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
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: December 31
Date of reporting period: January 1, 2004 - December 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Although the Fund benefited to a
substantial degree from the high-yield bond market's ongoing rally in 2004, the
Fund's return lagged that of its benchmark the Merrill Lynch High Yield Master
Index, primarily because we began to adopt a more defensive investment posture
as the bull market aged and yield differences between high-yield corporate bonds
and comparable-maturity U.S. Treasury securities narrowed toward historical
lows. The Fund's relatively conservative positioning during the fall prevented
it from participating fully in the later stages of the bond market rally, which
was led by lower-rated, more speculative credits.
The Fund was positioned at the start of the reporting period to benefit
from strength among lower-rated bonds, including those in the "triple-C" range
where performance had been strongest. In the spring, however, we began to detect
a shift in market sentiment toward corporate bonds with higher credit ratings,
such as those rated "single B" and "double-B." Accordingly, we began to
intensify the Fund's focus on relatively higher-rated credits. While this change
benefited the Fund's results during periods of heightened volatility in the
spring and summer, it hindered relative performance in the fall, when investors'
focus shifted back to triple-C credits. In our view, because the yield
differences between highly-rated and lower-rated bonds have become narrower than
historical norms, the market's preference for lower-rated credits is likely to
be temporary, and we generally have maintained the Fund's emphasis on somewhat
better-quality high-yield securities. In addition, to guard against the
potentially adverse effects of higher interest rates, since last spring we have
tended to emphasize relatively short-term, high-coupon securities.
Traditionally, securities with these characteristics have held more of their
value during market declines. In hindsight, we may have adopted these strategies
too early, because they prevented the Fund from participating more fully in the
market rally through year-end.
During the first half of the reporting period, the Fund received
particularly positive contributions to performance from its investment in bonds
issued by companies in the cable television and telecommunications services
areas. Later, when commodity prices rose, the Fund enjoyed strong results from
the energy and basic materials sectors, including chemical producers, steel
makers and general manufacturers. The Fund also benefited throughout the year
from its relatively light exposure to the poor-performing airline industry,
which continued to be hurt by rising commodity prices.
The Fund's holdings of bonds from electric utilities fared relatively
poorly when mild weather reduced demand for air conditioning in the summer and
heating in the late fall. Weather-related factors also undermined returns from a
limited number of holdings in the amusement parks and garden-hose manufacturing
industries.
As of the end of the reporting period, we have maintained the Fund's
relatively conservative positioning, with an emphasis on relatively
higher-quality, higher-coupon, shorter-term securities. What's more, we
currently believe that selectivity remains a key to successful investing in the
high-yield bond market, and we continue to carefully consider the credit quality
of existing and potential holdings.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each share class of the Fund
held until December 31, 2004. In the case of Non-Service shares, performance is
measured over a ten-year period. In the case of Service shares, performance is
measured from inception of the class on 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 graph assumes that all dividends and capital gains distributions were
reinvested in additional shares.
The Fund's performance is compared to the performance of the 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, and none of the data in the graphs
shows the effect of taxes. The Fund's performance reflects the effects of the
Fund's business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the index.
4 | OPPENHEIMER HIGH INCOME FUND/VA
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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer High Income Merrill Lynch High
Fund/VA (Non-Service) Yield Master Index
12/31/1994 10,000 10,000
03/31/1995 10,440 10,603
06/30/1995 11,110 11,276
09/30/1995 11,528 11,605
12/31/1995 12,037 11,991
03/31/1996 12,479 12,166
06/30/1996 12,795 12,333
09/30/1996 13,335 12,814
12/31/1996 13,873 13,318
03/31/1997 13,929 13,457
06/30/1997 14,529 14,096
09/30/1997 15,328 14,648
12/31/1997 15,568 15,026
03/31/1998 16,182 15,445
06/30/1998 16,309 15,703
09/30/1998 15,147 15,142
12/31/1998 15,615 15,576
03/31/1999 16,163 15,745
06/30/1999 16,209 15,850
09/30/1999 16,026 15,652
12/31/1999 16,285 15,821
03/31/2000 16,064 15,536
06/30/2000 16,183 15,633
09/30/2000 16,386 15,845
12/31/2000 15,675 15,221
03/31/2001 16,340 16,167
06/30/2001 15,984 15,962
09/30/2001 15,067 15,317
12/31/2001 15,984 16,166
03/31/2002 16,079 16,482
06/30/2002 15,414 15,470
09/30/2002 14,854 14,982
12/31/2002 15,601 15,981
03/31/2003 16,442 17,084
06/30/2003 17,902 18,736
09/30/2003 18,373 19,210
12/31/2003 19,339 20,332
03/31/2004 19,636 20,786
06/30/2004 19,660 20,603
09/30/2004 20,331 21,559
12/31/2004 21,073 22,520
AVERAGE ANNUAL TOTAL RETURNS OF NON-SERVICE SHARES OF THE FUND AT 12/31/2004
1-YEAR 8.97% 5-YEAR 5.29% 10-YEAR 7.74%
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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer High Income Merrill Lynch High
Fund/VA (Service) Yield 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
03/31/2004 12,437 13,570
06/30/2004 12,437 13,451
09/30/2004 12,862 14,075
12/31/2004 13,319 14,703
AVERAGE ANNUAL TOTAL RETURNS OF SERVICE SHARES OF THE FUND AT 12/31/2004
1-YEAR 8.73% 5-Year N/A Since Inception (9/18/01) 9.11%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, CALL US AT 1.800.981.2871. THE FUND'S
TOTAL RETURNS SHOULD NOT BE EXPECTED TO BE THE SAME AS THE RETURNS OF OTHER
FUNDS, WHETHER OR NOT BOTH FUNDS HAVE THE SAME PORTFOLIO MANAGERS AND/OR SIMILAR
NAMES. THE FUND'S TOTAL RETURNS DO NOT INCLUDE THE CHARGES ASSOCIATED WITH THE
SEPARATE ACCOUNT PRODUCTS THAT OFFER THIS FUND. SUCH PERFORMANCE WOULD HAVE BEEN
LOWER IF SUCH CHARGES WERE TAKEN INTO ACCOUNT.
5 | OPPENHEIMER HIGH INCOME FUND/VA
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include redemption fees, if any; and (2) ongoing
costs, including management fees; distribution and service fees; and other Fund
expenses. These examples are intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended December 31, 2004.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any charges associated with the separate
accounts that offer this Fund. Therefore, the "hypothetical" lines of the table
are useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these separate
account charges were included, your costs would have been higher.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(7/1/04) (12/31/04) DECEMBER 31, 2004
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Non-Service shares Actual $ 1,000.00 $ 1,071.90 $ 3.91
- --------------------------------------------------------------------------------
Non-Service shares Hypothetical 1,000.00 1,021.37 3.82
- --------------------------------------------------------------------------------
Service shares Actual 1,000.00 1,070.90 5.27
- --------------------------------------------------------------------------------
Service shares Hypothetical 1,000.00 1,020.06 5.14
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/366
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended December 31, 2004 are as follows:
CLASS EXPENSE RATIOS
- ------------------------------------
Non-Service shares 0.75%
- -------------------------------------
Service shares 1.01
6 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS December 31, 2004
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PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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ASSET-BACKED SECURITIES--0.3%
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Consumer Credit Reference Index
Securities Program, Credit Card
Asset-Backed Certificates,
Series 2002-B, Cl. FX, 10.421%,
3/22/07 1 $ 500,000 $ 514,941
- --------------------------------------------------------------------------------
Norse CBO Ltd., 9.342% Sub. Bonds,
Series 1A, Cl. C2, 8/13/10 1 1,500,000 1,470,000
-------------
Total Asset-Backed Securities
(Cost $1,997,606) 1,984,941
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MORTGAGE-BACKED OBLIGATIONS--0.1%
- --------------------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1, Cl. D,
7.863%, 4/29/39 1,2 300,000 305,672
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Salomon Brothers Mortgage Securities
VII, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-B, Cl. 1,
4.357%, 4/25/26 1,2 21,630 19,967
-------------
Total Mortgage-Backed Obligations
(Cost $297,992) 325,639
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CORPORATE BONDS AND NOTES--77.9%
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CONSUMER DISCRETIONARY--23.0%
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AUTO COMPONENTS--2.5%
ArvinMeritor, Inc., 8.75% Sr. Unsec
Unsub. Nts., 3/1/12 1,800,000 2,088,000
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Collins & Aikman Floorcoverings, Inc.,
9.75% Sr. Sub. Nts., Series B, 2/15/10 800,000 864,000
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Cooper Standard Automotive Group:
7% Sr. Nts., 12/15/12 3 180,000 183,600
8.375% Sr. Sub. Nts., 12/15/14 3 710,000 711,775
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Dana Corp., 10.125% Nts., 3/15/10 1 500,000 566,790
- --------------------------------------------------------------------------------
Dura Operating Corp.:
8.625% Sr. Nts., Series B, 4/15/12 1,000,000 1,045,000
9% Sr. Sub. Nts., Series B, 5/1/09 [EUR] 100,000 129,129
9% Sr. Unsec. Sub. Nts., Series D, 5/1/09 200,000 199,000
- --------------------------------------------------------------------------------
Eagle-Picher, Inc., 9.75% Sr. Nts., 9/1/13 1,200,000 1,206,000
- --------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The),
7.857% Nts., 8/15/11 1,500,000 1,530,000
- --------------------------------------------------------------------------------
Keystone Automotive Operations, Inc.,
9.75% Sr. Unsec. Sub. Nts., 11/1/13 200,000 215,000
- --------------------------------------------------------------------------------
Lear Corp., 8.11% Sr. Unsec. Nts.,
Series B, 5/15/09 1,300,000 1,475,767
- --------------------------------------------------------------------------------
Metaldyne Corp.:
10% Sr. Nts., 11/1/13 3 500,000 477,500
11% Sr. Sub. Nts., 6/15/12 750,000 626,250
- --------------------------------------------------------------------------------
Stoneridge, Inc., 11.50% Sr. Nts., 5/1/12 1,200,000 1,401,000
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
AUTO COMPONENTS Continued
Tenneco Automotive, Inc.:
8.625% Sr. Sub. Nts., 11/15/14 3 $ 1,100,000 $ 1,149,500
10.25% Sr. Sec. Nts., Series B, 7/15/13 900,000 1,066,500
- --------------------------------------------------------------------------------
United Components, Inc., 9.375%
Sr. Sub. Nts., 6/15/13 400,000 436,000
- --------------------------------------------------------------------------------
Visteon Corp., 7% Sr. Unsec. Nts.,
3/10/14 200,000 192,000
-------------
15,562,811
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--5.9%
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts.,
3/15/08 940,000 925,900
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Aztar Corp., 9% Sr. Unsec. Sub. Nts.,
8/15/11 450,000 498,375
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Boyd Gaming Corp., 8.75% Sr. Sub. Nts.,
4/15/12 800,000 894,000
- --------------------------------------------------------------------------------
Capital Gaming International, Inc.,
11.50% Promissory Nts., 8/1/1995 1,4,5 9,500 --
- --------------------------------------------------------------------------------
Carrols Corp., 9% Sr. Sub. Nts., 1/15/13 3 270,000 280,800
- --------------------------------------------------------------------------------
Domino's, Inc., 8.25% Sr. Unsec. Sub.
Nts., 7/1/11 875,000 960,313
- --------------------------------------------------------------------------------
Gaylord Entertainment Co., 8% Sr. Nts.,
11/15/13 500,000 542,500
- --------------------------------------------------------------------------------
Hilton Hotels Corp.:
7.625% Nts., 12/1/12 500,000 585,602
7.625% Nts., 5/15/08 400,000 443,340
- --------------------------------------------------------------------------------
Hollywood Park, Inc., 9.25% Sr. Unsec.
Sub. Nts., Series B, 2/15/07 1,000,000 1,022,500
- --------------------------------------------------------------------------------
Intrawest Corp., 7.50% Sr. Unsec. Nts.,
10/15/13 917,000 980,044
- --------------------------------------------------------------------------------
Isle of Capri Casinos, Inc.:
7% Sr. Unsec. Sub. Nts., 3/1/14 800,000 820,000
9% Sr. Sub. Nts., 3/15/12 600,000 664,500
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John Q. Hammons Hotels, Inc., 8.875%
Sr. Nts., Series B, 5/15/12 900,000 1,021,500
- --------------------------------------------------------------------------------
La Quinta Properties, Inc., 7%
Sr. Sec. Nts., 8/15/12 500,000 531,250
- --------------------------------------------------------------------------------
Mandalay Resort Group, 10.25% Sr.
Unsec. Sub. Nts., Series B, 8/1/07 800,000 908,000
- --------------------------------------------------------------------------------
MGM Mirage, Inc.:
5.875% Sr. Nts., 2/27/14 600,000 592,500
8.375% Sr. Unsec. Sub. Nts., 2/1/11 900,000 1,019,250
9.75% Sr. Unsec. Sub. Nts., 6/1/07 800,000 892,000
- --------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority:
6.375% Sr. Sub. Nts., 7/15/09 800,000 826,000
8% Sr. Sub. Nts., 4/1/12 700,000 763,000
- --------------------------------------------------------------------------------
NCL Corp., 10.625% Sr. Nts., 7/15/14 3 600,000 603,000
- --------------------------------------------------------------------------------
Park Place Entertainment Corp.:
7.875% Sr. Sub. Nts., 3/15/10 1,500,000 1,696,875
9.375% Sr. Unsec. Sub. Nts., 2/15/07 1,500,000 1,657,500
7 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE Continued
Penn National Gaming, Inc., 8.875%
Sr. Sub. Nts., 3/15/10 $ 600,000 $ 657,750
- --------------------------------------------------------------------------------
Pinnacle Entertainment, Inc., 8.25%
Sr. Unsec. Sub. Nts., 3/15/12 1,350,000 1,441,125
- --------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd., 8.75%
Sr. Unsub. Nts., 2/2/11 600,000 711,750
- --------------------------------------------------------------------------------
Six Flags, Inc.:
8.875% Sr. Unsec. Nts., 2/1/10 800,000 814,000
9.625% Sr. Nts., 6/1/14 57,000 57,570
9.75% Sr. Nts., 4/15/13 1,000,000 1,020,000
- --------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide,
Inc., 7.875% Sr. Nts., 5/1/12 1,500,000 1,721,250
- --------------------------------------------------------------------------------
Station Casinos, Inc.:
6.50% Sr. Unsec. Sub. Nts., 2/1/14 2,300,000 2,374,750
9.875% Sr. Unsec. Sub. Nts., 7/1/10 600,000 634,500
- --------------------------------------------------------------------------------
Sun International Hotels Ltd., 8.875%
Sr. Unsec. Sub. Nts., 8/15/11 1,000,000 1,097,500
- --------------------------------------------------------------------------------
Universal City Development Partners
Ltd., 11.75% Sr. Nts., 4/1/10 1,000,000 1,186,250
- --------------------------------------------------------------------------------
Vail Resorts, Inc., 6.75% Sr. Sub. Nts.,
2/15/14 900,000 920,250
- --------------------------------------------------------------------------------
Venetian Casino Resort LLC/Las Vegas
Sands, Inc., 11% Sec. Nts., 6/15/10 850,000 974,313
- --------------------------------------------------------------------------------
Wynn Las Vegas LLC/Wynn Las Vegas
Capital Corp., 6.625% Nts., 12/1/14 3 3,400,000 3,383,000
-------------
36,122,757
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--1.8%
Beazer Homes USA, Inc., 8.375%
Sr. Nts., 4/15/12 500,000 552,500
- --------------------------------------------------------------------------------
Blount, Inc., 8.875% Sr. Sub. Nts.,
8/1/12 775,000 844,750
- --------------------------------------------------------------------------------
D.R. Horton, Inc., 9.75% Sr. Sub.
Nts., 9/15/10 300,000 364,500
- --------------------------------------------------------------------------------
K. Hovnanian Enterprises, Inc., 8.875%
Sr. Sub. Nts., 4/1/12 800,000 888,000
- --------------------------------------------------------------------------------
KB Home:
8.625% Sr. Sub. Nts., 12/15/08 150,000 170,250
9.50% Sr. Unsec. Sub. Nts., 2/15/11 350,000 386,750
- --------------------------------------------------------------------------------
Meritage Corp., 9.75% Sr. Unsec. Nts.,
6/1/11 1,200,000 1,332,000
- --------------------------------------------------------------------------------
Norcraft Cos. LP, 9% Sr. Sub. Nts.,
11/1/11 1 300,000 325,500
- --------------------------------------------------------------------------------
Sealy Mattress Co., 8.25% Sr. Sub. Nts.,
6/15/14 1,400,000 1,491,000
- --------------------------------------------------------------------------------
Standard Pacific Corp., 9.25% Sr.
Sub. Nts., 4/15/12 700,000 815,500
- --------------------------------------------------------------------------------
Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11 500,000 555,000
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES Continued
WCI Communities, Inc.:
9.125% Sr. Sub. Nts., 5/1/12 $ 800,000 $ 892,000
10.625% Sr. Unsec. Sub. Nts., 2/15/11 600,000 669,000
- --------------------------------------------------------------------------------
William Lyon Homes, Inc., 10.75%
Sr. Nts., 4/1/13 800,000 903,000
- --------------------------------------------------------------------------------
Williams Scotsman, Inc., 9.875%
Sr. Unsec. Nts., 6/1/07 1,000,000 1,005,000
-------------
11,194,750
- --------------------------------------------------------------------------------
MEDIA--10.6%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 4,5 360,000 336,600
8.125% Sr. Nts., Series B, 7/15/03 4,5 1,000,000 945,000
8.375% Sr. Nts., Series B, 2/1/08 4,5 1,000,000 947,500
10.875% Sr. Unsec. Nts., 10/1/10 4,5 1,000,000 995,000
- --------------------------------------------------------------------------------
Allbritton Communications Co., 7.75%
Sr. Unsec. Sub. Nts., 12/15/12 700,000 728,000
- --------------------------------------------------------------------------------
AMC Entertainment, Inc.:
8% Sr. Unsec. Sub. Nts., 3/1/14 1,050,000 1,050,000
9.50% Sr. Unsec. Sub. Nts., 2/1/11 1,192,000 1,238,190
- --------------------------------------------------------------------------------
American Media Operations, Inc.:
8.875% Sr. Unsec. Sub. Nts., 1/15/11 900,000 961,875
10.25% Sr. Unsec. Sub. Nts., Series B,
5/1/09 600,000 635,250
- --------------------------------------------------------------------------------
Block Communications, Inc., 9.25%
Sr. Sub. Nts., 4/15/09 600,000 657,000
- --------------------------------------------------------------------------------
Cablevision Systems New York Group,
8% Sr. Nts., 4/15/12 3 500,000 536,250
- --------------------------------------------------------------------------------
Carmike Cinemas, Inc., 7.50% Sr. Sub.
Nts., 2/15/14 850,000 874,438
- --------------------------------------------------------------------------------
CBD Media LLC/CBD Finance, Inc.,
8.625% Sr. Sub. Nts., 6/1/11 200,000 212,500
- --------------------------------------------------------------------------------
Charter Communications Holdings II
LLC, 10.25% Sr. Unsec. Nts., 9/15/10 700,000 745,500
- --------------------------------------------------------------------------------
Charter Communications Holdings
LLC/Charter Communications Holdings
Capital Corp.:
0%/11.75% Sr. Unsec.
Sub. Disc. Nts., 5/15/11 6 475,000 351,500
8.375% Sr. Nts., Second Lien, 4/30/14 3 6,400,000 6,784,000
- --------------------------------------------------------------------------------
Cinemark USA, Inc., 9% Sr. Unsec. Sub.
Nts., 2/1/13 400,000 458,500
- --------------------------------------------------------------------------------
Cinemark, Inc., 0%/9.75% Sr. Unsec.
Disc. Nts., 3/15/14 6 1,800,000 1,368,000
- --------------------------------------------------------------------------------
Corus Entertainment, Inc., 8.75% Sr.
Sub. Nts., 3/1/12 800,000 882,000
- --------------------------------------------------------------------------------
CSC Holdings, Inc., 7.625% Sr. Unsec.
Unsub. Nts., Series B, 4/1/11 1,900,000 2,056,750
- --------------------------------------------------------------------------------
Dex Media East LLC/Dex Media East
Finance Co., 9.875% Sr. Unsec. Nts.,
11/15/09 800,000 915,000
8 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
MEDIA Continued
Dex Media West LLC, 5.875% Sr. Nts.,
11/15/11 3 $ 1,800,000 $ 1,800,000
- --------------------------------------------------------------------------------
Dex Media West LLC/Dex Media West
Finance Co.:
8.50% Sr. Nts., 8/15/10 700,000 782,250
9.875% Sr. Sub. Nts., 8/15/13 1,172,000 1,356,590
- --------------------------------------------------------------------------------
Dex Media, Inc., 8% Unsec. Nts.,
11/15/13 3,550,000 3,860,625
- --------------------------------------------------------------------------------
DirecTV Holdings LLC/DirecTV
Financing Co., Inc., 8.375% Sr. Unsec.
Nts., 3/15/13 3,400,000 3,829,250
- --------------------------------------------------------------------------------
EchoStar DBS Corp.:
6.625% Sr. Nts., 10/1/14 3 2,350,000 2,391,125
9.125% Sr. Nts., 1/15/09 1,895,000 2,093,975
- --------------------------------------------------------------------------------
Emmis Operating Co., 6.875% Sr. Unsec.
Sub. Nts., 5/15/12 1,200,000 1,261,500
- --------------------------------------------------------------------------------
Entravision Communications Corp.,
8.125% Sr. Sub. Nts., 3/15/09 600,000 643,500
- --------------------------------------------------------------------------------
Granite Broadcasting Corp., 9.75%
Sr. Sec. Nts., 12/1/10 1,257,000 1,206,720
- --------------------------------------------------------------------------------
Gray Television, Inc., 9.25% Sr. Sub. Nts.,
12/15/11 500,000 562,500
- --------------------------------------------------------------------------------
Lamar Media Corp., 7.25% Sr. Unsec.
Sub. Nts., 1/1/13 200,000 217,000
- --------------------------------------------------------------------------------
Lin Television Corp., 6.50% Sr. Sub. Nts.,
5/15/13 500,000 516,875
- --------------------------------------------------------------------------------
LodgeNet Entertainment Corp.,
9.50% Sr. Sub. Debs., 6/15/13 400,000 444,000
- --------------------------------------------------------------------------------
Mediacom LLC/Mediacom Capital
Corp., 9.50% Sr. Unsec. Nts., 1/15/13 1,257,000 1,267,999
- --------------------------------------------------------------------------------
MediaNews Group, Inc.:
6.375% Sr. Sub. Nts., 4/1/14 1,400,000 1,393,000
6.875% Sr. Unsec. Sub. Nts., 10/1/13 500,000 515,000
- --------------------------------------------------------------------------------
News America Holdings, Inc., 8.875%
Sr. Debs., 4/26/23 625,000 814,644
- --------------------------------------------------------------------------------
PanAmSat Corp., 9% Sr. Nts., 8/15/14 3 2,000,000 2,242,500
- --------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8% Sr. Nts., 5/15/13 1,700,000 1,757,375
8.875% Sr. Unsec. Nts., 5/15/11 57,000 60,563
- --------------------------------------------------------------------------------
R.H. Donnelley Financial Corp. I:
8.875% Sr. Nts., 12/15/10 3 700,000 784,000
10.875% Sr. Sub. Nts., 12/15/12 3 1,000,000 1,192,500
- --------------------------------------------------------------------------------
Radio One, Inc., 8.875% Sr. Unsec. Sub.
Nts., Series B, 7/1/11 800,000 875,000
- --------------------------------------------------------------------------------
Rainbow National Services LLC, 8.75%
Sr. Nts., 9/1/12 3 1,800,000 1,984,500
- --------------------------------------------------------------------------------
Rogers Cable, Inc., 6.75% Sr. Sec. Second
Priority Nts., 3/15/15 3 500,000 513,750
- --------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 8%
Sr. Unsec. Sub. Nts., 3/15/12 1,600,000 1,708,000
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
MEDIA Continued
Spanish Broadcasting System, Inc.,
9.625% Sr. Unsec. Sub. Nts., 11/1/09 $ 600,000 $ 631,500
- --------------------------------------------------------------------------------
Vertis, Inc.:
9.75% Sr. Sec. Nts., 4/1/09 500,000 545,000
10.875% Sr. Unsec. Nts., Series B,
6/15/09 650,000 708,500
- --------------------------------------------------------------------------------
WMG Holdings Corp.:
0%/9.50% Sr. Disc. Nts., 12/15/14 3,6 2,000,000 1,287,500
6.905% Sr. Nts., 12/15/11 2,3 900,000 911,250
- --------------------------------------------------------------------------------
WRC Media, Inc./Weekly Reader Corp./
CompassLearning, Inc., 12.75%
Sr. Sub. Nts., 11/15/09 1,100,000 1,051,875
-------------
64,889,219
- --------------------------------------------------------------------------------
MULTILINE RETAIL--0.1%
Saks, Inc.:
8.25% Sr. Unsec. Nts., 11/15/08 250,000 275,000
9.875% Nts., 10/1/11 300,000 357,000
-------------
632,000
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--1.1%
Asbury Automotive Group, Inc., 9%
Sr. Sub. Nts., 6/15/12 600,000 633,000
- --------------------------------------------------------------------------------
Atlantic Broadband Finance LLC, 9.375%
Sr. Sub. Nts., 1/15/14 3 500,000 486,250
- --------------------------------------------------------------------------------
AutoNation, Inc., 9% Sr. Unsec. Nts.,
8/1/08 1,200,000 1,377,000
- --------------------------------------------------------------------------------
Boise Cascade LLC/Boise Cascade
Finance Corp., 7.125% Sr. Sub. Nts.,
10/15/14 3 950,000 1,009,375
- --------------------------------------------------------------------------------
Building Materials Corp. of America,
8% Sr. Nts, 12/1/08 300,000 310,500
- --------------------------------------------------------------------------------
Eye Care Centers of America, Inc.,
9.125% Sr. Unsec. Sub. Nts., 5/1/08 400,000 402,000
- --------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375%
Sr. Unsec. Nts., 6/1/12 600,000 651,000
- --------------------------------------------------------------------------------
Hollywood Entertainment Corp.,
9.625% Sr. Sub. Nts., 3/15/11 300,000 319,500
- --------------------------------------------------------------------------------
Petco Animal Supplies, Inc., 10.75%
Sr. Sub. Nts., 11/1/11 750,000 881,250
- --------------------------------------------------------------------------------
Rent-A-Center, Inc., 7.50% Sr. Unsec.
Sub. Nts., Series B, 5/1/10 350,000 364,438
-------------
6,434,313
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--1.0%
Invista, Inc., 9.25% Sr. Nts., 5/1/12 3 2,500,000 2,800,000
- --------------------------------------------------------------------------------
Levi Strauss & Co.:
7% Unsec. Nts., 11/1/06 800,000 844,000
9.75% Sr. Nts., 1/15/15 3 1,100,000 1,094,500
11.625% Sr. Unsec. Nts., 1/15/08 100,000 105,500
9 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS Continued
Oxford Industries, Inc.,
8.875% Sr. Nts., 6/1/11 $ 500,000 $ 539,375
- --------------------------------------------------------------------------------
Russell Corp., 9.25% Sr. Nts., 5/1/10 600,000 646,500
-------------
6,029,875
- --------------------------------------------------------------------------------
CONSUMER STAPLES--3.1%
- --------------------------------------------------------------------------------
BEVERAGES--0.1%
Constellation Brands, Inc., 8.125%
Sr. Sub. Nts., 1/15/12 500,000 545,625
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--0.6%
Great Atlantic & Pacific Tea Co., Inc.
(The), 9.125% Sr. Nts., 12/15/11 457,000 430,723
- --------------------------------------------------------------------------------
Ingles Markets, Inc., 8.875% Sr. Unsec.
Sub. Nts., 12/1/11 57,000 61,275
- --------------------------------------------------------------------------------
Jean Coutu Group (PJC), Inc. (The):
7.625% Sr. Nts., 8/1/12 3 650,000 690,625
8.50% Sr. Sub. Nts., 8/1/14 3 1,100,000 1,133,000
- --------------------------------------------------------------------------------
Real Time Data Co., 11% Disc. Nts.,
5/31/09 1,4,5,7 476,601 --
- --------------------------------------------------------------------------------
Rite Aid Corp.:
8.125% Sr. Sec. Nts., 5/1/10 900,000 956,250
9.50% Sr. Sec. Nts., 2/15/11 450,000 496,125
-------------
3,767,998
- --------------------------------------------------------------------------------
FOOD PRODUCTS--2.0%
American Seafoods Group LLC,
10.125% Sr. Sub. Nts., 4/15/10 500,000 537,500
- --------------------------------------------------------------------------------
Burns Philp Capital Property Ltd.,
9.75% Sr. Unsec. Sub. Nts., 7/15/12 400,000 442,000
- --------------------------------------------------------------------------------
Chiquita Brands International, Inc.,
7.50% Sr. Nts., 11/1/14 1 300,000 305,250
- --------------------------------------------------------------------------------
Del Monte Corp.:
8.625% Sr. Sub. Nts., 12/15/12 1,000,000 1,125,000
9.25% Sr. Unsec. Sub. Nts., 5/15/11 100,000 110,000
- --------------------------------------------------------------------------------
Doane Pet Care Co.:
9.75% Sr. Unsec. Sub. Nts., 5/15/07 400,000 396,000
10.75% Sr. Nts., 3/1/10 1,500,000 1,612,500
- --------------------------------------------------------------------------------
Dole Food Co., Inc.:
8.625% Sr. Nts., 5/1/09 900,000 983,250
8.875% Sr. Unsec. Nts., 3/15/11 400,000 437,000
- --------------------------------------------------------------------------------
Hines Nurseries, Inc., 10.25% Sr. Unsec.
Sub. Nts., 10/1/11 600,000 658,500
- --------------------------------------------------------------------------------
Pinnacle Foods Holding Corp.:
8.25% Sr. Sub. Nts., 12/1/13 3 500,000 478,750
8.25% Sr. Sub. Nts., 12/1/13 3 600,000 574,500
- --------------------------------------------------------------------------------
Smithfield Foods, Inc.:
7.625% Sr. Unsec. Sub. Nts., 2/15/08 925,000 994,375
8% Sr. Nts., Series B, 10/15/09 900,000 1,001,250
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
FOOD PRODUCTS Continued
Swift & Co., 10.125% Sr. Nts., 10/1/09 $ 1,000,000 $ 1,120,000
- --------------------------------------------------------------------------------
United Biscuits Finance plc, 10.625%
Sr. Sub. Nts., 4/15/11 [EUR] 1,000,000 1,440,805
-------------
12,216,680
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.4%
Church & Dwight Co., Inc., 6%
Sr. Sub. Nts., 12/15/12 3 500,000 511,250
- --------------------------------------------------------------------------------
Playtex Products, Inc.:
8% Sr. Sec. Nts., 3/1/11 1,000,000 1,097,500
9.375% Sr. Unsec. Sub. Nts., 6/1/11 700,000 750,750
-------------
2,359,500
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--0.0%
Elizabeth Arden, Inc., 7.75% Sr. Unsec.
Sub. Nts., 1/15/14 300,000 319,500
- --------------------------------------------------------------------------------
ENERGY--7.0%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.1%
BRL Universal Equipment Corp., 8.875%
Sr. Sec. Nts., 2/15/08 750,000 792,188
- --------------------------------------------------------------------------------
Dresser, Inc., 9.375% Sr. Sub. Nts.,
4/15/11 400,000 440,000
- --------------------------------------------------------------------------------
Grant Prideco, Inc., 9% Sr. Unsec. Nts.,
12/15/09 300,000 333,750
- --------------------------------------------------------------------------------
Hanover Compress Co., 8.625% Sr. Nts.,
12/15/10 700,000 768,250
- --------------------------------------------------------------------------------
Hanover Equipment Trust 2001A,
8.50% Sr. Sec. Nts., Series A, 9/1/08 500,000 540,000
- --------------------------------------------------------------------------------
Hornbeck Offshore Services, Inc.,
6.125% Sr. Nts., 12/1/14 3 750,000 757,500
- --------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec.
Nts., 6/1/08 1,350,000 1,397,250
- --------------------------------------------------------------------------------
Petroleum Helicopters, Inc., 9.375% Sr.
Nts., 5/1/09 600,000 660,000
- --------------------------------------------------------------------------------
Universal Compression, Inc., 7.25% Sr.
Unsec. Sub. Nts., 5/15/10 1 800,000 858,000
-------------
6,546,938
- --------------------------------------------------------------------------------
OIL & GAS--5.9%
ANR Pipeline Co., 8.875% Sr. Nts.,
3/15/10 400,000 450,000
- --------------------------------------------------------------------------------
Chesapeake Energy Corp.:
6.375% Sr. Nts., 6/15/15 3 550,000 567,875
6.875% Sr. Unsec. Nts., 1/15/16 1,120,000 1,178,800
9% Sr. Nts., 8/15/12 300,000 344,250
- --------------------------------------------------------------------------------
El Paso Corp., 7.875% Sr. Unsec. Nts.,
6/15/12 3,057,000 3,213,671
- --------------------------------------------------------------------------------
El Paso Energy Corp., 7.625% Nts.,
7/15/11 350,000 364,000
10 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
OIL & GAS Continued
El Paso Production Holding Co.,
7.75% Sr. Unsec. Nts., 6/1/13 $ 3,000,000 $ 3,157,500
- --------------------------------------------------------------------------------
EXCO Resources, Inc., 7.25% Sr. Nts.,
1/15/11 800,000 860,000
- --------------------------------------------------------------------------------
Forest Oil Corp., 7.75% Sr. Nts., 5/1/14 1,000,000 1,092,500
- --------------------------------------------------------------------------------
Frontier Oil Corp., 6.625% Sr. Nts.,
10/1/11 3 450,000 461,250
- --------------------------------------------------------------------------------
MarkWest Energy Partners
LP/MarkWest Energy Finance Corp.,
6.875% Sr. Nts., 11/1/14 3 250,000 255,000
- --------------------------------------------------------------------------------
Newfield Exploration Co.:
6.625% Sr. Unsec. Sub. Nts., 9/1/14 3 1,300,000 1,381,250
8.375% Sr. Sub. Nts., 8/15/12 600,000 675,000
- --------------------------------------------------------------------------------
Plains Exploration & Production Co.,
7.125% Sr. Nts., 6/15/14 600,000 657,000
- --------------------------------------------------------------------------------
Premcor Refining Group, Inc.:
6.75% Sr. Nts., 5/1/14 700,000 747,250
9.50% Sr. Nts., 2/1/13 1,000,000 1,165,000
- --------------------------------------------------------------------------------
Range Resources Corp., 7.375%
Sr. Sub. Nts., 7/15/13 400,000 431,000
- --------------------------------------------------------------------------------
Southern Natural Gas Co.:
7.35% Nts., 2/15/31 600,000 625,500
8% Sr. Unsub. Nts., 3/1/32 1 900,000 986,625
8.875% Sr. Nts., 3/15/10 700,000 787,500
- --------------------------------------------------------------------------------
Stone Energy Corp.:
6.75% Sr. Sub. Nts., 12/15/14 3 360,000 360,900
8.25% Sr. Unsec. Sub. Nts., 12/15/11 1,600,000 1,736,000
- --------------------------------------------------------------------------------
Teekay Shipping Corp., 8.875% Sr. Nts.,
7/15/11 575,000 669,875
- --------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50%
Bonds, 4/1/17 2,915,000 3,228,363
- --------------------------------------------------------------------------------
Tesoro Petroleum Corp.:
8% Sr. Sec. Nts., 4/15/08 1,000,000 1,092,500
9.625% Sr. Sub. Nts., 4/1/12 557,000 643,335
- --------------------------------------------------------------------------------
Transcontinental Gas Pipe Line Corp.:
6.125% Nts., 1/15/05 200,000 200,000
8.875% Sr. Unsub. Nts., Series B, 7/15/12 200,000 244,250
- --------------------------------------------------------------------------------
Whiting Petroleum Corp., 7.25% Sr. Sub.
Nts., 5/1/12 800,000 840,000
- --------------------------------------------------------------------------------
Williams Cos., Inc. (The):
7.125% Nts., 9/1/11 2,550,000 2,798,625
7.625% Nts., 7/15/19 1,400,000 1,547,000
8.75% Unsec. Nts., 3/15/32 1,900,000 2,192,125
- --------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc.,
6.50% Nts., 12/1/08 300,000 315,000
- --------------------------------------------------------------------------------
XTO Energy, Inc., 7.50% Sr. Nts.,
4/15/12 1,000,000 1,171,886
-------------
36,440,830
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
FINANCIALS--1.9%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--1.0%
American Color Graphics, Inc., 10%
Sr. Sec. Nts., 6/15/10 $ 400,000 $ 339,500
- --------------------------------------------------------------------------------
BCP Caylux Holdings Luxembourg
SCA, 9.625% Sr. Sub. Nts., 6/15/14 3 2,400,000 2,718,000
- --------------------------------------------------------------------------------
Berry Plastics Corp., 10.75% Sr. Sub.
Nts., 7/15/12 1,600,000 1,840,000
- --------------------------------------------------------------------------------
DeCrane Aircraft Holdings, Inc., 12%
Sr. Unsec. Sub. Nts., Series B, 9/30/08 1,550,000 1,046,250
-------------
5,943,750
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--0.1%
Bank Plus Corp., 12% Sr. Nts., 7/18/07 517,000 555,775
- --------------------------------------------------------------------------------
Western Financial Bank, 9.625% Unsec.
Sub. Debs., 5/15/12 400,000 458,000
-------------
1,013,775
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--0.3%
Affinia Group, Inc., 9% Sr. Sub. Nts.,
11/30/14 3 450,000 471,375
- --------------------------------------------------------------------------------
Global Cash Access LLC/Global Cash
Finance Corp., 8.75% Sr. Sub. Nts.,
3/15/12 1 575,000 622,438
- --------------------------------------------------------------------------------
Universal City Florida:
7.20% Sr. Nts., 5/1/10 1,2 270,000 282,150
8.375% Sr. Nts., 5/1/10 1 270,000 281,475
-------------
1,657,438
- --------------------------------------------------------------------------------
REAL ESTATE--0.5%
American Casino & Entertainment
Properties LLC, 7.85% Sr. Sec. Nts.,
2/1/12 800,000 854,000
- --------------------------------------------------------------------------------
Felcor Lodging LP, 9% Sr. Nts., 6/1/11 837,000 952,088
- --------------------------------------------------------------------------------
HMH Properties, Inc., 7.875% Sr. Nts.,
Series B, 8/1/08 441,000 455,333
- --------------------------------------------------------------------------------
MeriStar Hospitality Corp.:
9.125% Sr. Unsec. Nts., 1/15/11 457,000 495,845
10.50% Sr. Unsec. Nts., 6/15/09 350,000 383,250
-------------
3,140,516
- --------------------------------------------------------------------------------
HEALTH CARE--5.7%
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.8%
Dade Behring Holdings, Inc., 11.91% Sr.
Unsec. Sub. Nts., 10/3/10 177,358 198,198
- --------------------------------------------------------------------------------
Fisher Scientific International, Inc.,
8.125% Sr. Sub. Nts., 5/1/12 782,000 871,930
- --------------------------------------------------------------------------------
HMP Equity Holdings Corp., 17.95%
Sr. Disc. Nts., 5/15/08 8 2,000,000 1,332,500
11 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES Continued
Inverness Medical Innovations, Inc.,
8.75% Sr. Sub. Nts., 2/15/12 1 $ 600,000 $ 630,000
- --------------------------------------------------------------------------------
Sybron Dental Specialties, Inc.,
8.125% Sr. Sub. Nts., 6/15/12 700,000 766,500
- --------------------------------------------------------------------------------
Universal Hospital Services, Inc.,
10.125% Sr. Unsec. Nts., 11/1/11 800,000 836,000
-------------
4,635,128
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--4.8%
Alderwoods Group, Inc., 7.75% Sr. Nts.,
9/15/12 3 950,000 1,030,750
- --------------------------------------------------------------------------------
AmeriPath, Inc., 10.50% Sr. Unsec. Sub.
Nts., 4/1/13 700,000 747,250
- --------------------------------------------------------------------------------
Beverly Enterprises, Inc., 7.875% Sr. Sub.
Nts., 6/15/14 1 600,000 646,500
- --------------------------------------------------------------------------------
Community Health Systems, Inc.,
6.50% Sr. Sub. Nts., 12/15/12 3 900,000 911,250
- --------------------------------------------------------------------------------
Extendicare Health Services, Inc.:
6.875% Sr. Sub. Nts., 5/1/14 600,000 615,000
9.50% Sr. Unsec. Sub. Nts., 7/1/10 500,000 562,500
- --------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust II,
7.875% Nts., 2/1/08 1,600,000 1,740,000
- --------------------------------------------------------------------------------
Genesis HealthCare Corp., 8% Sr. Sub.
Nts., 10/15/13 400,000 436,000
- --------------------------------------------------------------------------------
HCA, Inc.:
6.30% Sr. Unsec. Nts., 10/1/12 3,200,000 3,250,387
6.375% Nts., 1/15/15 1,100,000 1,106,481
7.50% Bonds, 11/6/33 600,000 613,903
7.875% Sr. Nts., 2/1/11 305,000 336,366
8.75% Sr. Nts., 9/1/10 400,000 457,752
- --------------------------------------------------------------------------------
HealthSouth Corp.:
7.625% Nts., 6/1/12 1,000,000 1,010,000
10.75% Sr. Unsec. Sub. Nts., 10/1/08 357,000 378,420
- --------------------------------------------------------------------------------
Magellan Health Services, Inc., 9.375%
Sr. Unsec. Nts., Series A, 11/15/08 1,867,643 2,042,735
- --------------------------------------------------------------------------------
Medquest, Inc., 11.875% Sr. Unsec. Sub.
Nts., Series B, 8/15/12 1 700,000 826,000
- --------------------------------------------------------------------------------
National Nephrology Assn., 9% Sr. Sub.
Nts., 11/1/11 3 200,000 232,500
- --------------------------------------------------------------------------------
NDCHealth Corp., 10.50% Sr. Unsec.
Sub. Nts., 12/1/12 600,000 648,000
- --------------------------------------------------------------------------------
PacifiCare Health Systems, Inc.,
10.75% Sr. Unsec. Unsub. Nts., 6/1/09 714,000 828,240
- --------------------------------------------------------------------------------
Quintiles Transnational Corp.,
10% Sr. Sub. Nts., 10/1/13 1 600,000 675,000
- --------------------------------------------------------------------------------
Rotech Healthcare, Inc., 9.50%
Sr. Unsec. Sub. Nts., 4/1/12 1 600,000 663,000
- --------------------------------------------------------------------------------
Stewart Enterprises, Inc., 10.75%
Sr. Unsec. Sub. Nts., 7/1/08 1,800,000 1,957,500
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES Continued
Tenet Healthcare Corp.:
6.375% Sr. Nts., 12/1/11 $ 1,660,000 $ 1,547,950
7.375% Nts., 2/1/13 57,000 55,575
9.875% Sr. Nts., 7/1/14 3 1,500,000 1,642,500
- --------------------------------------------------------------------------------
Triad Hospitals, Inc.:
7% Sr. Nts., 5/15/12 900,000 951,750
7% Sr. Sub. Nts., 11/15/13 1,120,000 1,150,800
- --------------------------------------------------------------------------------
US Oncology, Inc.:
9% Sr. Nts., 8/15/12 3 650,000 729,625
10.75% Sr. Sub. Nts., 8/15/14 3 650,000 755,625
- --------------------------------------------------------------------------------
Vicar Operating, Inc., 9.875%
Sr. Sub. Nts., 12/1/09 1,000,000 1,100,000
-------------
29,649,359
- --------------------------------------------------------------------------------
PHARMACEUTICALS--0.1%
Valeant Pharmaceuticals International,
Inc., 7% Sr. Nts., 12/15/11 800,000 836,000
- --------------------------------------------------------------------------------
INDUSTRIALS--7.3%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.1%
Alliant Techsystems, Inc., 8.50%
Sr. Unsec. Sub. Nts., 5/15/11 900,000 990,000
- --------------------------------------------------------------------------------
BE Aerospace, Inc.:
8% Sr. Unsec. Sub. Nts., Series B, 3/1/08 300,000 301,875
8.875% Sr. Unsec. Sub. Nts., 5/1/11 57,000 59,850
- --------------------------------------------------------------------------------
L-3 Communications Corp.:
5.875% Sr. Sub. Nts., 1/15/15 3 1,000,000 1,002,500
7.625% Sr. Sub. Nts., 6/15/12 800,000 882,000
- --------------------------------------------------------------------------------
Rexnord Corp., 10.125% Sr. Unsec. Sub.
Nts., 12/15/12 700,000 794,500
- --------------------------------------------------------------------------------
TD Funding Corp., 8.375% Sr. Sub. Nts.,
7/15/11 800,000 862,000
- --------------------------------------------------------------------------------
TRW Automotive, Inc.:
9.375% Sr. Nts., 2/15/13 580,000 675,700
11% Sr. Sub. Nts., 2/15/13 454,000 549,340
- --------------------------------------------------------------------------------
Vought Aircraft Industries, Inc., 8%
Sr. Nts., 7/15/11 300,000 293,250
-------------
6,411,015
- --------------------------------------------------------------------------------
AIRLINES--0.3%
America West Airlines, Inc., 10.75%
Sr. Nts., 9/1/05 1,000,000 1,002,500
- --------------------------------------------------------------------------------
ATA Holdings Corp., 13% Sr. Unsec.
Nts., 2/1/09 4,5 1,575,000 905,625
-------------
1,908,125
- --------------------------------------------------------------------------------
BUILDING PRODUCTS--0.4%
Associated Materials, Inc., 9.75%
Sr. Sub. Nts., 4/15/12 700,000 785,750
12 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
BUILDING PRODUCTS Continued
Goodman Global Holding Co., Inc.,
7.875% Sr. Sub. Nts., 12/15/12 3 $ 360,000 $ 358,200
- --------------------------------------------------------------------------------
Green Star Products, Inc., 10.15%
Bonds, 6/24/10 3 284,439 289,771
- --------------------------------------------------------------------------------
Jacuzzi Brands, Inc., 9.625%
Sr. Sec. Nts., 7/1/10 544,000 606,560
- --------------------------------------------------------------------------------
North America Energy Partners, Inc.,
8.75% Sr. Unsec. Nts., 12/1/11 300,000 307,500
-------------
2,347,781
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.9%
Allied Waste North America, Inc.:
7.375% Sr. Sec. Nts., Series B, 4/15/14 300,000 288,750
7.875% Sr. Nts., 4/15/13 800,000 824,000
8.50% Sr. Sub. Nts., 12/1/08 1,000,000 1,065,000
8.875% Sr. Nts., Series B, 4/1/08 1,500,000 1,612,500
9.25% Sr. Sec. Debs., Series B, 9/1/12 1,700,000 1,848,750
- --------------------------------------------------------------------------------
American Pad & Paper Co., 13% Sr. Sub.
Nts., Series B, 11/15/05 1,4,5 200,000 --
- --------------------------------------------------------------------------------
Cenveo Corp., 7.875% Sr. Sub. Nts.,
12/1/13 1,600,000 1,496,000
- --------------------------------------------------------------------------------
Comforce Operating, Inc., 12%
Sr. Nts., Series B, 12/1/07 350,000 345,625
- --------------------------------------------------------------------------------
Corrections Corp. of America:
7.50% Sr. Nts., 5/1/11 500,000 536,875
9.875% Sr. Nts., 5/1/09 500,000 557,500
- --------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc.,
10.375% Sr. Sub. Nts., 8/1/07 1 250,000 253,125
- --------------------------------------------------------------------------------
Kindercare Learning Centers, Inc.,
9.50% Sr. Sub. Nts., 2/15/09 576,000 581,040
- --------------------------------------------------------------------------------
Mail-Well I Corp., 9.625% Sr. Nts.,
3/15/12 1 700,000 771,750
- --------------------------------------------------------------------------------
Protection One, Inc./Protection One
Alarm Monitoring, Inc., 7.375%
Sr. Unsec. Nts., 8/15/05 900,000 913,500
- --------------------------------------------------------------------------------
Synagro Technologies, Inc., 9.50%
Sr. Sub. Nts., 4/1/09 700,000 766,500
-------------
11,860,915
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--0.1%
Integrated Electrical Services, Inc.,
9.375% Sr. Sub. Nts., Series C, 2/1/09 58,000 54,810
- --------------------------------------------------------------------------------
URS Corp., 11.50% Sr. Unsec. Nts.,
9/15/09 455,000 525,525
-------------
580,335
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.5%
Belden & Blake Corp., 8.75%
Sr. Sec. Nts., 7/15/12 1 650,000 663,000
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT Continued
Dayton Superior Corp., 13%
Sr. Unsec. Sub. Nts., 6/15/09 $ 100,000 $ 104,500
- --------------------------------------------------------------------------------
General Cable Corp., 9.50%
Sr. Nts., 11/15/10 500,000 567,500
- --------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7%
Sr. Unsec. Debs., 10/15/28 1,500,000 1,511,250
-------------
2,846,250
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.0%
Great Lakes Dredge & Dock Co., 7.75%
Sr. Unsec. Sub. Nts., 12/15/13 250,000 228,750
- --------------------------------------------------------------------------------
MACHINERY--1.6%
AGCO Corp., 9.50% Sr. Unsec. Nts.,
5/1/08 1,000,000 1,070,000
- --------------------------------------------------------------------------------
Douglas Dynamics LLC, 7.75% Sr. Nts.,
1/15/12 3 600,000 611,250
- --------------------------------------------------------------------------------
Dresser-Rand Group, Inc., 7.375%
Sr. Sub. Nts., 11/1/14 3 300,000 307,500
- --------------------------------------------------------------------------------
Manitowoc Co., Inc. (The):
7.125% Sr. Nts., 11/1/13 150,000 163,125
10.50% Sr. Sub. Nts., 8/1/12 800,000 924,000
- --------------------------------------------------------------------------------
Milacron Escrow Corp., 11.50%
Sr. Sec. Nts., 5/15/11 1 1,200,000 1,278,000
- --------------------------------------------------------------------------------
Navistar International Corp., 7.50%
Sr. Nts., 6/15/11 800,000 862,000
- --------------------------------------------------------------------------------
NMHG Holding Co., 10% Sr. Nts.,
5/15/09 600,000 666,000
- --------------------------------------------------------------------------------
SPX Corp., 7.50% Sr. Nts., 1/1/13 900,000 981,000
- --------------------------------------------------------------------------------
Terex Corp.:
7.375% Sr. Unsec. Sub. Nts., 1/15/14 500,000 538,750
9.25% Sr. Unsec. Sub. Nts., 7/15/11 800,000 902,000
10.375% Sr. Unsec. Sub. Nts., Series B,
4/1/11 500,000 562,500
- --------------------------------------------------------------------------------
Trinity Industries, Inc., 6.50% Sr. Nts.,
3/15/14 1,000,000 1,005,000
-------------
9,871,125
- --------------------------------------------------------------------------------
MARINE--0.4%
CP Ships Ltd., 10.375% Sr. Nts., 7/15/12 1,000,000 1,158,750
- --------------------------------------------------------------------------------
Millenium Seacarriers, Inc., 12%
Sr. Sec. Nts., 7/15/05 1,4,5 700,000 16,870
- --------------------------------------------------------------------------------
Navigator Gas Transport plc, 10.50%
First Priority Ship Mtg. Nts., 6/30/07 1,4,5 1,000,000 756,250
- --------------------------------------------------------------------------------
Pacific & Atlantic Holdings, Inc., 3.75%
Sec. Nts., 12/31/07 3,7 429,249 198,571
-------------
2,130,441
13 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
ROAD & RAIL--0.6%
Kansas City Southern Railway Co.
(The), 7.50% Sr. Nts., 6/15/09 $ 500,000 $ 527,500
- --------------------------------------------------------------------------------
Stena AB:
7% Sr. Nts., 12/1/16 3 1,700,000 1,691,500
7.50% Sr. Unsec. Nts., 11/1/13 928,000 976,720
9.625% Sr. Nts., 12/1/12 600,000 681,000
-------------
3,876,720
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--0.2%
United Rentals, Inc., 7% Sr. Sub. Nts.,
2/15/14 1,500,000 1,410,000
- --------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE--0.2%
Horizon Lines LLC, 9% Nts., 11/1/12 3 600,000 648,000
- --------------------------------------------------------------------------------
Worldspan LP/Worldspan Financial
Corp., 9.625% Sr. Nts., 6/15/11 550,000 550,000
-------------
1,198,000
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--2.6%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.4%
Lucent Technologies, Inc., 6.45%
Unsec. Debs., 3/15/29 1,700,000 1,547,000
- --------------------------------------------------------------------------------
Orion Network Systems, Inc., 12.50%
Sr. Unsub. Disc. Nts., 1/15/07 1,4,5 1,150,000 603,750
-------------
2,150,750
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.1%
Seagate Technology Hdd Holdings, 8%
Sr. Nts., 5/15/09 700,000 759,500
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.9%
Flextronics International Ltd., 6.25%
Sr. Sub. Nts., 11/15/14 3 2,300,000 2,288,500
- --------------------------------------------------------------------------------
Ingram Micro, Inc., 9.875% Sr. Unsec.
Sub. Nts., 8/15/08 1,200,000 1,311,000
- --------------------------------------------------------------------------------
LCE Acquisition Corp., 9% Sr. Sub. Nts.,
8/1/14 3 875,000 951,563
- --------------------------------------------------------------------------------
Sensus Metering System, Inc., 8.625%
Sr. Unsec. Sub. Nts., 12/15/13 1,000,000 1,030,000
-------------
5,581,063
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.0%
Exodus Communications, Inc., 10.75%
Sr. Nts., 12/15/09 1,4,5 [EUR] 846,550 11,507
- --------------------------------------------------------------------------------
Globix Corp., 11% Sr. Nts., 5/1/08 7 71,480 66,119
- --------------------------------------------------------------------------------
NorthPoint Communications Group,
Inc., 12.875% Nts., 2/15/10 1,4,5 240,208 --
- --------------------------------------------------------------------------------
PSINet, Inc., 10.50% Sr. Unsec. Nts.,
12/1/06 1,4,5 [EUR] 1,000,000 54,370
-------------
131,996
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
IT SERVICES--0.3%
Iron Mountain, Inc.:
7.75% Sr. Sub. Nts., 1/15/15 $ 400,000 $ 408,000
8.625% Sr. Unsec. Sub. Nts., 4/1/13 1,000,000 1,067,500
- --------------------------------------------------------------------------------
Titan Corp. (The), 8% Sr. Sub. Nts.,
5/15/11 400,000 428,000
-------------
1,903,500
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.9%
AMI Semiconductor, Inc., 10.75%
Sr. Unsec. Sub. Nts., 2/1/13 682,000 804,760
- --------------------------------------------------------------------------------
Amkor Technology, Inc.:
7.75% Sr. Nts., 5/15/13 120,000 113,400
9.25% Sr. Unsec. Sub. Nts., 2/15/08 1,000,000 1,027,500
- --------------------------------------------------------------------------------
Freescale Semiconductor, Inc., 7.125%
Sr. Unsec. Nts., 7/15/14 1,300,000 1,417,000
- --------------------------------------------------------------------------------
Huntsman International LLC, 7.375%
Sr. Sub. Nts., 1/1/15 3 1,550,000 1,561,625
- --------------------------------------------------------------------------------
MagnaChip Semiconductor Ltd., 8%
Sr. Sub. Nts., 12/15/14 3 181,000 189,598
-------------
5,113,883
- --------------------------------------------------------------------------------
MATERIALS--11.5%
- --------------------------------------------------------------------------------
CHEMICALS--3.8%
Avecia Group plc, 11% Sr. Unsec. Nts.,
7/1/09 117,000 121,095
- --------------------------------------------------------------------------------
ClimaChem, Inc., 10.75% Sr. Unsec. Nts.,
Series B, 12/1/07 250,000 167,500
- --------------------------------------------------------------------------------
Compass Minerals Group, Inc., 10%
Sr. Sub. Nts., 8/15/11 1,200,000 1,356,000
- --------------------------------------------------------------------------------
Crompton Corp., 9.875% Sr. Nts.,
8/1/12 3 800,000 920,000
- --------------------------------------------------------------------------------
Equistar Chemicals LP/
Equistar Funding Corp.:
8.75% Sr. Unsec. Nts., 2/15/09 400,000 450,000
10.125% Sr. Unsec. Nts., 9/1/08 57,000 65,978
10.625% Sr. Unsec. Nts., 5/1/11 1,800,000 2,097,000
- --------------------------------------------------------------------------------
Huntsman Co. LLC:
11.625% Sr. Unsec. Nts., 10/15/10 57,000 67,688
11.75% Sr. Nts., 7/15/12 3 1,300,000 1,543,750
- --------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts.,
7/1/09 [EUR] 60,838 88,698
10.125% Sr. Unsec. Sub. Nts., 7/1/09 9 1,645,000 1,739,588
13.09% Sr. Unsec. Disc. Nts., 12/31/09 8 400,000 226,000
- --------------------------------------------------------------------------------
Huntsman International LLC, 9.875%
Sr. Nts., 3/1/09 2,000,000 2,205,000
- --------------------------------------------------------------------------------
IMC Global, Inc.:
7.625% Bonds, 11/1/05 1 3,000 3,075
10.875% Sr. Unsec. Nts., 8/1/13 1 57,000 71,535
10.875% Sr. Unsec. Nts., Series B, 6/1/08 11,627 14,011
14 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
CHEMICALS Continued
Innophos, Inc., 8.875% Sr. Sub. Nts.,
8/15/14 1 $ 800,000 $ 868,000
- --------------------------------------------------------------------------------
ISP Chemco, Inc., 10.25% Sr. Unsec. Sub.
Nts., 7/1/11 500,000 567,500
- --------------------------------------------------------------------------------
ISP Holdings, Inc., 10.625% Sr. Sec. Nts.,
12/15/09 300,000 333,750
- --------------------------------------------------------------------------------
KI Holdings, Inc., 0%/9.875%
Sr. Disc. Nts., 11/15/14 3,6 750,000 483,750
- --------------------------------------------------------------------------------
Lyondell Chemical Co.:
9.50% Sec. Nts., 12/15/08 57,000 62,130
9.50% Sr. Sec. Nts., 12/15//08 100,000 109,000
9.625% Sr. Sec. Nts., Series A, 5/1/07 1,300,000 1,436,500
9.80% Debs., 2/1/20 900,000 1,030,500
9.875% Sec. Nts., Series B, 5/1/07 420,000 442,050
10.50% Sr. Sec. Nts., 6/1/13 300,000 358,500
11.125% Sr. Sec. Nts., 7/15/12 300,000 357,750
- --------------------------------------------------------------------------------
Millennium America, Inc., 9.25%
Sr. Unsec. Sub. Nts., 6/15/08 711,627 813,034
- --------------------------------------------------------------------------------
PCI Chemicals Canada, 10%
Sr. Sec. Nts., 12/31/08 319,909 340,703
- --------------------------------------------------------------------------------
Pioneer Cos., Inc., 6.05%
Sr. Sec. Nts., 12/31/06 2 101,304 106,876
- --------------------------------------------------------------------------------
PolyOne Corp.:
8.875% Sr. Unsec. Nts., 5/1/12 1,550,000 1,693,375
10.625% Sr. Unsec. Nts., 5/15/10 357,000 403,410
- --------------------------------------------------------------------------------
Resolution Performance Products LLC:
8% Sr. Sec. Nts., 12/15/09 450,000 486,000
13.50% Sr. Unsec. Sub. Nts., 11/15/10 300,000 327,750
- --------------------------------------------------------------------------------
Rhodia SA, 10.25% Sr. Unsec.
Nts., 6/1/10 500,000 565,000
- --------------------------------------------------------------------------------
Rockwood Specialties Group, Inc.:
7.50% Sr. Sub. Nts., 11/15/14 3 400,000 417,000
10.625% Sr. Unsec. Sub. Nts., 5/15/11 400,000 462,000
- --------------------------------------------------------------------------------
Sterling Chemicals, Inc., 10%
Sr. Sec. Nts., 12/19/07 7 409,135 411,181
- --------------------------------------------------------------------------------
Westlake Chemical Corp., 8.75%
Sr. Nts., 7/15/11 260,000 295,100
-------------
23,562,140
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--0.1%
Texas Industries, Inc., 10.25%
Sr. Unsec. Nts., 6/15/11 800,000 940,000
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING--2.9%
Crown Euro Holdings SA, 9.50%
Sr. Sec. Nts., 3/1/11 900,000 1,030,500
- --------------------------------------------------------------------------------
Graham Packaging Co., Inc.:
8.50% Sr. Nts., 10/15/12 3 350,000 369,250
9.875% Sub. Nts., 10/15/14 3 600,000 643,500
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING Continued
Graphic Packaging International Corp.:
8.50% Sr. Nts., 8/15/11 $ 1,000,000 $ 1,097,500
9.50% Sr. Sub. Nts., 8/15/13 700,000 799,750
- --------------------------------------------------------------------------------
Jefferson Smurfit Corp.:
7.50% Sr. Unsec. Unsub. Nts., 6/1/13 350,000 375,375
8.25% Sr. Unsec. Nts., 10/1/12 900,000 985,500
- --------------------------------------------------------------------------------
MDP Acquisitions plc, 9.625%
Sr. Nts., 10/1/12 800,000 896,000
- --------------------------------------------------------------------------------
Owens-Brockway Glass Container, Inc.:
7.75% Sr. Sec. Nts., 5/15/11 1,000,000 1,087,500
8.25% Sr. Unsec. Nts., 5/15/13 557,000 615,485
8.75% Sr. Sec. Nts., 11/15/12 1,350,000 1,528,875
8.875% Sr. Sec. Nts., 2/15/09 1,300,000 1,418,625
- --------------------------------------------------------------------------------
Pliant Corp., 0%/11.125% Sr. Sec.
Disc. Nts., 6/15/09 6 600,000 557,250
- --------------------------------------------------------------------------------
Solo Cup Co., 8.50% Sr. Sub. Nts.,
2/15/14 1,500,000 1,567,500
- --------------------------------------------------------------------------------
Stone Container Corp.:
8.375% Sr. Nts., 7/1/12 750,000 821,250
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 1,100,000
- --------------------------------------------------------------------------------
Stone Container Finance Co. of Canada
II, 7.375% Sr. Unsec. Nts., 7/15/14 600,000 642,000
- --------------------------------------------------------------------------------
TriMas Corp., 9.875% Sr. Unsec. Sub. Nts.,
6/15/12 1 1,000,000 1,065,000
-------------
17,710,860
- --------------------------------------------------------------------------------
METALS & MINING--2.7%
AK Steel Corp.:
7.75% Sr. Unsec. Nts., 6/15/12 557,000 576,495
7.875% Sr. Unsec. Nts., 2/15/09 300,000 307,125
- --------------------------------------------------------------------------------
Arch Western Finance LLC, 6.75%
Sr. Nts., 7/1/13 800,000 830,000
- --------------------------------------------------------------------------------
California Steel Industries, Inc., 6.125%
Sr. Nts., 3/15/14 800,000 798,000
- --------------------------------------------------------------------------------
Century Aluminum Co., 7.50% Sr. Nts.,
8/15/14 3 1,300,000 1,391,000
- --------------------------------------------------------------------------------
Foundation PA Coal Co., 7.25% Sr. Nts.,
8/1/14 3 650,000 695,500
- --------------------------------------------------------------------------------
IMCO Recycling, Inc., 10.375%
Sr. Sec. Nts., 10/15/10 700,000 798,000
- --------------------------------------------------------------------------------
International Steel Group, Inc.,
6.50% Sr. Nts., 4/15/14 300,000 323,250
- --------------------------------------------------------------------------------
IPSCO, Inc., 8.75% Sr. Nts., 6/1/13 300,000 345,000
- --------------------------------------------------------------------------------
Ispat Inland ULC, 9.75% Sr. Sec. Nts.,
4/1/14 1,364,000 1,691,360
- --------------------------------------------------------------------------------
Jorgensen (Earle M.) Co., 9.75%
Sr. Sec. Nts., 6/1/12 800,000 904,000
15 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING Continued
Kaiser Aluminum & Chemical Corp.,
10.875% Sr. Nts., Series B, 10/15/06 4,5 $ 1,000,000 $ 887,500
- --------------------------------------------------------------------------------
Koppers Industry, Inc., 9.875%
Sr. Sec. Nts., 10/15/13 900,000 1,030,500
- --------------------------------------------------------------------------------
Massey Energy Co., 6.625% Sr. Nts.,
11/15/10 400,000 420,000
- --------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 740,000 647,500
- --------------------------------------------------------------------------------
Northwest Pipeline Corp., 8.125%
Sr. Nts., 3/1/10 200,000 222,250
- --------------------------------------------------------------------------------
Oregon Steel Mills, Inc., 10% Sr. Nts.,
7/15/09 1,300,000 1,452,750
- --------------------------------------------------------------------------------
Peabody Energy Corp., 6.875%
Sr. Unsec. Nts., Series B, 3/15/13 1,000,000 1,087,500
- --------------------------------------------------------------------------------
Steel Dynamics, Inc., 9.50% Sr. Nts.,
3/15/09 400,000 440,000
- --------------------------------------------------------------------------------
UCAR Finance, Inc., 10.25% Sr. Nts.,
2/15/12 1 400,000 459,000
- --------------------------------------------------------------------------------
United States Steel Corp.:
9.75% Sr. Nts., 5/15/10 505,000 578,225
10.75% Sr. Nts., 8/1/08 389,000 459,993
-------------
16,344,948
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--2.0%
Abitibi-Consolidated, Inc., 8.55% Nts.,
8/1/10 300,000 326,625
- --------------------------------------------------------------------------------
Appleton Papers, Inc., 8.125% Sr. Nts.,
6/15/11 600,000 649,500
- --------------------------------------------------------------------------------
Buckeye Technologies, Inc.,
8.50% Sr. Nts., 10/1/13 350,000 381,500
- --------------------------------------------------------------------------------
Georgia-Pacific Corp.:
7.75% Sr. Unsec. Nts., 11/15/29 2,000,000 2,250,000
8.125% Sr. Unsec. Nts., 5/15/11 2,200,000 2,541,000
9.375% Sr. Unsec. Nts., 2/1/13 1,600,000 1,872,000
- --------------------------------------------------------------------------------
Inland Fiber Group LLC, 9.625%
Sr. Unsec. Nts., 11/15/07 1,4,5 300,000 136,500
- --------------------------------------------------------------------------------
Norske Skog Canada Ltd., 7.375%
Sr. Unsec. Nts., 3/1/14 600,000 628,500
- --------------------------------------------------------------------------------
Riverside Forest Products Ltd., 7.875%
Sr. Unsec. Sub. Nts., 3/1/14 600,000 663,000
- --------------------------------------------------------------------------------
Tekni-Plex, Inc., 8.75% Sr. Sec. Nts.,
11/15/13 3 1,557,000 1,557,000
- --------------------------------------------------------------------------------
Tembec Industries, Inc.:
7.75% Sr. Nts., 3/15/12 700,000 680,750
8.50% Sr. Unsec. Nts., 2/1/11 57,000 57,570
- --------------------------------------------------------------------------------
Western Forest Products, Inc., 15%
Sec. Nts., 7/28/09 3,7 417,000 472,253
-------------
12,216,198
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--9.6%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.7%
American Tower Corp.:
7.125% Sr. Unsec. Nts., 10/15/12 3 $ 500,000 $ 513,750
9.375% Sr. Nts., 2/1/09 9 161,000 171,063
- --------------------------------------------------------------------------------
Citizens Communications Co.:
6.25% Sr. Nts., 1/15/13 1,400,000 1,417,500
9% Sr. Unsec. Unsub. Nts., 8/15/31 600,000 688,500
9.25% Sr. Nts., 5/15/11 800,000 940,000
- --------------------------------------------------------------------------------
Crown Castle International Corp.,
7.50% Sr. Nts., 12/1/13 900,000 972,000
- --------------------------------------------------------------------------------
MCI, Inc.:
6.908% Sr. Unsec. Nts., 5/1/07 2 2,729,000 2,800,636
7.688% Sr. Unsec. Nts., 5/1/09 2 1,000,000 1,037,500
- --------------------------------------------------------------------------------
PSINet, Inc., 11% Sr. Nts., 8/1/09 1,4,5 886,049 13,291
- --------------------------------------------------------------------------------
Qwest Capital Funding, Inc., 7.90%
Unsec. Nts., 8/15/10 1,657,000 1,681,855
- --------------------------------------------------------------------------------
Qwest Communications International,
Inc., 7.25% Sr. Nts., 2/15/11 3 600,000 618,000
- --------------------------------------------------------------------------------
Qwest Corp.:
6.875% Unsec. Debs., 9/15/33 1,000,000 925,000
9.125% Nts., 3/15/12 3 2,500,000 2,900,000
- --------------------------------------------------------------------------------
Qwest Services Corp.:
14% Nts., 12/15/10 2,3 4,800,000 5,796,000
14.50% Nts., 12/15/14 3 1,700,000 2,159,000
- --------------------------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 1,4,5 400,000 --
- --------------------------------------------------------------------------------
Time Warner Telecom LLC/Time Warner
Telecom, Inc., 9.75% Sr. Nts., 7/15/08 100,000 101,750
- --------------------------------------------------------------------------------
Winstar Communications, Inc., 12.75%
Sr. Nts., 4/15/10 1,4,5 1,000,000 --
-------------
22,735,845
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--5.9%
Alamosa Delaware, Inc.:
8.50% Sr. Nts., 1/31/12 1,000,000 1,097,500
11% Sr. Unsec. Nts., 7/31/10 57,000 67,403
12.50% Sr. Unsec. Nts., 2/1/11 100,000 113,500
- --------------------------------------------------------------------------------
American Cellular Corp., 10% Sr. Nts.,
Series B, 8/1/11 200,000 172,500
- --------------------------------------------------------------------------------
American Tower Corp., 7.50% Sr. Nts.,
5/1/12 1,650,000 1,740,750
- --------------------------------------------------------------------------------
American Tower Escrow Corp., 12.25%
Sr. Sub. Disc. Nts., 8/1/08 8 1,400,000 1,053,500
- --------------------------------------------------------------------------------
AT&T Corp., 9.05% Sr. Unsec. Nts.,
11/15/11 2 3,250,000 3,757,813
- --------------------------------------------------------------------------------
CellNet Data Systems, Inc., Sr. Unsec.
Disc. Nts., 10/1/07 1,4,5 1,834,000 --
- --------------------------------------------------------------------------------
Centennial Cellular Operating Co.
LLC/Centennial Communications Corp.,
10.125% Sr. Nts., 6/15/13 1,700,000 1,916,750
16 | OPPENHEIMER HIGH INCOME FUND/VA
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES Continued
Crown Castle International Corp.,
10.75% Sr. Nts., 8/1/11 $ 2,050,000 $ 2,234,500
- --------------------------------------------------------------------------------
Dobson Cellular Systems, 8.375%
Sec. Nts., 11/1/11 3 270,000 280,125
- --------------------------------------------------------------------------------
Dobson Communications Corp.,
8.875% Sr. Nts., 10/1/13 507,000 358,703
- --------------------------------------------------------------------------------
IWO Escrow Co., Sr. Sec. Nts.,
1/15/12 2,3,9 220,000 222,750
- --------------------------------------------------------------------------------
Nextel Communications, Inc.,
7.375% Sr. Nts., 8/1/15 6,490,000 7,171,450
- --------------------------------------------------------------------------------
Nextel Partners, Inc.:
8.125% Sr. Nts., 7/1/11 700,000 780,500
12.50% Sr. Nts., 11/15/09 1,162,000 1,321,775
- --------------------------------------------------------------------------------
Rogers Wireless Communications, Inc.:
6.375% Sec. Nts., 3/1/14 2,400,000 2,388,000
7.50% Sr. Sec. Nts., 3/15/15 3 900,000 954,000
8% Sr. Sub. Nts., 12/15/12 3 800,000 850,000
- --------------------------------------------------------------------------------
Rural Cellular Corp.:
8.25% Sr. Sec. Nts., 3/15/12 775,000 823,438
9.75% Sr. Sub. Nts., 1/15/10 457,000 415,870
9.875% Sr. Nts., 2/1/10 1,100,000 1,124,750
- --------------------------------------------------------------------------------
SBA Communications Corp., 8.50%
Sr. Nts., 12/1/12 3 1,150,000 1,178,750
- --------------------------------------------------------------------------------
SBA Telecommunications, Inc./SBA
Communications Corp., 0%/9.75%
Sr. Disc. Nts., 12/15/11 6 2,357,000 1,997,558
- --------------------------------------------------------------------------------
Triton PCS, Inc., 8.50%
Sr. Unsec. Nts., 6/1/13 1,300,000 1,261,000
- --------------------------------------------------------------------------------
UbiquiTel Operating Co., 9.875%
Sr. Nts., 3/1/11 1,100,000 1,240,250
- --------------------------------------------------------------------------------
US Unwired, Inc., 10% Sr. Sec. Nts.,
6/15/12 500,000 566,250
- --------------------------------------------------------------------------------
Western Wireless Corp., 9.25%
Sr. Unsec. Nts., 7/15/13 1,057,000 1,154,773
-------------
36,244,158
- --------------------------------------------------------------------------------
UTILITIES--6.2%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.9%
AES Corp. (The), 8.75% Sr. Sec. Nts.,
5/15/13 3 1,150,000 1,312,438
- --------------------------------------------------------------------------------
Allegheny Energy, Inc., 7.75% Nts.,
8/1/05 300,000 305,625
- --------------------------------------------------------------------------------
Caithness Coso Funding Corp.,
9.05% Sr. Sec. Nts., Series B, 12/15/09 366,797 405,311
- --------------------------------------------------------------------------------
Calpine Corp., 7.625% Sr. Nts., 4/15/06 360,000 355,500
- --------------------------------------------------------------------------------
CenterPoint Energy, Inc., 7.25%
Sr. Nts., Series B, 9/1/10 1,600,000 1,786,640
- --------------------------------------------------------------------------------
CMS Energy Corp.:
7.50% Sr. Nts., 1/15/09 357,000 381,990
7.75% Sr. Nts., 8/1/10 400,000 439,500
9.875% Sr. Unsec. Nts., 10/15/07 1,400,000 1,571,500
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES Continued
CMS Energy X-TRAS Pass-Through
Trust I, 7% Sr. Unsec. Pass-Through
Certificates, 1/15/05 $ 500,000 $ 500,000
- --------------------------------------------------------------------------------
ESI Tractebel Acquisition Corp.,
7.99% Sec. Bonds, Series B, 12/30/11 1 882,000 935,834
- --------------------------------------------------------------------------------
Midwest Generation LLC, 8.75%
Sr. Sec. Nts., 5/1/34 3,600,000 4,104,000
- --------------------------------------------------------------------------------
Mirant Americas Generation LLC,
8.30% Sr. Unsec. Nts., 5/1/11 4,5 200,000 212,500
- --------------------------------------------------------------------------------
MSW Energy Holdings II LLC/MSW
Energy Finance Co. II, Inc., 7.375%
Sr. Sec. Nts., Series B, 9/1/10 700,000 738,500
- --------------------------------------------------------------------------------
MSW Energy Holdings LLC/MSW
Energy Finance Co., Inc., 8.50%
Sr. Sec. Nts., 9/1/10 400,000 440,000
- --------------------------------------------------------------------------------
NRG Energy, Inc., 8% Sr. Sec. Nts.,
12/15/13 3 2,500,000 2,737,500
- --------------------------------------------------------------------------------
Reliant Energy, Inc., 6.75% Sr. Sec. Nts.,
12/15/14 900,000 898,875
- --------------------------------------------------------------------------------
Reliant Resources, Inc.:
9.25% Sr. Sec. Nts., 7/15/10 1,657,000 1,855,840
9.50% Sr. Sec. Nts., 7/15/13 1,600,000 1,826,000
- --------------------------------------------------------------------------------
Teco Energy, Inc., 7.20% Unsec. Unsub.
Nts., 5/1/11 2,000,000 2,200,000
- --------------------------------------------------------------------------------
Texas Genco LLC, 6.875% Sr. Nts.,
12/15/14 3 1,100,000 1,142,625
-------------
24,150,178
- --------------------------------------------------------------------------------
GAS UTILITIES--0.3%
AmeriGas Partners LP/AmeriGas Eagle
Finance Corp., 8.875% Sr. Unsec. Nts.,
Series B, 5/20/11 10 1,400,000 1,533,000
- --------------------------------------------------------------------------------
SEMCO Energy, Inc., 7.125% Sr. Nts.,
5/15/08 400,000 430,109
-------------
1,963,109
- --------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--1.9%
AES Red Oak LLC:
8.54% Sr. Sec. Bonds, Series A, 11/30/19 1,031,898 1,163,465
9.20% Sr. Sec. Bonds, Series B, 11/30/29 500,000 563,750
- --------------------------------------------------------------------------------
Consumers Energy Co.:
6.25% Nts., 9/15/06 300,000 313,344
6.375% Sr. Sec. Nts., 2/1/08 450,000 481,506
7.375% Nts., 9/15/23 350,000 362,054
- --------------------------------------------------------------------------------
Dynegy Holdings, Inc.:
6.875% Sr. Unsec. Unsub. Nts., 4/1/11 3,340,000 3,231,450
8.75% Sr. Nts., 2/15/12 1,857,000 1,954,493
10.125% Sr. Sec. Nts., 7/15/13 3 1,850,000 2,127,500
- --------------------------------------------------------------------------------
Mirant Mid-Atlantic LLC, 8.625%
Sec. Pass-Through Certificates,
Series A, 6/30/12 797,235 885,429
17 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER Continued
NorthWestern Corp., 5.875%
Sr. Sec. Nts., 11/1/14 3 $ 580,000 $ 596,223
-------------
11,679,214
- --------------------------------------------------------------------------------
WATER UTILITIES--0.1%
National Waterworks, Inc., 10.50%
Sr. Unsec. Sub. Nts., Series B, 12/1/12 300,000 339,000
-------------
Total Corporate Bonds and Notes
(Cost $450,525,393) 478,080,198
SHARES
- --------------------------------------------------------------------------------
PREFERRED STOCKS--0.6%
- --------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr.
Exchangeable, Non-Vtg. 1,5,7 13,764 --
- --------------------------------------------------------------------------------
Dobson Communications Corp., 6% Cv.,
Series F (converts into Dobson
Communications Corp., Cl. A common
stock), Non-Vtg. 3 800 56,071
- --------------------------------------------------------------------------------
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 8,000 698,000
- --------------------------------------------------------------------------------
ICG Holdings, Inc.,
14.25% Exchangeable, Non-Vtg. 1,5,7 342 --
- --------------------------------------------------------------------------------
McLeodUSA, Inc., 2.50% Cv., Series A 5 3,258 11,875
- --------------------------------------------------------------------------------
Pacific & Atlantic Holdings, Inc., 7.50%
Cum. Cv., Series A 1,5,7 22,013 44,026
- --------------------------------------------------------------------------------
Paxson Communications Corp.:
14.25% Cum. Jr. Exchangeable,
Non-Vtg. 1,7 92 678,500
14.25% Cum. Jr. Exchangeable,
Non-Vtg. 1,5,7 -- 561
- --------------------------------------------------------------------------------
PTV, Inc., 10% Cum., Series A, Non-Vtg. 22 75
- --------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum.,
Series B, Non-Vtg. 1,5,7 1,177 915,118
- --------------------------------------------------------------------------------
Sovereign Real Estate Investment Trust,
12% Non-Cum., Series A 1 10,000 1,517,500
-------------
Total Preferred Stocks (Cost $4,490,451) 3,921,776
- --------------------------------------------------------------------------------
COMMON STOCKS--1.6%
- --------------------------------------------------------------------------------
AboveNet, Inc. 5 159 5,088
- --------------------------------------------------------------------------------
Broadwing Corp. 460 4,191
- --------------------------------------------------------------------------------
Cebridge Connections Holding LLC 5 2,645 --
- --------------------------------------------------------------------------------
Charles River Laboratories
International, Inc. 5 8,360 384,644
- --------------------------------------------------------------------------------
Chesapeake Energy Corp. 100,909 1,664,999
- --------------------------------------------------------------------------------
Covad Communications Group, Inc. 5 20,660 44,419
- --------------------------------------------------------------------------------
Crunch Equity Holdings, Cl. A 1,5 301 390,333
- --------------------------------------------------------------------------------
Dobson Communications Corp., Cl. A 5 43,391 74,633
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS Continued
Globix Corp. 5 11,467 $ 41,281
- --------------------------------------------------------------------------------
Gulfstream Holding, Inc. 1,5 56 --
- --------------------------------------------------------------------------------
Horizon Natural Resources Co. 1,5 20,000 --
- --------------------------------------------------------------------------------
ICO Global Communication
Holdings Ltd. 5 42,107 21,475
- --------------------------------------------------------------------------------
iPCS, Inc. 5 9,973 304,177
- --------------------------------------------------------------------------------
Leap Wireless International, Inc. 5 1,913 51,651
- --------------------------------------------------------------------------------
Magellan Health Services, Inc. 5 9,965 340,404
- --------------------------------------------------------------------------------
Manitowoc Co., Inc. (The) 1,039 39,118
- --------------------------------------------------------------------------------
MCI, Inc. 1,629 32,841
- --------------------------------------------------------------------------------
NTL, Inc. 5 18,902 1,379,090
- --------------------------------------------------------------------------------
Orbital Sciences Corp. 5 2,235 26,440
- --------------------------------------------------------------------------------
Pioneer Cos., Inc. 5 20,688 429,276
- --------------------------------------------------------------------------------
Polymer Group, Inc., Cl. A 5 24,040 456,760
- --------------------------------------------------------------------------------
Prandium, Inc. 1,5 62,829 691
- --------------------------------------------------------------------------------
Sterling Chemicals, Inc. 1,5 396 14,751
- --------------------------------------------------------------------------------
Telewest Global, Inc. 5 96,326 1,693,411
- --------------------------------------------------------------------------------
Telus Corp. 1,079 31,183
- --------------------------------------------------------------------------------
TVMAX Holdings, Inc. 1,5 7,500 44,625
- --------------------------------------------------------------------------------
UnitedGlobalCom, Inc., Cl. A 5 143,824 1,389,340
- --------------------------------------------------------------------------------
Viatel Holding Ltd. (Bermuda) 1,5 2,701 3,241
- --------------------------------------------------------------------------------
Western Forest Products, Inc. 5 85,047 472,030
- --------------------------------------------------------------------------------
Williams Cos., Inc. (The) 20,000 325,800
- --------------------------------------------------------------------------------
WRC Media Corp. 1,5 1,353 27
- --------------------------------------------------------------------------------
XO Communications, Inc. 5 2,646 8,044
-------------
Total Common Stocks (Cost $8,602,957) 9,673,963
UNITS
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.2%
- --------------------------------------------------------------------------------
American Tower Corp. Wts.,
Exp. 8/1/08 3,5 1,400 322,700
- --------------------------------------------------------------------------------
ASAT Finance LLC Wts., Exp. 11/1/06 1,5 500 4
- --------------------------------------------------------------------------------
Citigroup, Inc. Litigation Wts.,
Exp. 12/31/50 5 15,626 22,189
- --------------------------------------------------------------------------------
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 --
- --------------------------------------------------------------------------------
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 --
18 | OPPENHEIMER HIGH INCOME FUND/VA
VALUE
UNITS SEE NOTE 1
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES Continued
- --------------------------------------------------------------------------------
Huntsman Co. LLC Wts.,
Exp. 5/15/11 1,5 1,000 $ 470,500
- --------------------------------------------------------------------------------
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 6
- --------------------------------------------------------------------------------
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 1,516
- --------------------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts.,
Exp. 7/15/05 1,5 1,500 15
- --------------------------------------------------------------------------------
Ntelos, Inc. Wts., Exp. 8/15/10 1,5 1,000 10
- --------------------------------------------------------------------------------
Pathmark Stores, Inc. Wts., Exp. 9/19/10 5 20,000 4,000
- --------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 6/30/05 1,5 1,600 --
- --------------------------------------------------------------------------------
Sterling Chemicals, Inc. Wts.,
Exp. 12/19/08 1,5 647 3,017
- --------------------------------------------------------------------------------
Transocean, Inc. Wts., Exp. 5/1/09 3,5 1,000 453,125
- --------------------------------------------------------------------------------
XO Communications, Inc., Cl. A Wts.,
Exp. 1/16/10 5 5,300 3,578
- --------------------------------------------------------------------------------
XO Communications, Inc., Cl. B Wts.,
Exp. 1/16/10 5 3,975 1,908
- --------------------------------------------------------------------------------
XO Communications, Inc., Cl. C Wts.,
Exp. 1/16/10 5 3,975 1,550
-------------
Total Rights, Warrants and Certificates
(Cost $256,478) 1,284,277
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
STRUCTURED NOTES--7.9%
- --------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The), High
Yield Index Linked Nts., 0%, 5/8/05 8 $ 6,000,000 6,128,400
- --------------------------------------------------------------------------------
Dow Jones CDX High Yield Index
Pass-Through Certificates:
Series 3-1, 7.75%, 12/29/09 3,11 11,000,000 11,323,125
Series 3-3, 8%, 12/29/09 3,11 17,400,000 17,867,625
Series 3-4, 10.50%, 12/29/09 3,11 11,500,000 11,765,938
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
STRUCTURED NOTES Continued
- --------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc.,
High Yield Targeted Return Index
Securities, Series 2004-1,
8.218%, 8/1/15 1,10,11 $ 953,488 $ 1,063,481
-------------
Total Structured Notes (Cost $46,981,804) 48,148,569
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--9.6%
- --------------------------------------------------------------------------------
Undivided interest of 4.07% in joint repurchase
agreement (Principal Amount/Value
$1,443,703,000, with a maturity value of
$1,443,962,867) with UBS Warburg LLC, 2.16%,
dated 12/31/04, to be repurchased at $58,766,576
on 1/3/05, collateralized by Federal National
Mortgage Assn., 5%--6%, 4/1/34--10/1/34, with a
value of $1,474,609,071 (Cost $58,756,000) 58,756,000 58,756,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $571,908,681) 98.2% 602,175,363
- --------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.8 11,242,358
-----------------------------
NET ASSETS 100.0% $ 613,417,721
=============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
PRINCIPAL AMOUNT IS REPORTED IN U.S. DOLLARS, EXCEPT FOR THOSE DENOTED IN THE
FOLLOWING CURRENCY:
EUR EURO
1. Illiquid or restricted security. The aggregate value of illiquid or
restricted securities as of December 31, 2004 was $23,784,798, which represents
3.88% of the Fund's net assets, of which $691 is considered restricted. See Note
8 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 $132,039,023 or 21.53% of the Fund's net
assets as of December 31, 2004.
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. Zero coupon bond reflects effective yield on the date of purchase.
9. When-issued security or forward commitment to be delivered and settled after
December 31, 2004. See Note 1 of Notes to Financial Statements.
10. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts with an aggregate
market value of $363,592. See Note 6 of Notes to Financial Statements.
11. Interest rate represents a weighted average rate comprised of the interest
rates of the underlying securities.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF ASSETS AND LIABILITIES December 31, 2004
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Investments, at value (cost $571,908,681)--see accompanying statement of investments $ 602,175,363
- -----------------------------------------------------------------------------------------------------------------------
Cash 1,323,413
- -----------------------------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $5,025) 5,025
- -----------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 9,052,296
Shares of beneficial interest sold 1,245,171
Investments sold 225,785
Other 8,576
--------------
Total assets 614,035,629
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on swap contracts 90,514
- -----------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased on a when-issued basis or forward commitment 220,000
Shares of beneficial interest redeemed 153,752
Distribution and service plan fees 77,618
Shareholder communications 26,663
Trustees' compensation 12,530
Futures margins 5,000
Transfer and shareholder servicing agent fees 1,733
Other 30,098
--------------
Total liabilities 617,908
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 613,417,721
==============
- -----------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 69,751
- -----------------------------------------------------------------------------------------------------------------------
Additional paid-in capital 656,159,098
- -----------------------------------------------------------------------------------------------------------------------
Accumulated net investment income 37,454,171
- -----------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (110,525,544)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities denominated in
foreign currencies 30,260,245
--------------
NET ASSETS $ 613,417,721
==============
- -----------------------------------------------------------------------------------------------------------------------
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 $479,405,199 and 54,454,794 shares of beneficial interest outstanding) $ 8.80
- -----------------------------------------------------------------------------------------------------------------------
Service shares:
Net asset value, redemption price per share and offering price per share
(based on net assets of $134,012,522 and 15,296,009 shares of beneficial interest outstanding) $ 8.76
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENT OF OPERATIONS For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $617) $ 43,139,671
- ---------------------------------------------------------------------------------------
Portfolio lending fees 6,683
-------------
Total investment income 43,146,354
- ---------------------------------------------------------------------------------------
EXPENSES
- ---------------------------------------------------------------------------------------
Management fees 4,058,869
- ---------------------------------------------------------------------------------------
Distribution and service plan fees--Service shares 253,266
- ---------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Non-Service shares 10,157
Service shares 10,042
- ---------------------------------------------------------------------------------------
Shareholder communications:
Non-Service shares 52,908
Service shares 12,135
- ---------------------------------------------------------------------------------------
Custodian fees and expenses 19,333
- ---------------------------------------------------------------------------------------
Trustees' compensation 16,825
- ---------------------------------------------------------------------------------------
Other 56,941
-------------
Total expenses 4,490,476
Less reduction to custodian expenses (14,793)
-------------
Net expenses 4,475,683
- ---------------------------------------------------------------------------------------
NET INVESTMENT INCOME 38,670,671
- ---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ---------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments (613,058)
Closing of futures contracts 64,322
Foreign currency transactions 327,659
Swap contracts (461,773)
-------------
Net realized loss (682,850)
- ---------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 10,248,803
Translation of assets and liabilities denominated in foreign currencies 45,315
Futures contracts 76,370
Swap contracts (90,514)
-------------
Net change in unrealized appreciation 10,279,974
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 48,267,795
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER HIGH INCOME FUND/VA
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2004 2003
- --------------------------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Net investment income $ 38,670,671 $ 36,198,271
- --------------------------------------------------------------------------------------------------------------------------
Net realized loss (682,850) (3,373,657)
- --------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 10,279,974 60,265,270
----------------------------
Net increase in net assets resulting from operations 48,267,795 93,089,884
- --------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Non-Service shares (29,416,204) (26,819,814)
Service shares (5,469,874) (1,672,018)
- --------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares (10,547,360) 76,658,765
Service shares 54,117,983 51,833,851
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
Total increase 56,952,340 193,090,668
- --------------------------------------------------------------------------------------------------------------------------
Beginning of period 556,465,381 363,374,713
----------------------------
End of period (including accumulated net investment income of $37,454,171 and
$33,660,739, respectively) $613,417,721 $556,465,381
============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER HIGH INCOME FUND/VA
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NON-SERVICE SHARES YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.61 $ 7.51 $ 8.54 $ 9.27 $ 10.72
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .58 1 .60 .58 .84 1.00
Net realized and unrealized gain (loss) .15 1.09 (.76) (.62) (1.36)
--------------------------------------------------------------------------------
Total from investment operations .73 1.69 (.18) .22 (.36)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.54) (.59) (.85) (.95) (1.09)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.80 $ 8.61 $ 7.51 $ 8.54 $ 9.27
================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.97% 23.96% (2.40)% 1.97% (3.74)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 479,405 $ 480,112 $ 345,670 $ 344,788 $ 333,533
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 460,877 $ 396,858 $ 335,894 $ 347,723 $ 329,260
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 6.91% 8.31% 8.29% 9.94% 10.47%
Total expenses 0.75% 4 0.76% 4 0.77% 4 0.79% 4 0.79% 4
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 48% 75% 46% 31%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Total returns are not annualized for
periods less than one full year. Total return information does not reflect
expenses that apply at the separate account level or to related insurance
products. Inclusion of these charges would reduce the total return figures for
all periods shown. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER HIGH INCOME FUND/VA
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SERVICE SHARES YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 1
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.58 $ 7.49 $ 8.54 $ 8.40
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .56 2 .61 .88 .20
Net realized and unrealized gain (loss) .15 1.06 (1.08) (.06)
--------------------------------------------------------------------
Total from investment operations .71 1.67 (.20) .14
- ----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.53) (.58) (.85) --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.76 $ 8.58 $ 7.49 $ 8.54
====================================================================
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 8.73% 23.79% (2.67)% 1.67%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 134,013 $ 76,354 $ 17,705 $ 3
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 101,464 $ 41,246 $ 5,602 $ 2
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 6.63% 7.84% 8.91% 12.51%
Total expenses 1.01% 5 1.04% 5 1.02% 5,6 0.96% 5
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 48% 75% 46%
1. For the period from September 18, 2001 (inception of offering) to December
31, 2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Total returns are not annualized for
periods less than one full year. Total return information does not reflect
expenses that apply at the separate account level or to related insurance
products. Inclusion of these charges would reduce the total return figures for
all periods shown. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | 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. Both classes of shares have identical rights and
voting privileges with respect to the Fund in general and exclusive voting
rights on matters that affect that class alone. Earnings, net assets and net
asset value per share may differ due to each class having its own expenses, such
as transfer and shareholder servicing agent fees and shareholder communications,
directly attributable to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities listed
or traded on National Stock Exchanges or other domestic or foreign exchanges are
valued based on the last sale price of the security traded on that exchange
prior to the time when the Fund's assets are valued. Securities traded on NASDAQ
are valued based on the closing price provided by NASDAQ prior to the time when
the Fund's assets are valued. In the absence of a sale, the security is valued
at the last sale price on the prior trading day, if it is within the spread of
the closing bid and asked prices, and if not, at the closing bid price.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of 60 days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. Securities may be valued primarily
using dealer-supplied valuations or a portfolio pricing service authorized by
the Board of Trustees. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective exchanges will be fair
valued. Fair value is determined in good faith using consistently applied
procedures under the supervision of the Board of Trustees. Short-term "money
market type" debt securities with remaining maturities of sixty days or less are
valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying financial statements. The Fund records a realized gain or loss when
a structured note is sold or matures. As of December 31, 2004, the market value
of these securities comprised 7.9% of the Fund's net assets and resulted in
unrealized cumulative gains of $1,166,765.
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward
25 | OPPENHEIMER HIGH INCOME FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
commitment may increase the volatility of the Fund's net asset value to the
extent the Fund executes such transactions while remaining substantially fully
invested. The Fund may also sell securities that it purchased on a when-issued
basis or forward commitment prior to settlement of the original purchase. As of
December 31, 2004, the Fund had purchased $220,000 of securities on a
when-issued basis or forward commitment.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of December 31, 2004, securities with an
aggregate market value of $6,822,262, representing 1.11% of the Fund's net
assets, were in default.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars as of the close of The New York Stock Exchange (the
Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for
business. Amounts related to the purchase and sale of foreign securities and
investment income are translated at the rates of exchange prevailing on the
respective dates of such transactions. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
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.
26 | OPPENHEIMER HIGH INCOME FUND/VA
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
------------------------------------------------------------------------------
$37,883,370 $-- $108,492,664 $28,050,771
1. As of December 31, 2004, the Fund had $107,323,569 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2004,
details of the capital loss carryforwards were as follows:
EXPIRING
-------------------------
2006 $ 3,401,577
2007 4,933,260
2008 11,572,833
2009 22,696,701
2010 56,061,391
2011 8,529,303
2012 128,504
-------------
Total $ 107,323,569
=============
2. As of December 31, 2004, the Fund had $1,169,095 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2013.
3. During the fiscal year ended December 31, 2004, the Fund did not utilize any
capital loss carryforward.
4. During the fiscal year ended December 31, 2003, the Fund did not utilize any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for December 31, 2004. Net assets of
the Fund were unaffected by the reclassifications.
INCREASE TO INCREASE TO
ACCUMULATED ACCUMULATED NET
NET INVESTMENT REALIZED LOSS
INCOME ON INVESTMENTS
-----------------------------------------------
$8,839 $8,839
The tax character of distributions paid during the years ended December 31, 2004
and December 31, 2003 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $34,886,078 $28,491,832
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of December 31, 2004 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 573,928,234
Federal tax cost of other investments 6,176,172
---------------
Total federal tax cost $ 580,104,406
===============
Gross unrealized appreciation $ 42,282,791
Gross unrealized depreciation (14,232,020)
---------------
Net unrealized appreciation $ 28,050,771
===============
27 | OPPENHEIMER HIGH INCOME FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED DECEMBER 31, 2004 YEAR ENDED DECEMBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
NON-SERVICE SHARES
Sold 23,243,919 $ 196,620,675 28,774,062 $ 229,684,313
Dividends and/or distributions reinvested 3,591,722 29,416,204 3,719,807 26,819,814
Redeemed (28,128,136) (236,584,239) (22,801,608) (179,845,362)
------------------------------------------------------------------
Net increase (decrease) (1,292,495) $ (10,547,360) 9,692,261 $ 76,658,765
==================================================================
28 | OPPENHEIMER HIGH INCOME FUND/VA
YEAR ENDED DECEMBER 31, 2004 YEAR ENDED DECEMBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
SERVICE SHARES
Sold 12,247,468 $ 103,415,502 13,073,333 $ 104,602,083
Dividends and/or distributions reinvested 669,507 5,469,874 232,224 1,672,018
Redeemed (6,517,361) (54,767,393) (6,772,325) (54,440,250)
------------------------------------------------------------------
Net increase 6,399,614 $ 54,117,983 6,533,232 $ 51,833,851
==================================================================
- --------------------------------------------------------------------------------
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, 2004, were
$314,901,839 and $240,904,813, 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.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended December 31, 2004, the Fund paid
$20,130 to OFS for services to the Fund.
Additionally, funds offered in variable annuity separate accounts are
subject to minimum fees of $10,000 per class for class level assets of $10
million or more. Each class is subject to the minimum fee in the event that the
per account fee does not equal or exceed the applicable minimum fee.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FOR SERVICE SHARES. The Fund has adopted a
Distribution and Service Plan for Service shares to pay OppenheimerFunds
Distributor, Inc. (the Distributor), for distribution related services and
personal service and account maintenance for the Fund's Service shares. Under
the Plan, payments are made quarterly at an annual rate of up to 0.25% of the
average annual net assets of Service shares of the Fund. The Distributor
currently uses all of those fees to compensate sponsor(s) of the insurance
product that offers Fund shares, for providing personal service and maintenance
of accounts of their variable contract owners that hold Service shares. The
impact of the service plan is to increase operating expenses of the Service
shares, which results in lower performance compared to the Fund's shares that
are not subject to a service fee. Fees incurred by the Fund under the Plan are
detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. OFS has voluntarily agreed to limit transfer
and shareholder servicing agent fees for all classes to 0.35% of average annual
net assets per class. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
29 | OPPENHEIMER HIGH INCOME FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of December 31, 2004, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or has expired.
Cash held by the broker to cover initial margin requirements on open
futures contracts is noted in the Statement of Assets and Liabilities.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin. Realized gains and losses are
reported in the Statement of Operations as the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in the Statement of Operations.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of December 31, 2004, the Fund had outstanding futures contracts as follows:
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE CONTRACTS DECEMBER 31, 2004 APPRECIATION
- ----------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Standard & Poor's 500 Index 3/17/05 20 $6,068,500 $82,250
- --------------------------------------------------------------------------------
7. INTEREST RATE SWAP CONTRACTS
The Fund may enter into an interest rate swap transaction to maintain a total
return or yield spread on a particular investment, or portion of its portfolio,
or for other non-speculative purposes. Interest rate swaps involve the exchange
of commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. The coupon payments are based on an agreed
upon principal amount and a specified index. Because the principal amount
30 | OPPENHEIMER HIGH INCOME FUND/VA
is not exchanged, it represents neither an asset nor a liability to either
counterparty, and is referred to as notional. The Fund records an increase or
decrease to unrealized gain (loss), in the amount due to or owed by the Fund at
termination or settlement.
Interest rate swaps are subject to credit risk (if the counterparty fails
to meet its obligations) and interest rate risk. The Fund could be obligated to
pay more under its swap agreements than it receives under them, as a result of
interest rate changes.
As of December 31, 2004, the Fund had entered into the following interest rate
swap agreements:
FIXED RATE FLOATING RATE
PAID BY RECEIVED BY
NOTIONAL THE FUND AT THE FUND AT FLOATING TERMINATION UNREALIZED
SWAP COUNTERPARTY AMOUNT DEC. 31, 2004 DEC. 31, 2004 RATE INDEX DATE DEPRECIATION
- -------------------------------------------------------------------------------------------------------------------
Three-Month
Deutshe Bank AG $20,000,000 4.11% 2.41% LIBOR flat 12/2/09 $90,514
Index abbreviation is as follows:
LIBOR London-Interbank Offered Rate
- --------------------------------------------------------------------------------
8. ILLIQUID OR RESTRICTED SECURITIES
As of December 31, 2004, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund will not invest more than 15% of
its net assets (determined at the time of purchase and reviewed periodically) in
illiquid or restricted securities. Certain restricted securities, eligible for
resale to qualified institutional investors, are not subject to that limitation.
Information concerning restricted securities is as follows:
Acquisition Valuation as of Unrealized
Security Dates Cost December 31, 2004 Depreciation
- --------------------------------------------------------------------------------------
Prandium, Inc. 3/19/99-7/19/02 $738,000 $691 $737,309
- --------------------------------------------------------------------------------
9. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of US
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the collateral.
Cash collateral is invested in cash equivalents. The Fund retains a portion of
the interest earned from the collateral. The Fund also continues to receive
interest or dividends paid on the securities loaned. As of December 31, 2004,
the Fund had no securities on loan.
- --------------------------------------------------------------------------------
10. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor (collectively, the
"Oppenheimer defendants"), as well as 51 of the Oppenheimer funds (as "Nominal
Defendants") excluding the Fund, 31 present and former Directors or Trustees and
9 present and former officers of the funds. This complaint, filed in the U.S.
District Court for the Southern District of New York on January 10, 2005,
31 | OPPENHEIMER HIGH INCOME FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. LITIGATION Continued
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The Oppenheimer defendants believe that the allegations contained in the
Complaints are without merit and that they, the funds named as Nominal
Defendants, and the Directors/Trustees of those funds have meritorious defenses
against the claims asserted. The Oppenheimer defendants intend to defend these
lawsuits vigorously and to contest any claimed liability, and they have retained
legal counsel to defend such suits. The Oppenheimer defendants believe that it
is premature to render any opinion as to the likelihood of an outcome
unfavorable to them and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
32 | OPPENHEIMER HIGH INCOME FUND/VA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2004, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 2004, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
Additionally, an audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer High Income Fund/VA as of December 31, 2004, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 11, 2005
33 | OPPENHEIMER HIGH INCOME FUND/VA
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2005, if applicable, shareholders of record received information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends of $0.5417 and $0.5308 per share were paid to Non-service and
Service shareholders, respectively, on March 15, 2004, all of which was
designated as ordinary income for federal income tax purposes.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
- --------------------------------------------------------------------------------
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF
INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file new Form N-PX, with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. The Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at www.sec.gov. Those
forms may be reviewed and copied at the SEC's Public Reference Room in
Washington D.C. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
34 | 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
FUND, LENGTH OF SERVICE, AGE TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, CO
TRUSTEES 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek Mortgage
Chairman of the Board of Company (since 1991), Centennial State Mortgage Company (since 1994), The El Paso
Trustees (since 2003) and Mortgage Company (since 1993), Transland Financial Services, Inc. (since 1997); Chairman
Trustee (since 1999) of the following private companies: Great Frontier Insurance (insurance agency) (since
Age: 67 1995), Ambassador Media Corporation and Broadway Ventures (since 1984); a director of
the following public companies: Helmerich & Payne, Inc. (oil and gas drilling/production
company) (since 1992) and UNUMProvident (insurance company) (since 1991). Mr. Armstrong
is also a Director/Trustee of Campus Crusade for Christ and the Bradley Foundation.
Formerly a director of the following: Storage Technology Corporation (a publicly-held
computer equipment company) (1991-February 2003), and International Family Entertainment
(television channel) (1992-1997), Frontier Real Estate, Inc. (residential real estate
brokerage) (1994-1999), and Frontier Title (title insurance agency) (1995-June 1999); a
U.S. Senator (January 1979-January 1991). Oversees 38 portfolios in the OppenheimerFunds
complex.
ROBERT G. AVIS, Formerly, Director and President of A.G. Edwards Capital, Inc. (General Partner of
Trustee (since 1993) private equity funds) (until February 2001); Chairman, President and Chief
Age: 73 Executive Officer of A.G. Edwards Capital, Inc. (until March 2000); Vice Chairman
and Director of A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards & Sons, Inc.
(its brokerage company subsidiary) (until March 1999); Chairman of A.G. Edwards
Trust Company and A.G.E. Asset Management (investment advisor) (until March 1999);
and a Director (until March 2000) of A.G. Edwards & Sons and A.G. Edwards Trust
Company. Oversees 38 portfolios in the OppenheimerFunds complex.
GEORGE C. BOWEN, Formerly Assistant Secretary and a director (December 1991-April 1999) of Centennial
Trustee (since 1999) Asset Management Corporation; President, Treasurer and a director (June 1989-April 1999)
Age: 68 of Centennial Capital Corporation; Chief Executive Officer and a director of MultiSource
Services, Inc. (March 1996-April 1999). Until April 1999 Mr. Bowen held several
positions in subsidiary or affiliated companies of the Manager. Oversees 38 portfolios
in the OppenheimerFunds complex.
EDWARD L. CAMERON, A member of The Life Guard of Mount Vernon, George Washington's home (since June 2000).
Trustee (since 1999) Formerly Director (March 2001-May 2002) of Genetic ID, Inc. and its subsidiaries (a
Age: 66 privately held biotech company); a partner (July 1974-June 1999) with
PricewaterhouseCoopers LLP (an accounting firm); and Chairman (July 1994-June 1998) of
Price Waterhouse LLP Global Investment Management Industry Services Group. Oversees 38
portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Director (since February 1998) of Rocky Mountain Elk Foundation (a not-for-profit
Trustee (since 1990) foundation); a director (since 1997) of Putnam Lovell Finance (finance company); a
Age: 63 director (since June 2002) of UNUMProvident (an insurance company). Formerly a director
(October 1999-October 2003) of P.R. Pharmaceuticals (a privately held company); Chairman
and a director (until October 1996) and President and Chief Executive Officer (until
October 1995) of the Manager; President, Chief Executive Officer and a director (until
October 1995) of Oppenheimer Acquisition Corp., Shareholders Services Inc. and
Shareholder Financial Services, Inc. Oversees 38 portfolios in the OppenheimerFunds
complex.
SAM FREEDMAN, Director of Colorado Uplift (a non-profit charity) (since September 1984). Formerly
Trustee (since 1996) (until October 1994) Mr. Freedman held several positions in subsidiary or affiliated
Age: 64 companies of the Manager. Oversees 38 portfolios in the OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey International Studies (an educational organization) (since February
Trustee (since 2002) 2000); a director of The California Endowment (a philanthropic organization) (since
Age: 58 April 2002) and of Community Hospital of Monterey Peninsula (educational organization)
(since February 2002); a director of America Funds Emerging Markets Growth Fund (since
October 1991) (an investment company); an advisor to Credit Suisse First Boston's Sprout
venture capital unit. Mrs. Hamilton also is a member of the investment committees of the
Rockefeller Foundation and of the University of Michigan. Formerly, Trustee of
MassMutual Institutional Funds (open-end investment company) (1996-May 2004); a director
of MML Series Investment Fund (April 1989-May 2004) and MML Services (April 1987-May
2004) (investment companies); member of the investment committee (2000-2003) of Hartford
Hospital; an advisor (2000-2003) to Unilever (Holland)'s pension fund; and President
(February 1991-April 2000) of ARCO Investment Management Company. Oversees 37 portfolios
in the OppenheimerFunds complex.
35 | OPPENHEIMER HIGH INCOME FUND/VA
TRUSTEES AND OFFICERS Unaudited / Continued
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ROBERT J. MALONE, Chairman, Chief Executive Officer and Director of Steele Street State Bank (a commercial
Trustee (since 2002) banking entity) (since August 2003); director of Colorado UpLIFT (a non-profit
Age: 60 organization) (since 1986); trustee (since 2000) of the Gallagher Family Foundation
(non-profit organization). Formerly, Chairman of U.S. Bank-Colorado (a subsidiary of
U.S. Bancorp and formerly Colorado National Bank,) (July 1996-April 1, 1999), a director
of: Commercial Assets, Inc. (a REIT) (1993-2000), Jones Knowledge, Inc. (a privately
held company) (2001-July 2004) and U.S. Exploration, Inc. (oil and gas exploration)
(1997-February 2004). Oversees 37 portfolios in the Oppenheimer Funds complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Institutional Funds (since 1996) and MML Series Investment Fund
Trustee (since 2000) (since 1987) (both open-end investment companies) and the Springfield Library and Museum
Age: 62 Association (since 1995) (museums) and the Community Music School of Springfield (music
school) (since 1996); Trustee (since 1987), Chairman of the Board (since 2003) and
Chairman of the investment committee (since 1994) for the Worcester Polytech Institute
(private university); and President and Treasurer (since January 1999) of the SIS Fund
(a private not for profit charitable fund). Formerly, member of the investment committee
of the Community Foundation of Western Massachusetts (1998-2003); Chairman (January
1999-July 1999) of SIS & Family Bank, F.S.B. (formerly SIS Bank) (commercial bank); and
Executive Vice President (January 1999-July 1999) of Peoples Heritage Financial Group,
Inc. (commercial bank). Oversees 38 portfolios in the OppenheimerFunds complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY
AND OFFICER STREET, 11TH FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR AN INDEFINITE TERM,
UNTIL HIS RESIGNATION, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President (since
President and Trustee September 2000) of the Manager; President and a director or trustee of other Oppenheimer
(since 2001) funds; President and a director (since July 2001) of Oppenheimer Acquisition Corp. (the
Age: 55 Manager's parent holding company) and of Oppenheimer Partnership Holdings, Inc. (a
holding company subsidiary of the Manager); a director (since November 2001) of
OppenheimerFunds Distributor, Inc. (a subsidiary of the Manager); Chairman and a
director (since July 2001) of Shareholder Services, Inc. and of Shareholder Financial
Services, Inc. (transfer agent subsidiaries of the Manager); President and a director
(since July 2001) of OppenheimerFunds Legacy Program (a charitable trust program
established by the Manager); a director of the following investment advisory
subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset
Management Corporation, Trinity Investment Management Corporation and Tremont Capital
Management, Inc. (since November 2001), HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001); President (since November 1, 2001) and a
director (since July 2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice
President (since February 1997) of Massachusetts Mutual Life Insurance Company (the
Manager's parent company); a director (since June 1995) of DLB Acquisition Corporation
(a holding company that owns the shares of Babson Capital Management LLC); a member of
the Investment Company Institute's Board of Governors (elected to serve from October 3,
2003 through September 30, 2006). Formerly, Chief Operating Officer (September 2000-June
2001) of the Manager; President and trustee (November 1999- November 2001) of MML Series
Investment Fund and MassMutual Institutional Funds (open-end investment companies); a
director (September 1999-August 2000) of C.M. Life Insurance Company; President, Chief
Executive Officer and director (September 1999-August 2000) of MML Bay State Life
Insurance Company; a director (June 1989-June 1998) of Emerald Isle Bancorp and Hibernia
Savings Bank (a wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 62 portfolios
as Trustee/Director and 21 additional portfolios as Officer in the OppenheimerFunds
complex.
36 | OPPENHEIMER HIGH INCOME FUND/VA
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OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. KOURKOULAKOS
AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY
10281-1008, FOR MESSRS. VANDEHEY AND WIXTED, 6803 S. TUCSON WAY, CENTENNIAL, CO
80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER EARLIER
RESIGNATION, DEATH OR REMOVAL.
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
Manager (since 2002) Analyst (1995-1998) of the Manager.
Age: 38
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer of
Treasurer (since 1999) HarbourView Asset Management Corporation, Shareholder Financial Services, Inc.,
Age: 45 Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and
Oppenheimer Partnership Holdings, Inc. (since March 1999), of OFI Private Investments,
Inc. (since March 2000), of OppenheimerFunds International Ltd. and OppenheimerFunds plc
(since May 2000), of OFI Institutional Asset Management, Inc. (since November 2000), and
of OppenheimerFunds Legacy Program (a Colorado non-profit corporation) (since June
2003); Treasurer and Chief Financial Officer (since May 2000) of OFI Trust Company (a
trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of
Oppenheimer Acquisition Corp. Formerly Assistant Treasurer of Centennial Asset
Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003); Principal and Chief Operating Officer (March 1995-March 1999) at
Bankers Trust Company-Mutual Fund Services Division. An officer of 83 portfolios in the
OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since February 2002)
Vice President and of the Manager; General Counsel and a director (since November 2001) of the Distributor;
Secretary (since 2001) General Counsel (since November 2001) of Centennial Asset Management Corporation; Senior
Age: 56 Vice President and General Counsel (since November 2001) of HarbourView Asset Management
Corporation; Secretary and General Counsel (since November 2001) of Oppenheimer
Acquisition Corp.; Assistant Secretary and a director (since October 1997) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and a
director (since November 2001) of Oppenheimer Partnership Holdings, Inc.; a director
(since November 2001) of Oppenheimer Real Asset Management, Inc.; Senior Vice President,
General Counsel and a director (since November 2001) of Shareholder Financial Services,
Inc., Shareholder Services, Inc., OFI Private Investments, Inc. and OFI Trust Company;
Vice President (since November 2001) of OppenheimerFunds Legacy Program; Senior Vice
President and General Counsel (since November 2001) of OFI Institutional Asset
Management, Inc.; a director (since June 2003) of OppenheimerFunds (Asia) Limited.
Formerly Senior Vice President (May 1985-December 2003), Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of
the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November 2001),
Shareholder Financial Services, Inc. (November 1989-November 2001); and OppenheimerFunds
International Ltd. (October 1997- November 2001). An officer of 83 portfolios in the
OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the Manager;
Vice President and Chief Vice President (since June 1983) of OppenheimerFunds Distributor, Inc., Centennial Asset
Compliance Officer Management Corporation and Shareholder Services, Inc. Formerly (until February 2004)
(since 2004) Vice President and Director of Internal Audit of Oppenheimer Funds, Inc. An officer of
Age: 54 83 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY
CALLING 1.800.981.2871.
37 | 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 registrant has determined that Edward L.
Cameron, the Chairman of the Board's Audit Committee, and George C. Bowen, a
member of the Board's Audit Committee, possess the technical attributes
identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit
committee financial experts," and has designated Messrs. Cameron and Bowen as
the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $18,000 in fiscal 2004 and $16,500 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $35,859
in fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $5,548
in fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include: tax compliance, tax planning and tax advice. Tax
compliance generally involves preparation of original and amended
tax returns, claims for a refund and tax payment-planning services.
Tax planning and tax advice includes assistance with tax audits and
appeals, tax advice related to mergers and acquisitions and requests
for rulings or technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two fiscal
years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe
waived provided that: 1) the aggregate amount of all such services
provided constitutes no more than five percent of the total amount
of fees paid by the registrant to it principal accountant during the
fiscal year in which services are provided 2) such services were not
recognized by the registrant at the time of engagement as non-audit
services and 3) such services are promptly brought to the attention
of the audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $41,407
in fiscal 2003 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not include
any prohibited non-audit services as defined by the Securities
Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
account's independence. No such services were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The registrant's Board of Trustees has established a Governance Committee,
one function of which is to create and oversee the process by which shareholders
can submit nominees for positions on the Board. The Governance Committee has not
yet adopted a charter, but anticipates that it will do so by the end of this
calendar year. The Committee has temporarily adopted the process previously
adopted by the Audit Committee regarding shareholder submission of nominees for
board positions. Shareholders may submit names of individuals, accompanied by
complete and properly supported resumes, for the Governance Committee's
consideration by mailing such information to the Committee in care of the Fund.
The Committee may consider such persons at such time as it meets to consider
possible nominees. The Committee, however, reserves solo discretion to determine
the candidates for trustees and independent trustees to recommend to the Board
and/or shareholders and may identify candidates other than those submitted by
Shareholders. The Committee may, but need not, consider the advice and
recommendation of the Manager and its affiliates in selecting nominees. The full
Board elects new trustees except for those instances when a shareholder vote is
required.
Shareholders who desire to communicate with the Board should address
correspondence to the Board of Trustees of the registrant, or to an individual
Trustee c/o the Secretary of the Fund at 6803 South Tucson Way, Centennial,
Colorado 80112 and may submit their correspondence electronically at
WWW.OPPENHEIMERFUNDS.COM under the caption "contact us." If your correspondence
is intended for a particular Trustee, please indicate the name of the Trustee
for whom it is intended. The sender should indicate in the address whether it is
intended for the entire board, the Independent Trustees as group, or to an
individual Trustee. The Governance Committee will consider if a different
process should be recommended to the Board.
ITEM 10. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-3(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-3(c)) as of December 31, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances that information required to be
disclosed by registrant in the reports that it files under the
Securities Exchange Act of 1934 (a) is accumulated and communicated
to registrant's management, including its principal executive
officer and principal financial officer, to allow timely decisions
regarding required disclosure, and (b) is recorded, processed,
summarized and reported, within the time periods specified in the
rules and forms adopted by the U.S. Securities and Exchange
Commission.
(b) There have been no changes in registrant's internal controls over
financial reporting that occurred during the registrant's last
fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)