ----------------------------------------------------------------
METALS & MINING--2.0%
AK Steel Corp., 7.875%
Sr. Unsec. Nts., 2/15/09 300,000 264,750
- ----------------------------------------------------------------
Arch Western Finance LLC,
6.75% Sr. Nts., 7/1/13 3 800,000 826,000
- ----------------------------------------------------------------
California Steel Industries Corp.,
8.50% Sr. Unsec. Nts.,
Series B, 4/1/09 300,000 316,125
- ----------------------------------------------------------------
Century Aluminum Co.,
11.75% Sr. Sec. Nts., 4/15/08 1,385,000 1,551,200
- ----------------------------------------------------------------
IMCO Recycling, Inc.,
10.375% Sr. Sec. Nts., 10/15/10 3 700,000 722,750
- ----------------------------------------------------------------
IPSCO, Inc., 8.75% Sr. Nts., 6/1/13 300,000 333,000
- ----------------------------------------------------------------
Jorgensen (Earle M.) Co., 9.75%
Sr. Sec. Nts., 6/1/12 800,000 892,000
- ----------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.,
10.875% Sr. Nts., Series B,
10/15/06 1,4,5 1,000,000 905,000
13 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS CONTINUED
- ----------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
METALS & MINING Continued
Massey Energy Co., 6.625%
Sr. Nts., 11/15/10 3 $ 400,000 $ 412,000
- ----------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 740,000 418,100
- ----------------------------------------------------------------
Northwest Pipeline Corp.,
8.125% Sr. Nts., 3/1/10 200,000 223,000
- ----------------------------------------------------------------
Oregon Steel Mills, Inc.,
10% Sr. Nts., 7/15/09 1,100,000 970,750
- ----------------------------------------------------------------
Peabody Energy Corp., 6.875%
Sr. Unsec. Nts., Series B, 3/15/13 1,000,000 1,060,000
- ----------------------------------------------------------------
Steel Dynamics, Inc.,
9.50% Sr. Nts., 3/15/09 400,000 446,000
- ----------------------------------------------------------------
UCAR Finance, Inc.,
10.25% Sr. Nts., 2/15/12 400,000 462,000
- ----------------------------------------------------------------
United States Steel Corp.:
9.75% Sr. Nts., 5/15/10 600,000 678,000
10.75% Sr. Nts., 8/1/08 600,000 705,000
--------------
11,185,675
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS--1.5%
Abitibi-Consolidated, Inc.,
8.55% Nts., 8/1/10 300,000 334,590
- ----------------------------------------------------------------
Ainsworth Lumber Co. Ltd.:
12.50% Sr. Nts., 7/15/07 1,7 400,000 472,000
13.875% Sr. Sec. Nts., 7/15/07 250,000 288,750
- ----------------------------------------------------------------
Boise Cascade Co.:
6.50% Sr. Nts., 11/1/10 400,000 417,837
7% Sr. Nts., 11/1/13 650,000 676,718
- ----------------------------------------------------------------
Buckeye Technologies, Inc.,
8.50% Sr. Nts., 10/1/13 350,000 376,250
- ----------------------------------------------------------------
Doman Industries Ltd.,
8.75% Sr. Nts., 3/15/04 1,4,5 2,000,000 350,000
- ----------------------------------------------------------------
Georgia-Pacific Corp.:
8.125% Sr. Unsec. Nts., 5/15/11 2,200,000 2,431,000
9.375% Sr. Unsec. Nts., 2/1/13 1,600,000 1,848,000
- ----------------------------------------------------------------
Inland Fiber Group LLC,
9.625% Sr. Unsec. Nts., 11/15/07 4 300,000 157,500
- ----------------------------------------------------------------
Louisiana-Pacific Corp., 10.875%
Sr. Sub. Nts., 11/15/08 1 250,000 298,750
- ----------------------------------------------------------------
Tekni-Plex, Inc., 8.75%
Sr. Sec. Nts., 11/15/13 3 700,000 733,250
--------------
8,384,645
- ----------------------------------------------------------------
TELECOMMUNICATION SERVICES--8.4%
- ----------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.8%
360networks, Inc.:
13% Sr. Unsec. Nts., 5/1/08 1,4,5 [EUR] 500,000 63
13% Sr. Unsec. Nts., 5/1/08 1,4,5 400,000 40
- ----------------------------------------------------------------
American Tower Corp.,
9.375% Sr. Nts., 2/1/09 850,000 909,500
- ----------------------------------------------------------------
COLO.com, Inc., 13.875%
Sr. Nts., 3/15/10 1,4,5 504,605 3,785
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES Continued
Concentric Network Corp.,
Escrow Shares, 12/15/07 1,10 $ 800,000 $ --
- ----------------------------------------------------------------
Crown Castle International Corp.,
7.50% Sr. Nts., 12/1/13 3 700,000 707,000
- ----------------------------------------------------------------
Dex Media East LLC/Dex Media
East Finance Co., 9.875%
Sr. Unsec. Nts., 11/15/09 800,000 920,000
- ----------------------------------------------------------------
Dex Media West LLC/Dex
Media West Finance Co.:
8.50% Sr. Nts., 8/15/10 3 700,000 783,125
9.875% Sr. Sub. Nts., 8/15/13 3 1,200,000 1,401,000
- ----------------------------------------------------------------
Dex Media, Inc., 8% Nts., 11/15/13 3 1,500,000 1,582,500
- ----------------------------------------------------------------
Diamond Holdings plc,
9.125% Sr. Nts., 2/1/08 200,000 207,750
- ----------------------------------------------------------------
Focal Communications Corp.,
11.875% Sr. Unsec. Nts.,
Series B, 1/15/10 1,4 100,000 8,000
- ----------------------------------------------------------------
Intermedia Communications, Inc.,
0%/12.25% Sr. Disc. Nts.,
Series B, 3/1/09 4,5,6 200,000 75,000
- ----------------------------------------------------------------
IPC Acquisition Corp.,
11.50% Sr. Sub. Nts., 12/15/09 350,000 383,250
- ----------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08 6 200,000 189,500
9.125% Sr. Unsec. Nts., 5/1/08 1,000,000 915,000
- ----------------------------------------------------------------
MCI Communications Corp.,
7.75% Sr. Unsec. Debs., 3/23/25 4,5 600,000 486,000
- ----------------------------------------------------------------
Metromedia Fiber Network, Inc.,
10% Sr. Unsec. Nts.,
Series B, 11/15/08 1,4,5 600,000 39,000
- ----------------------------------------------------------------
Nextlink Communications, Inc.:
Escrow Shares, 10/1/07 1,10 500,000 --
Escrow Shares, 3/15/08 1,10 800,000 --
Escrow Shares, 11/15/08 1,10 200,000 --
Escrow Shares, 6/1/09 1,10 500,000 --
- ----------------------------------------------------------------
Qwest Capital Funding, Inc.,
5.875% Nts., 8/3/04 1,400,000 1,410,500
- ----------------------------------------------------------------
Qwest Corp.:
7.20% Unsec. Nts., 11/1/04 400,000 411,000
8.875% Nts., 3/15/12 3 1,600,000 1,844,000
- ----------------------------------------------------------------
Qwest Services Corp.,
13.50% Nts., 12/15/10 3 3,400,000 4,148,000
- ----------------------------------------------------------------
Sprint Capital Corp.,
8.375% Nts., 3/15/12 750,000 877,619
- ----------------------------------------------------------------
Telewest Communications plc:
0%/9.25% Sr. Disc. Nts.,
4/15/09 4,5,6 1,000,000 525,000
0%/9.875% Sr. Disc. Nts.,
4/15/09 4,5,6 [GBP] 500,000 456,489
11.25% Sr. Nts., 11/1/08 4,5 800,000 518,000
- ----------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts.,
12/1/07 1,4,5 400,000 --
14 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES Continued
Time Warner Telecom LLC/
Time Warner Telecom, Inc.,
9.75% Sr. Nts., 7/15/08 $ 1,500,000 $ 1,552,500
- ----------------------------------------------------------------
Time Warner Telecom, Inc.,
10.125% Sr. Unsec. Sub. Nts., 2/1/11 700,000 749,000
- ----------------------------------------------------------------
Viatel, Inc., 11.25%
Sr. Sec. Nts., 4/15/08 1,4,5 600,000 --
- ----------------------------------------------------------------
Winstar Communications, Inc.,
12.75% Sr. Nts., 4/15/10 1,4,5 1,000,000 100
--------------
21,102,721
- ----------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--4.6%
Alamosa Delaware, Inc.,
12.50% Sr. Unsec. Nts., 2/1/11 1,000,000 1,025,000
- ----------------------------------------------------------------
American Tower Escrow Corp.,
12.25% Sr. Sub. Disc. Nts., 8/1/08 9 1,400,000 973,000
- ----------------------------------------------------------------
CellNet Data Systems, Inc.,
Sr. Unsec. Disc. Nts., 10/1/07 1,4,5 1,834,000 --
- ----------------------------------------------------------------
Centennial Cellular Operating Co./
Centennial Communications Corp.,
10.125% Sr. Nts., 6/15/13 1,000,000 1,102,500
- ----------------------------------------------------------------
Crown Castle International Corp.,
10.75% Sr. Nts., 8/1/11 1,350,000 1,525,500
- ----------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr.
Deferred Coupon Nts.,
4/15/08 1,4,5,6 1,000,000 125,000
- ----------------------------------------------------------------
Dobson Communications Corp.:
8.875% Sr. Nts., 10/1/13 3 1,650,000 1,678,875
10.875% Sr. Unsec. Nts., 7/1/10 700,000 766,500
- ----------------------------------------------------------------
IPCS, Inc., 0%/14% Sr. Unsec. Disc.
Nts., 7/15/10 1,4,6 350,000 49,000
- ----------------------------------------------------------------
Leap Wireless International, Inc.:
0%/14.50% Sr. Unsec. Disc. Nts.,
4/15/10 1,4,5,6 400,000 50,000
12.50% Sr. Nts., 4/15/10 1,4 400,000 58,000
- ----------------------------------------------------------------
Nextel Communications, Inc.:
7.375% Sr. Nts., 8/1/15 490,000 529,200
9.375% Sr. Unsec. Nts., 11/15/09 5,050,000 5,529,750
9.50% Sr. Unsec. Nts., 2/1/11 1,200,000 1,362,000
- ----------------------------------------------------------------
Nextel Partners, Inc.:
11% Sr. Nts., 3/15/10 300,000 333,000
12.50% Sr. Nts., 11/15/09 1,162,000 1,353,730
- ----------------------------------------------------------------
Orbcomm Global LP,
Escrow Shares, 8/15/04 1,10 600,000 --
- ----------------------------------------------------------------
Rural Cellular Corp.:
9.625% Sr. Sub. Nts.,
Series B, 5/15/08 950,000 931,000
9.75% Sr. Sub. Nts., 1/15/10 500,000 491,250
9.875% Sr. Nts., 2/1/10 1,100,000 1,177,000
- ----------------------------------------------------------------
SBA Communications Corp.:
10.25% Sr. Unsec. Nts., 2/1/09 1,600,000 1,580,000
12% Sr. Unsec. Disc. Nts., 3/1/08 1 445,000 486,163
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES Continued
SBA Telecommunications, Inc./
SBA Communications Corp.,
0%/9.75% Sr. Disc. Nts.,
12/15/11 3,6 $ 1,500,000 $ 1,065,000
- ----------------------------------------------------------------
SpectraSite, Inc., 8.25%
Sr. Nts., 5/15/10 1 400,000 429,000
- ----------------------------------------------------------------
Triton PCS, Inc.:
8.50% Sr. Unsec. Nts., 6/1/13 800,000 864,000
8.75% Sr. Unsec. Sub. Nts., 11/15/11 300,000 297,000
9.375% Sr. Unsec. Sub. Nts., 2/1/11 300,000 307,500
- ----------------------------------------------------------------
US Unwired, Inc., 0%/13.375%
Sr. Unsec. Sub. Disc. Nts.,
Series B, 11/1/09 6 800,000 584,000
- ----------------------------------------------------------------
Western Wireless Corp., 9.25%
Sr. Unsec. Nts., 7/15/13 900,000 954,000
--------------
25,626,968
- ----------------------------------------------------------------
UTILITIES--8.7%
- ----------------------------------------------------------------
ELECTRIC UTILITIES--4.0%
AES Corp. (The):
8.75% Sr. Sec. Nts., 5/15/13 3 2,200,000 2,469,500
8.75% Sr. Unsec. Unsub. Nts., 6/15/08 451,000 485,953
8.875% Sr. Unsec. Nts., 2/15/11 144,000 157,680
9.375% Sr. Unsec. Nts., 9/15/10 252,000 280,665
9.50% Sr. Unsec. Nts., 6/1/09 58,000 64,598
10% Sec. Nts., 7/15/05 3 583,574 596,705
- ----------------------------------------------------------------
AES Drax Holdings Ltd., 10.41%
Sr. Sec. Sub. Nts., Series B,
12/31/20 1,4 300,000 261,000
- ----------------------------------------------------------------
Allegheny Energy, Inc., 7.75%
Nts., 8/1/05 300,000 304,125
- ----------------------------------------------------------------
Caithness Coso Funding Corp.,
9.05% Sr. Sec. Nts., Series B,
12/15/09 418,500 456,165
- ----------------------------------------------------------------
Calpine Corp.:
7.625% Sr. Nts., 4/15/06 550,000 489,500
8.25% Sr. Unsec. Nts., 8/15/05 400,000 389,000
8.50% Sr. Sec. Nts., 7/15/10 3 3,400,000 3,332,000
8.625% Sr. Nts., 8/15/10 200,000 157,000
8.75% Sr. Nts., 7/15/07 800,000 660,000
8.75% Sr. Sec. Nts., 7/15/13 3 950,000 931,000
9.875% Sr. Sec. Nts., 12/1/11 3 1,000,000 1,032,500
- ----------------------------------------------------------------
CMS Energy Corp.:
7.50% Sr. Nts., 1/15/09 300,000 310,500
7.75% Sr. Nts., 8/1/10 3 400,000 422,500
9.875% Sr. Unsec. Nts., 10/15/07 1,400,000 1,568,000
- ----------------------------------------------------------------
CMS Energy X-TRAS Pass-Through
Trust I, 7% Sr. Unsec. Pass-Through
Certificates, 1/15/05 500,000 515,000
- ----------------------------------------------------------------
Edison Mission Energy, 10%
Sr. Unsec. Nts., 8/15/08 200,000 208,500
- ----------------------------------------------------------------
ESI Tractebel Acquisition Corp.,
7.99% Sec. Bonds, Series B, 12/30/11 922,000 977,320
- ----------------------------------------------------------------
Mirant Americas Generation LLC,
8.30% Sr. Unsec. Nts., 5/1/11 4 200,000 170,000
15 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS CONTINUED
- --------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
ELECTRIC UTILITIES Continued
MSW Energy Holdings LLC/MSW
Energy Finance Co., Inc.:
7.375% Sr. Sec. Nts., 9/1/10 3 $ 700,000 $ 735,000
8.50% Sr. Sec. Nts., 9/1/10 3 400,000 438,000
- ----------------------------------------------------------------
NRG Energy, Inc., 8% Sr. Sec. Nts.,
12/15/13 3 1,600,000 1,690,000
- ----------------------------------------------------------------
PG&E Corp., 6.875% Sr. Sec.
Nts., 7/15/08 3 800,000 870,000
- ----------------------------------------------------------------
Reliant Resources, Inc.:
9.25% Sr. Sec. Nts., 7/15/10 3 1,200,000 1,278,000
9.50% Sr. Sec. Nts., 7/15/13 3 700,000 752,500
--------------
22,002,711
- ----------------------------------------------------------------
GAS UTILITIES--2.2%
AmeriGas Partners LP/AmeriGas
Eagle Finance Corp., 8.875% Sr.
Unsec. Nts., Series B, 5/20/11 11 1,400,000 1,547,000
- ----------------------------------------------------------------
ANR Pipeline Co., 8.875%
Sr. Nts., 3/15/10 400,000 452,000
- ----------------------------------------------------------------
El Paso Corp., 7.875%
Sr. Unsec. Nts., 6/15/12 1,200,000 1,140,000
- ----------------------------------------------------------------
El Paso Energy Corp.,
7.625% Nts., 7/15/11 800,000 745,000
- ----------------------------------------------------------------
SEMCO Energy, Inc.:
7.125% Sr. Nts., 5/15/08 400,000 418,500
7.75% Sr. Nts., 5/15/13 400,000 422,500
- ----------------------------------------------------------------
Southern Natural Gas Co.:
7.35% Nts., 2/15/31 600,000 595,500
8% Sr. Unsub. Nts., 3/1/32 900,000 933,750
8.875% Sr. Nts., 3/15/10 700,000 791,000
- ----------------------------------------------------------------
Tennessee Gas Pipeline Co.,
7.50% Bonds, 4/1/17 2,365,000 2,453,688
- ----------------------------------------------------------------
Williams Cos., Inc. (The),
7.125% Nts., 9/1/11 2,850,000 3,028,125
--------------
12,527,063
- ----------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--2.4%
AES Red Oak LLC, 8.54% Sr. Sec.
Bonds, Series A, 11/30/19 1,057,581 1,147,476
- ----------------------------------------------------------------
Aquila, Inc., 7% Sr.
Unsec. Nts., 7/15/04 300,000 301,500
- ----------------------------------------------------------------
Consumers Energy Co.:
6.25% Nts., 9/15/06 300,000 324,130
6.375% Sr. Sec. Nts., 2/1/08 450,000 490,094
7.375% Nts., 9/15/23 350,000 358,843
- ----------------------------------------------------------------
Dynegy Holdings, Inc.:
6.875% Sr. Unsec. Unsub.
Nts., 4/1/11 3,540,000 3,278,925
8.75% Sr. Nts., 2/15/12 600,000 608,250
10.125% Sr. Sec. Nts., 7/15/13 3 1,800,000 2,079,000
- ----------------------------------------------------------------
El Paso Production Holding Co.,
7.75% Sr. Nts., 6/1/13 3 1,100,000 1,089,000
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER Continued
Mirant Mid-Atlantic LLC, 8.625%
Sec. Pass-Through Certificates,
Series A, 6/30/12 1 $ 868,851 $ 873,739
- ----------------------------------------------------------------
Transcontinental Gas Pipe
Line Corp.:
6.125% Nts., 1/15/05 200,000 204,250
8.875% Sr. Unsub. Nts.,
Series B, 7/15/12 200,000 237,500
- ----------------------------------------------------------------
Williams Cos., Inc. (The):
8.625% Sr. Nts., 6/1/10 1,350,000 1,522,109
9.25% Sr. Unsec. Unsub. Nts., 3/15/04 700,000 712,250
- ----------------------------------------------------------------
Williams Holdings of Delaware, Inc.,
6.50% Nts., 12/1/08 300,000 311,625
--------------
13,538,691
- ----------------------------------------------------------------
WATER UTILITIES--0.1%
National Waterworks, Inc., 10.50%
Sr. Unsec. Sub. Nts., Series B,
12/1/12 1 300,000 336,750
--------------
Total Corporate Bonds and Notes
(Cost $393,156,285) 413,547,332
SHARES
- ----------------------------------------------------------------
PREFERRED STOCKS--0.7%
- ----------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr.
Exchangeable, Non-Vtg. 1,5,7 13,764 138
- ----------------------------------------------------------------
Dobson Communications Corp.,
6% Cv., Series F (converts into
Dobson Communications Corp.,
Cl. A common stock), Non-Vtg. 800 144,000
- ----------------------------------------------------------------
e.spire Communications, Inc.,
12.75% Jr. Redeemable, Non-Vtg. 1,5,7 498 50
- ----------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75%
Cum. Exchangeable, Series B,
Non-Vtg. 1,5 8,000 586,000
- ----------------------------------------------------------------
ICG Holdings, Inc., 14.25%
Exchangeable, Non-Vtg. 1,5,7 342 --
- ----------------------------------------------------------------
McLeodUSA, Inc., 2.50% Cv., Series A 5 3,258 24,826
- ----------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25%
Sr. Redeemable Exchangeable,
Non-Vtg. 1,5,7 7,274 --
- ----------------------------------------------------------------
NTL Europe, Inc., 10% Cum.,
Series A, Non-Vtg. 23 189
- ----------------------------------------------------------------
Pacific & Atlantic Holdings, Inc.,
7.50% Cum. Cv., Series A 1,5,7 19,640 39,280
- ----------------------------------------------------------------
Paxson Communications Corp.:
14.25% Cum. 5,7 -- 3,192
14.25% Cum. Jr. Exchangeable,
Non-Vtg. 7 80 738,000
- ----------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum.,
Series B, Non-Vtg. 7 1,177 921,003
- ----------------------------------------------------------------
Sovereign Real Estate Investment
Trust, 12% Non-Cum., Series A 1,5 10,000 1,497,500
16 | OPPENHEIMER HIGH INCOME FUND/VA
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------
PREFERRED STOCKS Continued
XO Communications, Inc., 13.50%
Sr., Series E, Non-Vtg. 1,5,7 1 $ --
--------------
Total Preferred Stocks
(Cost $5,061,967) 3,954,178
- ----------------------------------------------------------------
COMMON STOCKS--1.0%
Charles River Laboratories
International, Inc. 5 8,360 286,999
- ----------------------------------------------------------------
Chesapeake Energy Corp. 100,909 1,370,344
- ----------------------------------------------------------------
Classic Cable, Inc. 5 2,645 --
- ----------------------------------------------------------------
Covad Communications Group, Inc. 5 20,660 74,376
- ----------------------------------------------------------------
Dobson Communications
Corp., Cl. A 5 51,491 270,637
- ----------------------------------------------------------------
Equinix, Inc. 5 16,434 463,439
- ----------------------------------------------------------------
Geotek Communications, Inc.,
Liquidating Trust 1,5,10 226 --
- ----------------------------------------------------------------
Globix Corp. 5 11,467 45,868
- ----------------------------------------------------------------
Gulfstream Holding, Inc. 1,5 56 --
- ----------------------------------------------------------------
Horizon Natural Resources Co. 1,5 20,000 --
- ----------------------------------------------------------------
ICO Global Communication
Holdings Ltd 1,5 42,107 21,475
- ----------------------------------------------------------------
Manitowoc Co., Inc. (The) 1,039 32,417
- ----------------------------------------------------------------
Microcell Telecommunications, Inc. 5 1,861 24,828
- ----------------------------------------------------------------
Microcell
Telecommunications, Inc., Cl. A 5 15 210
- ----------------------------------------------------------------
Microcell
Telecommunications, Inc., Cl. B 5 1,850 24,753
- ----------------------------------------------------------------
NTL, Inc. 5 18,902 1,318,415
- ----------------------------------------------------------------
Orbital Sciences Corp. 5 2,235 26,865
- ----------------------------------------------------------------
Pioneer Cos., Inc. 5 20,688 168,607
- ----------------------------------------------------------------
Polymer Group, Inc., Cl. A 5 20,634 154,755
- ----------------------------------------------------------------
Prandium, Inc. 5 62,829 2,513
- ----------------------------------------------------------------
Southern Pacific Funding Corp.,
Liquidating Trust 1,10 251,604 --
- ----------------------------------------------------------------
Sterling Chemicals, Inc. 5 380 9,975
- ----------------------------------------------------------------
TVMAX Holdings, Inc. 1,5 7,500 18,750
- ----------------------------------------------------------------
UnitedGlobalCom, Inc., Cl. A 5 112,362 952,830
- ----------------------------------------------------------------
Viatel Holding Ltd. (Bermuda) 1,5 2,349 5,168
- ----------------------------------------------------------------
WRC Media Corp. 1,5 1,353 27
- ----------------------------------------------------------------
XO Communications, Inc. 5 2,646 15,215
--------------
Total Common Stocks
(Cost $5,822,865) 5,288,466
UNITS
- ----------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.1%
American Tower Corp. Wts.,
Exp. 8/1/08 1,5 1,400 175,700
MARKET VALUE
UNITS SEE NOTE 1
- ----------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES Continued
ASAT Finance LLC Wts.,
Exp. 11/1/06 1,5 500 $ 563
- ----------------------------------------------------------------
Chesapeake Energy Corp. Wts.,
Exp. 9/1/04 5 2,671 298
- ----------------------------------------------------------------
Citigroup, Inc. Litigation Wts., Exp.
12/31/50 5 15,626 16,564
- ----------------------------------------------------------------
COLO.com, Inc. Wts., Exp. 3/15/10 1,5 600 6
- ----------------------------------------------------------------
Concentric Network Corp.
Wts., Exp. 12/15/07 1,5 750 --
- ----------------------------------------------------------------
Covergent Communications, Inc.
Wts., Exp. 4/1/08 1,5 2,000 20
- ----------------------------------------------------------------
Decrane Aircraft Holdings, Inc.
Wts., Exp. 9/30/08 1,5 1,750 --
- ----------------------------------------------------------------
Diva Systems Corp. Wts., Exp. 3/1/08 1,5 1,500 15
- ----------------------------------------------------------------
e.spire Communications, Inc. Wts.,
Exp. 11/1/05 1,5 475 5
- ----------------------------------------------------------------
Horizon PCS, Inc. Wts., Exp. 10/1/10 1,5 1,300 --
- ----------------------------------------------------------------
ICG Communications, Inc. Wts.,
Exp. 9/15/05 1,5 5,940 59
- ----------------------------------------------------------------
ICO Global Communication
Holdings Ltd. Wts.:
Exp. 5/16/06 1,5 10,561 53
Exp. 5/16/06 1,5 16 --
- ----------------------------------------------------------------
Imperial Credit Industries, Inc.
Wts., Exp. 1/31/08 1,5 5,148 --
- ----------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07 1,5 765 --
- ----------------------------------------------------------------
IPCS, Inc. Wts., Exp. 6/15/10 1,5 750 8
- ----------------------------------------------------------------
Leap Wireless International, Inc.
Wts., Exp. 4/15/10 1,5 550 --
- ----------------------------------------------------------------
Long Distance International, Inc.
Wts., Exp. 4/13/08 1,5 800 --
- ----------------------------------------------------------------
Loral Space & Communications Ltd.
Wts., Exp. 1/15/07 1,5 800 8
- ----------------------------------------------------------------
McLeodUSA, Inc. Wts., Exp. 4/16/07 5 7,220 3,682
- ----------------------------------------------------------------
Microcell Telecommunications, Inc.:
Cl. A Wts., Exp. 5/1/05 5 687 1,047
Cl. B Wts., Exp. 5/1/08 5 1,145 2,437
- ----------------------------------------------------------------
Millenium Seacarriers, Inc. Wts.,
Exp. 7/15/05 1,5 1,500 15
- ----------------------------------------------------------------
Ntelos, Inc. Wts., Exp. 8/15/10 1,5 1,000 500
- ----------------------------------------------------------------
Pathmark Stores, Inc. Wts.,
Exp. 9/19/10 5 20,000 18,800
- ----------------------------------------------------------------
Protection One, Inc.
Wts., Exp. 6/30/05 1,5 1,600 --
- ----------------------------------------------------------------
Real Time Data Co. Wts.,
Exp. 5/31/04 1,5 121,440 --
- ----------------------------------------------------------------
Republic Technologies International
LLC Wts., Exp. 7/15/09 1,5 500 --
- ----------------------------------------------------------------
Sterling Chemicals, Inc. Wts.,
Exp. 12/19/08 1,5 619 --
17 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS CONTINUED
- --------------------------------------------------------------------------------
MARKET VALUE
UNITS SEE NOTE 1
- ----------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES Continued
Telergy, Inc. Wts., Exp. 9/25/10 1,5 2,019 $ --
- ----------------------------------------------------------------
Telus Corp. Wts., Exp. 9/15/05 5 1,079 8,816
- ----------------------------------------------------------------
Transocean, Inc. Wts., Exp. 5/1/09 3,5 1,000 190,125
- ----------------------------------------------------------------
XO Communications, Inc.:
Cl. A Wts., Exp. 1/16/10 5 5,300 10,335
Cl. B Wts., Exp. 1/16/10 5 3,975 6,758
Cl. C Wts., Exp. 1/16/10 5 3,975 4,373
--------------
Total Rights, Warrants and
Certificates (Cost $173,416) 440,187
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------
STRUCTURED NOTES--6.6%
Bear Stearns Cos., Inc. (The),
High Yield Index Linked Nts.:
5%, 3/11/04 $ 3,000,000 3,162,600
8.65%, 5/31/04 3,000,000 3,066,900
- ----------------------------------------------------------------
JPMorgan Chase Bank,
TRAC-X NA High Yield T3 Credit
Default Swap Bonds, 8%, 3/25/09 3 28,900,000 30,308,875
--------------
Total Structured Notes (Cost $34,900,000) 36,538,375
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--14.1% 12
Undivided interest of 4.91% 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
$78,700,979 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 $78,697,000) $78,697,000 $ 78,697,000
- ----------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $525,931,260) 98.1% 545,903,542
- ----------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.9 10,561,839
----------------------------
NET ASSETS 100.0% $556,465,381
============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
EUR Euro
GBP British Pound Sterling
1. Identifies issues considered to be illiquid or restricted. See Note 7 of
Notes to Financial Statements.
2. Represents the current interest rate for a variable or increasing rate
security.
3. 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 $105,538,588 or 18.97% of the Fund's net
assets as of December 31, 2003.
4. Issue is in default. See Note 1 of Notes to Financial Statements.
5. Non-income producing security.
6. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
7. Interest or dividend is paid-in-kind.
8. 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.
9. Zero coupon bond reflects effective yield on the date of purchase.
10. Received as the result of issuer reorganization. Currently has minimal
market value.
11. Securities with an aggregate market value of $243,100 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
12. 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.
18 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (including cost and market value of $78,697,000 in repurchase agreements)
(including securities loaned of approximately $2,143,000) (cost $525,931,260)--see accompanying statement $ 545,903,542
- --------------------------------------------------------------------------------------------------------------------------
Cash 665,365
- --------------------------------------------------------------------------------------------------------------------------
Collateral for securities loaned 2,164,744
- --------------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 8,962,318
Shares of beneficial interest sold 1,660,275
Futures margins 906
Other 4,827
--------------
Total assets 559,361,977
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Return of collateral for securities loaned 2,164,744
- --------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 621,566
Distribution and service plan fees 40,110
Shareholder reports 29,620
Trustees' compensation 3,596
Transfer and shareholder servicing agent fees 1,664
Other 35,296
--------------
Total liabilities 2,896,596
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 556,465,381
==============
- --------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Par value of shares of beneficial interest $ 64,644
- --------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital 612,593,582
- --------------------------------------------------------------------------------------------------------------------------
Accumulated net investment income 33,660,739
- --------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (109,833,855)
- --------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities denominated
in foreign currencies 19,980,271
--------------
NET ASSETS $ 556,465,381
==============
- --------------------------------------------------------------------------------------------------------------------------
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 $480,111,635
and 55,747,289 shares of beneficial interest outstanding) $8.61
- --------------------------------------------------------------------------------------------------------------------------
Service shares:
Net asset value, redemption price per share and offering price per share (based
on net assets of $76,353,746
and 8,896,395 shares of beneficial interest outstanding) $8.58
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $39,300,227
- ------------------------------------------------------------------------------------------------------
Dividends 296,800
- ------------------------------------------------------------------------------------------------------
Portfolio lending fees 40,956
------------
Total investment income 39,637,983
- ------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 3,196,862
- ------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Service shares 102,739
- ------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Non-Service shares 10,394
Service shares 10,845
- ------------------------------------------------------------------------------------------------------
Shareholder reports 48,921
- ------------------------------------------------------------------------------------------------------
Trustees' compensation 17,679
- ------------------------------------------------------------------------------------------------------
Custodian fees and expenses 8,998
- ------------------------------------------------------------------------------------------------------
Other 45,981
------------
Total expenses 3,442,419
Less reduction to custodian expenses (2,707)
------------
Net expenses 3,439,712
- ------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 36,198,271
- ------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (7,092,371)
Closing of futures contracts (142,823)
Foreign currency transactions 3,861,537
------------
Net realized loss (3,373,657)
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 59,477,154
Translation of assets and liabilities denominated in foreign currencies 892,393
Futures contracts (104,277)
------------
Net change in unrealized appreciation (depreciation) 60,265,270
- ------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $93,089,884
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2003 2002
- ----------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 36,198,271 $ 28,331,405
- ----------------------------------------------------------------------------------------------------------------
Net realized loss (3,373,657) (54,882,881)
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 60,265,270 18,653,181
-----------------------------
Net increase (decrease) in net assets resulting from operations 93,089,884 (7,898,295)
- ----------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Non-Service shares (26,819,814) (35,408,403)
Service shares (1,672,018) (306)
- ----------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from beneficial interest transactions:
Non-Service shares 76,658,765 44,572,082
Service shares 51,833,851 17,318,687
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase 193,090,668 18,583,765
- ----------------------------------------------------------------------------------------------------------------
Beginning of period 363,374,713 344,790,948
-----------------------------
End of period [including accumulated net investment
income of $33,660,739 and $25,973,552, respectively] $556,465,381 $363,374,713
=============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER HIGH INCOME 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 $7.51 $8.54 $9.27 $10.72 $11.02
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .60 .58 .84 1.00 1.01
Net realized and unrealized gain (loss) 1.09 (.76) (.62) (1.36) (.55)
-------------------------------------------------------------
Total from investment operations 1.69 (.18) .22 (.36) .46
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.59) (.85) (.95) (1.09) (.76)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.61 $7.51 $8.54 $ 9.27 $10.72
=============================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 23.96% (2.40)% 1.97% (3.74)% 4.29%
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $480,112 $345,670 $344,788 $333,533 $340,829
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $396,858 $335,894 $347,723 $329,260 $340,519
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 8.31% 8.29% 9.94% 10.47% 9.61%
Total expenses 0.76% 3 0.77% 3 0.79% 3 0.79% 3 0.75% 3
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 48% 75% 46% 31% 33%
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.
22 | OPPENHEIMER HIGH INCOME FUND/VA
SERVICE SHARES YEAR ENDED DECEMBER 31 2003 2002 2001 1
- --------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $7.49 $ 8.54 $8.40
- --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .61 .88 .20
Net realized and unrealized gain (loss) 1.06 (1.08) (.06)
----------------------------------
Total from investment operations 1.67 (.20) .14
- --------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.58) (.85) --
- --------------------------------------------------------------------------------------------
Net asset value, end of period $8.58 $ 7.49 $8.54
==================================
- --------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 23.79% (2.67)% 1.67%
- --------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $76,354 $17,705 $3
- --------------------------------------------------------------------------------------------
Average net assets (in thousands) $41,246 $ 5,602 $2
- --------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 7.84% 8.91% 12.51%
Total expenses 1.04% 4 1.02% 4,5 0.96% 4
- --------------------------------------------------------------------------------------------
Portfolio turnover rate 48% 75% 46%
1. For the period from September 18, 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%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 |OPPENHEIMER HIGH INCOME FUND/VA
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer High Income 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 from investment
in high-yield fixed-income 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 6.6% of the
Fund's net assets and resulted in unrealized gains of $1,638,375. The Fund also
hedges a portion of the foreign currency exposure generated by these securities,
as discussed in Note 5.
- --------------------------------------------------------------------------------
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 $10,090,218, representing 1.81% 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.
24 |OPPENHEIMER HIGH INCOME FUND/VA
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.
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 TAX PURPOSES
----------------------------------------------------------------------------
$34,835,883 $-- $107,217,947 $17,364,325
1. As of December 31, 2003, the Fund had $107,195,065 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 $ 3,401,577
2007 4,933,260
2008 11,572,833
2009 22,696,701
2010 56,061,391
2011 8,529,303
------------
Total $107,195,065
============
2. During the fiscal years ended December 31, 2003 and December 31, 2002, the
Fund did not utilize any capital loss carryforwards.
3. As of December 31, 2003, the Fund had $22,882 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2012.
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.
25 | OPPENHEIMER HIGH INCOME FUND/VA
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
REDUCTION TO REDUCTION TO
ACCUMULATED NET ACCUMULATED NET REALIZED
INVESTMENT INCOME LOSS ON INVESTMENTS
----------------------------------------------
$19,252 $19,252
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 $28,491,832 $35,408,709
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 $528,541,326
Federal tax cost of other investments 782,016
------------
Total federal tax cost $529,323,342
============
Gross unrealized appreciation $ 42,939,083
Gross unrealized depreciation (25,574,758)
------------
Net unrealized appreciation $ 17,364,325
============
- --------------------------------------------------------------------------------
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.
26 | OPPENHEIMER HIGH INCOME 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 28,774,062 $ 229,684,313 22,935,486 $ 176,263,288
Dividends and/or distributions reinvested 3,719,807 26,819,814 4,568,826 35,408,403
Redeemed (22,801,608) (179,845,362) (21,816,082) (167,099,609)
--------------------------------------------------------------------
Net increase 9,692,261 $ 76,658,765 5,688,230 $ 44,572,082
====================================================================
- -----------------------------------------------------------------------------------------------------------------
SERVICE SHARES
Sold 13,073,333 $ 104,602,083 2,741,181 $ 20,012,961
Dividends and/or distributions reinvested 232,224 1,672,018 39 306
Redeemed (6,772,325) (54,440,250) (378,418) (2,694,580)
--------------------------------------------------------------------
Net increase 6,533,232 $ 51,833,851 2,362,802 $ 17,318,687
====================================================================
- --------------------------------------------------------------------------------
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
$259,809,157 and $176,211,604, 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% on 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
$20,025 to 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 Investments.
27 | OPPENHEIMER HIGH INCOME FUND/VA
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of December 31, 2003, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
"financial futures" or debt securities "interest rate futures" in order to gain
exposure to or protection from changes in market value of 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
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:
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATES CONTRACTS DECEMBER 31, 2003 APPRECIATION
- ---------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Treasury Nts., 5 yr. 3/22/04 6 $669,750 $3,681
U.S. Treasury Nts., 10 yr. 3/22/04 1 112,266 2,199
------
$5,880
======
28 | OPPENHEIMER HIGH INCOME FUND/VA
- --------------------------------------------------------------------------------
7. 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 $41,523,423,
which represents 7.50% of the Fund's net assets, of which zero 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 $ -- $-- $ --
Real Time Data Co. Wts. 6/30/99 1,214 -- 1,214
- --------------------------------------------------------------------------------
8. 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 $2,143,000. Cash of
$2,164,744 was received as collateral for the loans, and has been invested in
approved instruments.
- --------------------------------------------------------------------------------
9. 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 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.
29 | OPPENHEIMER HIGH INCOME FUND/VA
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER HIGH INCOME FUND/VA:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer High Income 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 High Income 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
30 | OPPENHEIMER HIGH INCOME 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 $0.5855 and $0.5808 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.
Dividends, if any, paid by the Fund during the fiscal year ended December 31,
2003 which are not designated as capital gain distributions should be multiplied
by 0.16% to arrive at the amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES 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.
31 | OPPENHEIMER HIGH INCOME 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 1990) 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.
32 | OPPENHEIMER HIGH INCOME FUND/VA
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.
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.
33 | OPPENHEIMER HIGH INCOME FUND/VA
TRUSTEES AND OFFICERS UNAUDITED / CONTINUED
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OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. STEINMETZ,
KOURKOULAKOS 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 2003)
Age: 45
DIMITRIOS KOURKOULAKOS, Vice President of the Manager (since December 2001); an officer of 3 portfolios in the
Vice President and Portfolio OppenheimerFunds complex; formerly a High Yield Analyst (1998 - 2001) and a Securities Analyst
Manager (since 2002) (1995 - 1998) of the Manager.
Age: 37
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.
34 | OPPENHEIMER HIGH INCOME 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 $15,500 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 $0 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 $86,600 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)