UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4108
Oppenheimer Balanced Fund/VA
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: December 31
Date of reporting period: January 1, 2004 - December 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The Fund achieved strong returns
compared to its primary benchmark, the S&P 500 Index, during the 12-month
reporting period. We attribute this performance to our security selection
strategy in the stock market's financials, health care, consumer discretionary
and consumer staples sectors as well as strong performance from corporate bonds
and mortgage-backed securities. While both stocks and bonds contributed
positively to performance overall, the Fund's modest emphasis on bonds over
stocks hindered its overall results when stocks rallied strongly late in the
year.
Among equities, the Fund produced better returns than its benchmark in the
financials sector, where performance was driven by favorable stock selection.
The Fund enjoyed particularly strong results from the initial public offering of
Genworth Financial, Inc., Cl. A, an insurance company spun off by GE Capital.
Also in the insurance industry, another major insurance and financial services
provider posted strong returns. The Fund also benefited from its position in a
regional bank that was acquired by a larger competitor, and the Fund's real
estate-related holdings were driven higher by good performance from a
hotel-related real estate investment trust.
The Fund's largest single holding, international cable systems operator
UnitedGlobalCom, Inc., Cl. A, gained value as did other consumer discretionary
companies in the media, home building and restaurant industries. A managed care
provider, a health insurance company and a medical equipment manufacturer drove
gains in the Fund's health care sector, more than offsetting weakness in a
managed care provider that was hurt by allegations of mismanagement. Among
consumer staples companies, the Fund benefited from its position in Altria
Group, Inc. (formerly Phillip Morris), which gained value as litigation concerns
waned. A chicken producer saw attractive results when fears of "mad cow disease"
and the low-carb diet craze boosted consumption of poultry. A beer, wine, and
spirits maker gained value after several successful acquisitions and the
apparent end to a "wine glut."
On the other hand, the Fund received disappointing contributions from the
telecommunications sector. The Fund's investments in the energy, industrials and
information technology sectors were largely in line with industry averages. The
Fund's telecommunications investments were hurt by its lack of exposure to a
U.S. mobile phone service provider that was acquired during the reporting
period, and an unfavorable legal ruling favoring regional Bell operating
companies over smaller competitors. Although energy stocks generally fared well
as oil and gas prices surged, relatively light exposure to the area prevented
the Fund from participating fully in its gains. Among technology stocks, good
performance from software providers was undermined by lackluster results from
hardware manufacturers and semiconductor makers.
Among bonds, the Fund's returns were driven by its relatively heavy
exposure to corporate bonds, including a small position in high-yield
securities. Corporate bonds rated "triple-B" fared especially well compared to
their more highly rated counterparts. While the Fund's relatively heavy exposure
to mortgage-backed securities also helped boost fixed-income returns, we began
to reduce its mortgage position toward the neutral range later in the reporting
period. We also added value by maintaining a shorter-than-average duration
position in the rising interest-rate environment. The Fund's small positions in
commercial mortgages and asset-backed securities also helped boost fixed-income
returns.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each share class of the Fund
held until December 31, 2004. In the case of Non-Service shares, performance is
measured over a ten-year period. In the case of Service shares, performance is
measured from inception of the class on May 1, 2002. Performance information
does not reflect charges that apply to separate accounts investing in the Fund.
If these charges were taken into account, performance would be lower. The graph
assumes that all dividends and capital gains distributions were reinvested in
additional shares.
4 | OPPENHEIMER BALANCED FUND/VA
The Fund's performance is compared to the performance of both the S&P 500
Index, an unmanaged index of U.S. equity securities that is a measure of the
general domestic stock market and the Lehman Brothers Aggregate Bond Index, an
unmanaged index of U.S. corporate, government and mortgage-backed securities
that is a measure of the domestic bond market. Index performance reflects the
reinvestment of income but does not consider the effect of transaction costs,
and none of the data in the graphs show the effect of taxes. The Fund's
performance reflects the effects of the Fund's business and operating expenses.
While index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
investments in the index.
5 | OPPENHEIMER BALANCED FUND/VA
FUND PERFORMANCE DISCUSSION
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NON-SERVICE SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Balanced Fund/VA (Non-Service)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Balanced Fund/VA S&P 500 Lehman Brothers
(Non-Service) Index Aggregate Bond Index
12/31/1994 10,000 10,000 10,000
03/31/1995 10,647 10,973 10,504
06/30/1995 11,349 12,019 11,144
09/30/1995 11,888 12,973 11,363
12/31/1995 12,136 13,753 11,847
03/31/1996 12,548 14,491 11,637
06/30/1996 12,885 15,141 11,704
09/30/1996 13,387 15,609 11,920
12/31/1996 14,016 16,909 12,278
03/31/1997 14,021 17,363 12,209
06/30/1997 15,299 20,392 12,657
09/30/1997 16,485 21,919 13,078
12/31/1997 16,430 22,548 13,463
03/31/1998 17,565 25,691 13,672
06/30/1998 17,596 26,544 13,992
09/30/1998 15,756 23,910 14,583
12/31/1998 17,524 28,997 14,632
03/31/1999 17,807 30,441 14,560
06/30/1999 19,008 32,583 14,432
09/30/1999 18,379 30,554 14,530
12/31/1999 19,591 35,096 14,512
03/31/2000 20,789 35,900 14,832
06/30/2000 20,903 34,946 15,091
09/30/2000 20,966 34,608 15,546
12/31/2000 20,852 31,902 16,199
03/31/2001 20,678 28,122 16,691
06/30/2001 21,965 29,767 16,785
09/30/2001 19,557 25,399 17,559
12/31/2001 21,315 28,113 17,567
03/31/2002 21,391 28,191 17,584
06/30/2002 19,823 24,416 18,233
09/30/2002 17,893 20,200 19,069
12/31/2002 19,098 21,902 19,369
03/31/2003 18,902 21,212 19,638
06/30/2003 21,271 24,476 20,130
09/30/2003 22,020 25,124 20,100
12/31/2003 23,864 28,181 20,164
03/31/2004 24,412 28,658 20,700
06/30/2004 24,185 29,151 20,194
09/30/2004 24,366 28,606 20,839
12/31/2004 26,274 31,245 21,038
AVERAGE ANNUAL TOTAL RETURN OF NON-SERVICE SHARES OF THE FUND AT 12/31/04
1-Year 10.10% 5-Year 6.05% 10-Year 10.14%
SERVICE SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Balanced Fund/VA (Service)
S&P 500 Index
Lehman Brothers Aggregate Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Balanced Fund/VA S&P 500 Lehman Brothers
(Service) Index Aggregate Bond Index
05/01/2002 10,000 10,000 10,000
06/30/2002 9,407 9,220 10,172
09/30/2002 8,491 7,628 10,638
12/31/2002 9,056 8,271 10,806
03/31/2003 8,951 8,010 10,956
06/30/2003 10,075 9,242 11,230
09/30/2003 10,423 9,487 11,214
12/31/2003 11,291 10,641 11,249
03/31/2004 11,542 10,822 11,548
06/30/2004 11,427 11,008 11,266
09/30/2004 11,506 10,802 11,626
12/31/2004 12,397 11,799 11,737
AVERAGE ANNUAL TOTAL RETURN OF SERVICE SHARES OF THE FUND AT 12/31/2004
1-Year 9.79% 5-Year N/A Since Inception (5/1/02) 8.39%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, CALL US AT 1.800.981.2871. THE FUND'S
TOTAL RETURNS SHOULD NOT BE EXPECTED TO BE THE SAME AS THE RETURNS OF OTHER
FUNDS, WHETHER OR NOT BOTH FUNDS HAVE THE SAME PORTFOLIO MANAGERS AND/OR SIMILAR
NAMES. THE FUND'S TOTAL RETURNS DO NOT INCLUDE THE CHARGES ASSOCIATED WITH THE
SEPARATE ACCOUNT PRODUCTS THAT OFFER THIS FUND. SUCH PERFORMANCE WOULD HAVE BEEN
LOWER IF SUCH CHARGES WERE TAKEN INTO ACCOUNT.
6 | OPPENHEIMER BALANCED FUND/VA
FUND EXPENSES
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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 $ 1,086.40 $ 3.89
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Non-Service shares Hypothetical 1,000.00 1,021.42 3.77
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Service shares Actual 1,000.00 1,084.90 5.31
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Service shares Hypothetical 1,000.00 1,020.06 5.14
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/366
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended December 31, 2004 are as follows:
CLASS EXPENSE RATIOS
- ---------------------------------
Non-Service shares 0.74%
- ---------------------------------
Service shares 1.01
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7 | OPPENHEIMER BALANCED FUND/VA
STATEMENT OF INVESTMENTS December 31, 2004
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
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COMMON STOCKS--52.4%
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CONSUMER DISCRETIONARY--8.6%
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HOTELS, RESTAURANTS & LEISURE--0.8%
McDonald's Corp. 154,500 $ 4,953,270
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HOUSEHOLD DURABLES--0.3%
WCI Communities, Inc. 1 69,600 2,046,240
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INTERNET & CATALOG RETAIL--0.5%
IAC/InterActiveCorp 103,600 2,861,432
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LEISURE EQUIPMENT & PRODUCTS--0.1%
Leapfrog Enterprises, Inc. 1 47,200 641,920
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MEDIA--6.6%
Liberty Media Corp., Cl. A 1 996,200 10,938,276
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Liberty Media International, Inc., Cl. A 1 46,794 2,163,287
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UnitedGlobalCom, Inc., Cl. A 1 2,268,484 21,913,555
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Viacom, Inc., Cl. B 131,800 4,796,202
---------------
39,811,320
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SPECIALTY RETAIL--0.3%
Gap, Inc. (The) 82,300 1,738,176
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CONSUMER STAPLES--3.7%
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BEVERAGES--1.0%
Constellation Brands, Inc., Cl. A 1 133,900 6,227,689
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FOOD PRODUCTS--0.7%
Tyson Foods, Inc., Cl. A 233,800 4,301,920
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TOBACCO--2.0%
Altria Group, Inc. 199,600 12,195,560
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Energy--3.7%
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ENERGY EQUIPMENT & SERVICES--0.3%
Halliburton Co. 42,600 1,671,624
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OIL & GAS--3.4%
BP plc, ADR 50,400 2,943,360
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Kinder Morgan, Inc. 34,900 2,552,237
- -------------------------------------------------------------------------------
LUKOIL, Sponsored ADR 44,300 5,426,750
- -------------------------------------------------------------------------------
Petroleo Brasileiro SA, Preference 81,000 2,962,782
- -------------------------------------------------------------------------------
Talisman Energy, Inc. 137,700 3,717,894
- -------------------------------------------------------------------------------
Total SA, B Shares 1,700 372,570
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TotalFinaElf SA, Sponsored ADR 24,000 2,636,160
---------------
20,611,753
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FINANCIALS--10.0%
- -------------------------------------------------------------------------------
CAPITAL MARKETS--0.4%
UBS AG 25,042 2,099,863
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COMMERCIAL BANKS--2.5%
Bank of America Corp. 169,968 7,986,796
- -------------------------------------------------------------------------------
Wachovia Corp. 74,315 3,908,969
- -------------------------------------------------------------------------------
Wells Fargo & Co. 54,600 3,393,390
---------------
15,289,155
VALUE
SHARES SEE NOTE 1
- -------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--3.2%
Citigroup, Inc. 164,100 $ 7,906,338
- -------------------------------------------------------------------------------
JPMorgan Chase & Co. 100,500 3,920,505
- -------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 70,500 6,167,340
- -------------------------------------------------------------------------------
Morgan Stanley 30,600 1,698,912
---------------
19,693,095
- -------------------------------------------------------------------------------
INSURANCE--2.7%
Assured Guaranty Ltd. 181,900 3,577,973
- -------------------------------------------------------------------------------
Genworth Financial, Inc., Cl. A 258,500 6,979,500
- -------------------------------------------------------------------------------
Prudential Financial, Inc. 109,000 5,990,640
---------------
16,548,113
- -------------------------------------------------------------------------------
REAL ESTATE--0.4%
Host Marriott Corp. 140,500 2,430,650
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THRIFTS & MORTGAGE FINANCE--0.8%
Freddie Mac 67,200 4,952,640
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HEALTH CARE--7.6%
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BIOTECHNOLOGY--1.9%
MedImmune, Inc. 1 167,900 4,551,769
- -------------------------------------------------------------------------------
Wyeth 158,300 6,741,997
---------------
11,293,766
- -------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.7%
Beckman Coulter, Inc. 61,000 4,086,390
- -------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.3%
Manor Care, Inc. 47,600 1,686,468
- -------------------------------------------------------------------------------
PacifiCare Health Systems, Inc. 46,800 2,645,136
- -------------------------------------------------------------------------------
Tenet Healthcare Corp. 1 349,700 3,839,706
---------------
8,171,310
- -------------------------------------------------------------------------------
PHARMACEUTICALS--3.7%
GlaxoSmithKline plc, ADR 62,600 2,966,614
- -------------------------------------------------------------------------------
Novartis AG 89,813 4,525,798
- -------------------------------------------------------------------------------
Pfizer, Inc. 207,600 5,582,364
- -------------------------------------------------------------------------------
Schering-Plough Corp. 175,200 3,658,176
- -------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc. 1 170,700 5,600,667
---------------
22,333,619
- -------------------------------------------------------------------------------
INDUSTRIALS--5.7%
- -------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.9%
Empresa Brasileira de
Aeronautica SA, ADR 101,400 3,390,816
- -------------------------------------------------------------------------------
Honeywell International, Inc. 83,600 2,960,276
- -------------------------------------------------------------------------------
Orbital Sciences Corp. 1 557,464 6,594,799
- -------------------------------------------------------------------------------
Raytheon Co. 121,800 4,729,494
---------------
17,675,385
8 | OPPENHEIMER BALANCED FUND/VA
VALUE
SHARES SEE NOTE 1
- -------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.9%
Cendant Corp. 484,500 $ 11,327,610
- -------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.9%
General Electric Co. 97,900 3,573,350
- -------------------------------------------------------------------------------
Tyco International Ltd. 48,800 1,744,112
---------------
5,317,462
- -------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--8.9%
- -------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--2.2%
Hewlett-Packard Co. 145,400 3,049,038
- -------------------------------------------------------------------------------
International Business Machines Corp. 103,500 10,203,030
---------------
13,252,068
- -------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.8%
Flextronics International Ltd. 1 347,800 4,806,596
- -------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.3%
Net2Phone, Inc. 1 481,500 1,637,100
- -------------------------------------------------------------------------------
IT SERVICES--0.3%
CSG Systems International, Inc. 115,700 2,163,590
- -------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.3%
Freescale Semiconductor, Inc., Cl. A 1 282,900 5,041,278
- -------------------------------------------------------------------------------
Intel Corp. 128,600 3,007,954
---------------
8,049,232
- -------------------------------------------------------------------------------
SOFTWARE--4.0%
Compuware Corp. 1 245,400 1,587,738
- -------------------------------------------------------------------------------
Microsoft Corp. 290,000 7,745,900
- -------------------------------------------------------------------------------
Novell, Inc. 1 252,700 1,705,725
- -------------------------------------------------------------------------------
Synopsys, Inc. 1 39,600 776,952
- -------------------------------------------------------------------------------
Take-Two Interactive Software, Inc. 355,800 12,378,282
---------------
24,194,597
- -------------------------------------------------------------------------------
MATERIALS--1.4%
- -------------------------------------------------------------------------------
CHEMICALS--0.4%
Praxair, Inc. 58,900 2,600,435
- -------------------------------------------------------------------------------
Sterling Chemicals, Inc. 1,2 18 671
---------------
2,601,106
- -------------------------------------------------------------------------------
METALS & MINING--0.7%
Companhia Vale do Rio Doce,
Sponsored ADR 115,800 2,823,204
- -------------------------------------------------------------------------------
GrafTech International Ltd. 1 164,200 1,553,332
---------------
4,376,536
- -------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.3%
Bowater, Inc. 33,700 1,481,789
VALUE
SHARES SEE NOTE 1
- -------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.3%
- -------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.3%
IDT Corp., Cl. B 1 494,600 $ 7,656,408
- -------------------------------------------------------------------------------
WorldCom, Inc./WorldCom Group 1 375,000 --
---------------
7,656,408
- -------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.0%
Leap Wireless International, Inc. 1 1,707 46,089
- -------------------------------------------------------------------------------
UTILITIES--1.5%
- -------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.2%
AES Corp. (The) 1 389,900 5,329,933
- -------------------------------------------------------------------------------
PG&E Corp. 58,100 1,933,568
---------------
7,263,501
- -------------------------------------------------------------------------------
GAS UTILITIES--0.3%
Sempra Energy 52,900 1,940,372
---------------
Total Common Stocks (Cost $222,624,033) 317,748,946
UNITS
- -------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- -------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/09 1,2 2,593 26
- -------------------------------------------------------------------------------
Lucent Technologies, Inc. Wts.,
Exp. 12/10/07 1 8,881 14,032
- -------------------------------------------------------------------------------
Sterling Chemicals, Inc. Wts.,
Exp. 12/19/08 1,2 31 145
- -------------------------------------------------------------------------------
Sun Healthcare Group, Inc. Wts.,
Exp. 2/28/05 1 1,241 --
---------------
Total Rights, Warrants and Certificates
(Cost $38,932) 14,203
PRINCIPAL
AMOUNT
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--5.9%
- -------------------------------------------------------------------------------
Bank One Auto Securitization Trust,
Automobile Receivable Certificates,
Series 2003-1, Cl. A2, 1.29%, 8/21/06 $ 428,668 427,907
- -------------------------------------------------------------------------------
BMW Vehicle Owner Trust,
Automobile Loan Certificates,
Series 2004-A, Cl. A2, 1.88%, 10/25/06 1,342,339 1,338,035
- -------------------------------------------------------------------------------
Capital Auto Receivables Asset
Trust, Automobile Mtg.-Backed Nts.,
Series 2004-2, Cl. A3, 3.58%, 1/15/09 1,270,000 1,268,413
- -------------------------------------------------------------------------------
Centex Home Equity Co. LLC, Home
Equity Loan Asset-Backed Certificates:
Series 2003-C, Cl. AF1, 2.14%, 7/25/18 118,828 118,696
Series 2004-A, Cl. AF1, 2.03%, 6/25/19 279,453 278,377
Series 2004-D, Cl. AF1, 2.98%, 4/25/20 2 548,493 546,714
9 | OPPENHEIMER BALANCED FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- -------------------------------------------------------------------------------
Chase Funding Mortgage Loan
Asset-Backed Certificates, Home
Equity Mtg. Obligations:
Series 2002-4, Cl. 1A3, 3.44%,
4/25/23 $ 176,951 $ 176,963
Series 2003-1, Cl. 1A3, 3.14%,
7/25/23 519,865 519,594
Series 2003-4, Cl. 1A1, 2.538%,
9/25/17 3 105,089 105,145
Series 2003-4, Cl. 1A2, 2.138%,
7/25/18 470,000 468,421
Series 2004-1, Cl. 2A1, 2.528%,
9/25/21 3 912,702 913,289
- -------------------------------------------------------------------------------
Chase Manhattan Auto Owner Trust,
Automobile Loan Pass-Through
Certificates:
Series 2002-A, Cl. A4, 4.24%, 9/15/08 270,583 272,276
Series 2003-B, Cl. A2, 1.28%, 3/15/06 111,861 111,799
- -------------------------------------------------------------------------------
CIT Equipment Collateral,
Equipment Receivable-Backed Nts.,
Series 2004-DFS, Cl. A2, 2.66%,
11/20/06 2 900,000 896,169
- -------------------------------------------------------------------------------
Citibank Credit Card Issuance Trust,
Credit Card Receivable Nts., Series
2002-A3, Cl. A3, 4.40%, 5/15/07 1,050,000 1,057,252
- -------------------------------------------------------------------------------
CitiFinancial Mortgage Securities,
Inc., Home Equity Collateralized
Mtg. Obligations:
Series 2003-2, Cl. AF1, 2.518%,
5/25/33 3 62,274 62,315
Series 2003-3, Cl. AF1, 2.538%,
8/25/33 3 288,500 288,693
- -------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust,
Inc., Home Equity Mtg. Obligations,
Series 2004-OPT1, Cl. A1B, 2.388%,
9/1/34 2 957,943 956,745
- -------------------------------------------------------------------------------
Countrywide Asset-Backed
Certificates, Inc., Home Equity
Asset-Backed Certificates, Series
2002-4, Cl. A1, 2.788%, 2/25/33 3 247,806 249,209
- -------------------------------------------------------------------------------
DaimlerChrysler Auto Trust,
Automobile Loan Pass-Through
Certificates:
Series 2003-A, Cl. A2, 1.52%, 12/8/05 344,336 344,301
Series 2003-B, Cl. A2, 1.61%, 7/10/06 1,429,174 1,426,772
Series 2004-B, Cl. A2, 2.48%, 2/8/07 2 1,000,000 997,602
Series 2004-C, Cl. A2, 2.62%, 6/8/07 1,720,000 1,714,720
- -------------------------------------------------------------------------------
Ford Credit Auto Owner Trust,
Automobile Loan Pass-Through
Certificates, Series 2004-A,
Cl. A2, 2.13%, 10/15/06 2,200,000 2,191,434
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- -------------------------------------------------------------------------------
Harley-Davidson Motorcycle Trust,
Motorcycle Receivable Nts., Series
2003-3, Cl. A1, 1.50%, 1/15/08 $ 768,019 $ 765,306
- -------------------------------------------------------------------------------
Honda Auto Receivables Owner
Trust, Automobile Receivable
Obligations:
Series 2003-3, Cl. A2, 1.52%, 4/21/06 815,279 813,913
Series 2003-4, Cl. A2, 1.58%, 7/17/06 1,186,525 1,183,878
- -------------------------------------------------------------------------------
Household Automotive Trust,
Automobile Loan Certificates,
Series 2003-2, Cl. A2, 1.56%, 12/18/06 483,178 482,223
- -------------------------------------------------------------------------------
M&I Auto Loan Trust, Automobile
Loan Certificates:
Series 2002-1, Cl. A3, 2.49%, 10/22/07 499,345 499,276
Series 2003-1, Cl. A2, 1.60%, 7/20/06 780,991 779,864
- -------------------------------------------------------------------------------
National City Auto Receivables
Trust, Automobile Receivable
Obligations, Series 2004-A, Cl. A2,
1.50%, 2/15/07 830,296 827,374
- -------------------------------------------------------------------------------
Nissan Auto Lease Trust,
Automobile Lease Obligations:
Series 2003-A, Cl. A2, 1.69%, 12/15/05 77,230 77,230
Series 2004-A, Cl. A2, 2.55%, 1/15/07 840,000 839,430
- -------------------------------------------------------------------------------
Nissan Auto Receivables Owner
Trust, Automobile Receivable Nts.:
Series 2002-A, Cl. A4, 4.28%, 10/16/06 214,670 215,752
Series 2004-A, Cl. A2, 1.40%, 7/17/06 941,394 937,610
- -------------------------------------------------------------------------------
Option One Mortgage Loan Trust,
Home Equity Mtg. Obligations, Series
2004-3, Cl. A2, 2.568%, 11/25/34 2,3 538,440 538,787
- -------------------------------------------------------------------------------
Popular ABS Mortgage Pass-Through
Trust, Home Equity Pass-Through
Certificates, Series 2004-5, Cl. AF2,
3.735%, 11/10/34 2 340,000 338,869
- -------------------------------------------------------------------------------
Toyota Auto Receivables Owner
Trust, Automobile Mtg.-Backed
Obligations:
Series 2002-B, Cl. A3, 3.76%, 6/15/06 77,995 78,108
Series 2003-B, Cl. A2, 1.43%, 2/15/06 315,355 315,162
- -------------------------------------------------------------------------------
USAA Auto Owner Trust,
Automobile Loan Asset-Backed Nts.:
Series 2002-1, Cl. A3, 2.41%, 10/16/06 206,620 206,613
Series 2004-1, Cl. A2, 1.43%, 9/15/06 2,232,894 2,225,786
Series 2004-2, Cl. A2, 2.41%, 2/15/07 1,030,000 1,026,746
Series 2004-3, Cl. A2, 2.79%, 6/15/07 820,000 818,382
- -------------------------------------------------------------------------------
Volkswagen Auto Lease Trust,
Automobile Lease Asset-Backed
Securities, Series 2004-A, Cl. A2,
2.47%, 1/22/07 1,040,000 1,035,247
10 | OPPENHEIMER BALANCED FUND/VA
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- --------------------------------------------------------------------------------
Volkswagen Auto Loan Enhanced
Trust, Automobile Loan Receivable
Certificates:
Series 2003-1, Cl. A2, 1.11%, 12/20/05 $ 143,570 $ 143,521
Series 2003-2, Cl. A2, 1.55%, 6/20/06 619,502 618,299
- -------------------------------------------------------------------------------
Wachovia Auto Owner Trust,
Automobile Receivable Nts., Series
2004-B, Cl. A2, 2.40%, 5/21/07 740,000 736,955
- -------------------------------------------------------------------------------
Wells Fargo Home Equity Trust,
Collateralized Mtg. Obligations,
Series 2004-2, Cl. AI1B, 2.94%, 9/25/18 1,530,733 1,523,659
- -------------------------------------------------------------------------------
Whole Auto Loan Trust, Automobile
Loan Receivable Certificates:
Series 2003-1, Cl. A2A, 1.40%, 4/15/06 766,394 764,957
Series 2004-1, Cl. A2A, 2.59%, 5/15/07 1,070,000 1,066,063
---------------
Total Asset-Backed Securities
(Cost $35,698,339) 35,589,851
- -------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--31.9%
- -------------------------------------------------------------------------------
GOVERNMENT AGENCY--27.6%
- -------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--27.5%
Federal Home Loan Mortgage Corp.:
5%, 1/1/35 4 12,183,000 12,099,242
5.50%, 1/1/35 4 7,814,000 7,938,540
6.50%, 7/1/28-4/1/34 1,451,574 1,526,542
7%, 5/1/29-11/1/34 9,828,160 10,422,441
7%, 1/1/35 4 1,697,000 1,797,759
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through
Certificates:
Series 1669, Cl. G, 6.50%, 2/15/23 280,065 282,296
Series 2055, Cl. ZM, 6.50%, 5/15/28 722,759 751,722
Series 2075, Cl. D, 6.50%, 8/15/28 1,622,217 1,688,728
Series 2080, Cl. Z, 6.50%, 8/15/28 455,576 469,770
Series 2387, Cl. PD, 6%, 4/15/30 937,202 971,466
Series 2466, Cl. PD, 6.50%, 4/15/30 259,674 260,925
Series 2498, Cl. PC, 5.50%, 10/15/14 134,573 135,726
Series 2500, Cl. FD, 2.903%, 3/15/32 3 269,712 270,770
Series 2526, Cl. FE, 2.803%, 6/15/29 3 331,555 332,748
Series 2551, Cl. FD, 2.803%, 1/15/33 3 265,555 267,375
Series 2551, Cl. TA, 4.50%, 2/15/18 112,341 112,270
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Interest-Only Stripped Mtg.-Backed
Security:
Series 176, Cl. IO, (0.21)%, 6/1/26 5 469,447 87,648
Series 183, Cl. IO, (1.41)%, 4/1/27 5 761,669 147,670
Series 184, Cl. IO, 1.85%, 12/1/26 5 773,660 143,863
Series 192, Cl. IO, 3.27%, 2/1/28 5 209,537 38,940
Series 200, Cl. IO, 2.89%, 1/1/29 5 256,034 49,086
Series 2130, Cl. SC, 12.38%, 3/15/29 5 576,012 60,173
Series 2796, Cl. SD, 19.10%, 7/15/26 5 795,040 80,364
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp.,
Principal-Only Stripped Mtg.-Backed
Security, Series 176, Cl. PO, 6.95%,
6/1/26 6 $ 206,600 $ 180,247
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 1/1/20 4 5,578,000 5,560,569
5%, 1/1/20-1/1/35 4 22,693,000 22,586,331
5.50%, 3/1/33-1/1/34 5,764,934 5,859,441
5.50%, 1/1/35 4 22,082,000 22,420,120
6%, 5/1/16-8/1/24 8,553,513 8,926,103
6%, 1/1/35 4 12,055,000 12,465,617
6.50%, 11/1/27-10/1/30 1,359,313 1,429,034
6.50%, 1/1/35 4 15,978,000 16,756,928
7%, 12/1/31-10/1/34 11,580,421 12,281,759
7%, 8/1/28-6/1/32 4 4,627,104 4,910,937
7.50%, 7/1/30-9/1/30 1,082,094 1,159,793
8.50%, 7/1/32 56,581 61,468
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Collateralized Mtg. Obligations,
Trust 2002-T1, Cl. A2, 7%, 11/25/31 1,561,930 1,656,130
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Collateralized Mtg. Obligations, Gtd.
Real Estate Mtg. Investment Conduit
Pass-Through Certificates:
Trust 1993-87, Cl. Z, 6.50%, 6/25/23 1,256,369 1,319,246
Trust 1998-63, Cl. PG, 6%, 3/25/27 256,265 257,487
Trust 2001-50, Cl. NE, 6%, 8/25/30 508,881 515,913
Trust 2001-70, Cl. LR, 6%, 9/25/30 489,509 499,106
Trust 2001-72, Cl. NH, 6%, 4/25/30 397,360 406,372
Trust 2001-74, Cl. PD, 6%, 5/25/30 169,872 172,177
Trust 2002-50, Cl. PD, 6%, 9/25/27 278,499 278,685
Trust 2002-77, Cl. WF, 2.81%, 12/18/32 3 426,467 428,987
Trust 2002-94, Cl. MA, 4.50%, 8/25/09 737,669 739,285
Trust 2003-81, Cl. PA, 5%, 2/25/12 221,314 222,127
Trust 2004-101, Cl. BG, 5%, 1/25/20 1,110,000 1,119,713
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Interest-Only Stripped Mtg.-Backed
Security:
Trust 319, Cl. 2, (3.08)%, 2/1/32 5 469,725 90,287
Trust 2002-47, Cl. NS, 9.28%, 4/25/32 5 1,030,485 108,006
Trust 2002-51, Cl. S, 9.56%, 8/25/32 5 946,229 99,276
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Interest-Only Stripped Mtg.-Backed
Security:
Trust 222, Cl. 2, (2.53)%, 6/1/23 5 1,519,204 283,050
Trust 233, Cl. 2, (0.80)%, 8/1/23 5 1,435,014 265,601
Trust 240, Cl. 2, 0.11%, 9/1/23 5 2,324,143 442,611
Trust 252, Cl. 2, (3.44)%, 11/1/23 5 1,161,785 228,219
Trust 254, Cl. 2, (0.11)%, 1/1/24 5 584,942 120,874
Trust 273, Cl. 2, 0.09%, 7/1/26 5 340,774 62,963
Trust 321, Cl. 2, (8.45)%, 3/1/32 5 4,842,910 962,409
Trust 333, Cl. 2, 1.40%, 3/1/33 5 4,696,785 1,015,778
Trust 334, Cl. 17, (16.18)%, 2/1/33 5 777,496 155,868
Trust 2001-81, Cl. S, 13.68%, 1/25/32 5 482,978 58,907
11 | OPPENHEIMER BALANCED FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn.,
Interest-Only Stripped Mtg.-Backed
Security: Continued
Trust 2002-52, Cl. SD, 8.85%, 9/25/32 5 $ 1,191,233 $ 123,167
Trust 2002-77, Cl. SH, 21.15%,
12/18/32 5 619,517 62,738
Trust 2002-9, Cl. MS, 10.62%, 3/25/32 5 703,195 76,703
Trust 2004-54, Cl. DS, 20.40%,
11/25/30 5 993,390 90,528
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Principal-Only Stripped Mtg.-Backed
Security, Trust 1993-184, Cl. M,
9.71%, 9/25/23 6 480,445 416,075
---------------
166,812,699
- -------------------------------------------------------------------------------
GNMA/GUARANTEED--0.1%
Government National Mortgage
Assn., 8%, 4/15/23 293,164 320,660
- -------------------------------------------------------------------------------
Government National Mortgage
Assn., Interest-Only Stripped
Mtg.-Backed Security:
Series 2001-21, Cl. SB, 14.94%,
1/16/27 5 920,135 88,003
Series 2002-15, Cl. SM, 9.39%,
2/16/32 5 1,047,287 100,973
Series 2002-76, Cl. SY, 9.35%,
12/16/26 5 2,108,379 215,071
Series 2004-11, Cl. SM, 10.64%,
1/17/30 5 835,059 75,086
---------------
799,793
- -------------------------------------------------------------------------------
PRIVATE--4.3%
- -------------------------------------------------------------------------------
COMMERCIAL--4.3%
Banc of America Commercial
Mortgage, Inc., Commercial Mtg.
Pass-Through Certificates, Series
2004-6, Cl. A3, 4.512%, 12/10/42 1,000,000 1,000,000
- -------------------------------------------------------------------------------
Bank of America Mortgage Securities,
Inc., Collateralized Mtg. Obligations
Pass-Through Certificates:
Series 2004-2, Cl. 2A1, 6.50%,
7/20/32 1,636,692 1,672,129
Series 2004-8, Cl. 5A1, 6.50%,
5/25/32 1,275,323 1,325,141
Series 2004-E, Cl. 2A9, 3.712%,
6/25/34 931,642 932,230
Series 2004-G, Cl. 2A1, 2.469%,
8/25/34 622,321 621,094
- -------------------------------------------------------------------------------
Countrywide Alternative Loan
Trust, Collateralized Mtg. Obligations,
Series 2004-J9, Cl. 1A1, 2.598%,
10/25/34 3 1,299,747 1,301,242
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
COMMERCIAL Continued
First Union National Bank/Lehman
Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates,
Series 1998-C2, Cl. A2, 6.56%,
11/18/35 $ 680,000 $ 731,518
- -------------------------------------------------------------------------------
General Motors Acceptance Corp.
Commercial Mtg. Securities, Inc.,
Commercial Mtg. Obligations, Series
2004-C3, Cl. A4, 4.547%, 12/10/41 640,000 641,684
- -------------------------------------------------------------------------------
GMAC Commercial Mortgage
Securities, Inc., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. A3,
6.869%, 7/15/29 506,985 536,679
- -------------------------------------------------------------------------------
GS Mortgage Securities Corp. II,
Commercial Mtg. Pass-Through
Certificates:
Series 2004-C1, Cl. A1, 3.659%,
10/10/28 685,259 677,810
Series 2004-GG2, Cl. A3, 4.602%,
8/10/38 410,000 418,316
- -------------------------------------------------------------------------------
GSR Mortgage Loan Trust,
Collateralized Mtg. Obligations,
Series 04-12, Cl. 3A1, 4.593%, 12/25/34 2,3 2,018,542 2,021,322
- -------------------------------------------------------------------------------
Mastr Alternative Loan Trust,
Pass-Through Collateralized Mtg.
Obligations, Series 2004-6, Cl. 10A1,
6%, 7/25/34 1,893,011 1,954,708
- -------------------------------------------------------------------------------
Mastr Asset Securitization Trust,
Pass-Through Collateralized Mtg.
Obligations, Series 2004-9, Cl. A3,
4.70%, 8/25/34 2,476,850 2,478,856
- -------------------------------------------------------------------------------
Mastr Seasoned Securities Trust,
Collateralized Mtg. Obligations,
Series 2004-2, Cl. PT65, 6.50%,
12/1/34 4 2,966,000 3,054,517
- -------------------------------------------------------------------------------
Nomura Asset Securities Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1998-D6, Cl. A1B,
6.59%, 3/15/30 780,000 844,183
- -------------------------------------------------------------------------------
Prudential Mortgage Capital Co. II
LLC, Commercial Mtg. Pass-Through
Certificates, Series PRU-HTG 2000-C1,
Cl. A2, 7.306%, 10/6/15 983,000 1,133,147
- -------------------------------------------------------------------------------
Washington Mutual Mortgage
Securities Corp., Collateralized Mtg.
Pass-Through Certificates, Series
2003-AR12, Cl. A2, 2.446%, 2/25/34 3 16,547 16,556
12 | OPPENHEIMER BALANCED FUND/VA
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
COMMERICIAL Continued
Wells Fargo Mortgage-Backed
Securities Trust, Collateralized Mtg.
Obligations:
Series 2004-DD, Cl. 2A1,
4.548%, 1/25/35 $ 2,260,000 $ 2,263,708
Series 2004-N, Cl. A10, 3.803%,
8/25/34 2 1,652,090 1,657,524
Series 2004-W, Cl. A2, 4.635%,
11/25/34 3 948,941 951,560
---------------
26,233,924
- -------------------------------------------------------------------------------
OTHER--0.0%
CIT Equipment Collateral, Equipment
Receivable-Backed Nts., Series
2003-EF1, Cl. A2, 1.49%, 12/20/05 77,989 78,005
---------------
Total Mortgage-Backed Obligations
(Cost $193,402,123) 193,924,421
- -------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--6.6%
- -------------------------------------------------------------------------------
Federal Home Loan Bank Bonds,
3.125%, 9/15/06 2,155,000 2,153,636
- -------------------------------------------------------------------------------
Federal Home Loan Bank Unsec.
Bonds, 2.75%, 10/15/06 2,540,000 2,520,993
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage
Corp. Unsec. Nts., 6.875%, 9/15/10 1,500,000 1,714,446
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.
Unsec. Nts.:
4.25%, 7/15/07 4,315,000 4,408,066
7.25%, 1/15/10-5/15/30 4,075,000 4,790,855
- -------------------------------------------------------------------------------
Tennessee Valley Authority Bonds:
7.125%, 5/1/30 795,000 992,111
Series A, 6.79%, 5/23/12 7,916,000 9,128,446
- -------------------------------------------------------------------------------
U.S. Treasury Bonds:
5.375%, 2/15/31 2,197,000 2,376,365
5.50%, 8/15/28 645,000 698,314
STRIPS, 3.37%, 2/15/11 7 409,000 322,164
STRIPS, 3.86%, 2/15/13 7 478,000 340,039
- -------------------------------------------------------------------------------
U.S. Treasury Nts.:
2.50%, 9/30/06-10/31/06 8,960,000 8,882,683
4.25%, 11/15/13-11/15/14 1,538,000 1,546,678
5.75%, 8/15/10 434,000 477,960
---------------
Total U.S. Government Obligations
(Cost $40,249,219) 40,352,756
- -------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--0.1%
- -------------------------------------------------------------------------------
United Mexican States Nts., 7.50%,
1/14/12 (Cost $520,726) 475,000 539,838
- -------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND
NOTES--13.2%
ABN Amro Bank NV (NY Branch),
7.125% Sub. Nts., Series B, 10/15/93 400,000 $ 461,950
- -------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06 $ 1,185,000 $ 1,233,951
- -------------------------------------------------------------------------------
Allied Waste North America, Inc.,
8.875% Sr. Nts., Series B, 4/1/08 540,000 580,500
- -------------------------------------------------------------------------------
Allstate Financial Global Funding
LLC, 4.25% Nts., 9/10/08 9 245,000 248,094
- -------------------------------------------------------------------------------
Allstate Life Global Funding II,
3.50% Nts., 7/30/07 330,000 328,808
- -------------------------------------------------------------------------------
American Express Centurion Bank,
4.375% Nts., 7/30/09 435,000 442,381
- -------------------------------------------------------------------------------
American Honda Finance Corp.,
3.85% Nts., 11/6/08 9 835,000 833,408
- -------------------------------------------------------------------------------
AT&T Wireless Services, Inc.,
7.50% Sr. Unsec. Nts., 5/1/07 885,000 961,767
- -------------------------------------------------------------------------------
AXA, 8.60% Unsec. Sub. Nts., 12/15/30 750,000 987,984
- -------------------------------------------------------------------------------
Bank of America Corp.:
4.875% Sr. Unsec. Nts., 1/15/13 15,000 15,286
7.80% Jr. Unsec. Sub. Nts., 2/15/10 400,000 465,659
- -------------------------------------------------------------------------------
Bankers Trust Corp., 7.375%
Unsec. Sub. Nts., 5/1/08 100,000 111,007
- -------------------------------------------------------------------------------
Beazer Homes USA, Inc., 8.625%
Sr. Unsec. Nts., 5/15/11 565,000 618,675
- -------------------------------------------------------------------------------
Boeing Capital Corp.:
5.65% Sr. Unsec. Nts., 5/15/06 180,000 185,670
6.50% Nts., 2/15/12 10 750,000 841,571
- -------------------------------------------------------------------------------
British Telecommunications plc:
7.875% Nts., 12/15/05 770,000 803,285
8.125% Nts., 12/15/10 420,000 504,968
- -------------------------------------------------------------------------------
Canadian National Railway Co.,
4.25% Nts., 8/1/09 161,000 162,448
- -------------------------------------------------------------------------------
CenterPoint Energy, Inc.:
5.875% Sr. Nts., 6/1/08 690,000 722,564
8.125% Unsec. Nts., Series B, 7/15/05 270,000 277,148
- -------------------------------------------------------------------------------
Chancellor Media CCU, 8% Sr.
Unsec. Nts., 11/1/08 1,155,000 1,297,895
- -------------------------------------------------------------------------------
Chesapeake Energy Corp., 7.50%
Sr. Nts., 6/15/14 610,000 669,475
- -------------------------------------------------------------------------------
CIGNA Corp., 7.40% Unsec. Nts.,
5/15/07 1,410,000 1,515,619
- -------------------------------------------------------------------------------
CIT Group, Inc., 7.75% Sr. Unsec.
Unsub. Nts., 4/2/12 1,000,000 1,185,388
- -------------------------------------------------------------------------------
Citigroup, Inc., 6.875% Unsec. Nts.,
2/15/98 450,000 514,893
- -------------------------------------------------------------------------------
Citizens Communications Co.,
9.25% Sr. Nts., 5/15/11 291,000 341,925
- -------------------------------------------------------------------------------
Coca-Cola Co. (The), 7.375%
Unsec. Debs., 7/29/93 360,000 457,509
- -------------------------------------------------------------------------------
ConAgra Foods, Inc., 6% Nts.,
9/15/06 610,000 635,388
- -------------------------------------------------------------------------------
Conectiv, Inc., 5.30% Unsec. Unsub.
Nts., Series B, 6/1/05 168,000 169,381
13 | OPPENHEIMER BALANCED FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
Cox Communications, Inc., 7.875%
Unsec. Nts., 8/15/09 $ 760,000 $ 863,431
- -------------------------------------------------------------------------------
CSX Corp., 6.25% Unsec. Nts.,
10/15/08 585,000 631,265
- -------------------------------------------------------------------------------
D.R. Horton, Inc., 6.125% Nts.,
1/15/14 555,000 574,425
- -------------------------------------------------------------------------------
DaimlerChrysler North America
Holding Corp., 4.75% Unsec. Nts.,
1/15/08 1,090,000 1,114,053
- -------------------------------------------------------------------------------
Delphi Automotive Systems Corp.,
6.50% Nts., 5/1/09 500,000 514,400
- -------------------------------------------------------------------------------
Deutsche Telekom International
Finance BV, 8.50% Unsub. Nts.,
6/15/10 770,000 918,381
- -------------------------------------------------------------------------------
Dominion Resources, Inc., 8.125%
Sr. Unsub. Nts., 6/15/10 530,000 624,528
- -------------------------------------------------------------------------------
DTE Energy Co., 6.45% Sr. Unsub.
Nts., 6/1/06 580,000 603,983
- -------------------------------------------------------------------------------
Duke Capital LLC, 5.668% Nts.,
8/15/14 645,000 666,774
- -------------------------------------------------------------------------------
EOP Operating LP:
6.763% Sr. Unsec. Nts., 6/15/07 180,000 191,591
8.375% Nts., 3/15/06 425,000 448,405
- -------------------------------------------------------------------------------
Federated Department Stores, Inc.,
6.625% Sr. Unsec. Nts., 9/1/08 810,000 882,514
- -------------------------------------------------------------------------------
FedEx Corp., 2.65% Unsec. Nts.,
4/1/07 1,320,000 1,293,538
- -------------------------------------------------------------------------------
FirstEnergy Corp.:
5.50% Sr. Unsub. Nts., Series A,
11/15/06 495,000 511,228
7.375% Sr. Unsub. Nts., Series C,
11/15/31 565,000 647,246
- -------------------------------------------------------------------------------
Food Lion, Inc., 7.55% Nts., 4/15/07 785,000 852,939
- -------------------------------------------------------------------------------
Ford Holdings, Inc., 9.30% Unsec.
Unsub. Debs., 3/1/30 240,000 282,218
- -------------------------------------------------------------------------------
Ford Motor Co., 7.70% Unsec.
Debs., 5/15/97 400,000 387,614
- -------------------------------------------------------------------------------
Ford Motor Credit Co., 7.375%
Nts., 10/28/09 255,000 275,339
- -------------------------------------------------------------------------------
France Telecom SA:
7.95% Sr. Unsec. Nts., 3/1/06 115,000 120,779
8.50% Sr. Unsec. Nts., 3/1/11 540,000 644,961
9.25% Sr. Unsec. Nts., 3/1/31 3 230,000 312,708
- -------------------------------------------------------------------------------
Franklin Resources, Inc., 3.70% Nts.,
4/15/08 425,000 424,320
- -------------------------------------------------------------------------------
Gap, Inc. (The):
6.90% Nts., 9/15/07 2 354,000 382,320
10.55% Unsub. Nts., 12/15/08 141,000 172,373
- -------------------------------------------------------------------------------
General Electric Capital Corp.,
7.25% Nts., Series A, 2/1/05 400,000 401,310
- -------------------------------------------------------------------------------
General Mills, Inc., 3.875% Nts.,
11/30/07 950,000 953,687
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
General Motors Acceptance Corp.,
7.25% Nts., 3/2/11 $ 1,660,000 $ 1,740,108
- -------------------------------------------------------------------------------
General Motors Corp., 8.375% Sr.
Unsec. Debs., 7/15/33 280,000 290,907
- -------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The),
7.80% Sr. Unsec. Unsub. Nts.,
Series B, 1/28/10 400,000 462,792
- -------------------------------------------------------------------------------
Hartford Financial Services Group,
Inc. (The), 2.375% Nts., 6/1/06 345,000 338,808
- -------------------------------------------------------------------------------
Hertz Corp. (The), 6.35% Nts.,
6/15/10 1,560,000 1,600,650
- -------------------------------------------------------------------------------
Hilton Hotels Corp., 7.95% Sr. Nts.,
4/15/07 450,000 489,713
- -------------------------------------------------------------------------------
Household Finance Corp., 8.875%
Sr. Unsec. Nts., 2/15/06 830,000 878,858
- -------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co.
plc, 13.08% Sr. Unsec. Disc. Nts.,
12/31/09 7 500,000 282,500
- -------------------------------------------------------------------------------
Hutchison Whampoa International
Ltd., 7.45% Sr. Bonds, 11/24/33 9 495,000 550,726
- -------------------------------------------------------------------------------
IPALCO Enterprises, Inc., 8.375% Sr.
Sec. Nts., 11/14/08 2,3 540,000 610,200
- -------------------------------------------------------------------------------
iStar Financial, Inc.:
4.875% Sr. Unsec. Nts., Series B,
1/15/09 545,000 553,687
8.75% Sr. Unsec. Nts., 8/15/08 400,000 456,487
- -------------------------------------------------------------------------------
J.C. Penney Co., Inc., 8% Nts., 3/1/10 1,160,000 1,331,100
- -------------------------------------------------------------------------------
John Hancock Global Funding II,
7.90% Nts., 7/2/10 9 947,000 1,110,079
- -------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.,
10.875% Sr. Nts., Series B, 10/15/06 1,11 250,000 221,875
- -------------------------------------------------------------------------------
Kinder Morgan, Inc., 6.50% Sr. Unsec.
Nts., 9/1/12 595,000 655,005
- -------------------------------------------------------------------------------
Kraft Foods, Inc., 5.25% Nts., 6/1/07 1,435,000 1,487,320
- -------------------------------------------------------------------------------
Kroger Co. (The), 7.80% Sr. Nts.,
8/15/07 905,000 993,094
- -------------------------------------------------------------------------------
Lear Corp., 8.11% Sr. Unsec. Nts.,
Series B, 5/15/09 1,000,000 1,135,205
- -------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc.,
7% Nts., 2/1/08 765,000 836,410
- -------------------------------------------------------------------------------
Lehman Brothers, Inc., 6.625% Sr.
Sub. Nts., 2/15/08 125,000 135,056
- -------------------------------------------------------------------------------
Lennar Corp., 5.95% Sr. Unsec. Nts.,
3/1/13 580,000 615,214
- -------------------------------------------------------------------------------
Liberty Media Corp., 3.50% Nts.,
9/25/06 600,000 596,913
- -------------------------------------------------------------------------------
Liberty Property Trust, 5.65% Sr.
Nts., 8/15/14 615,000 633,055
- -------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc.,
5.375% Nts., 7/15/14 268,000 262,334
14 | OPPENHEIMER BALANCED FUND/VA
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
May Department Stores Co., 3.95%
Nts., 7/15/07 $ 81,000 $ 81,185
- -------------------------------------------------------------------------------
MBNA America Bank NA, 5.375%
Nts., 1/15/08 935,000 977,229
- -------------------------------------------------------------------------------
McDonnell Douglas Corp., 6.875%
Unsec. Unsub. Nts., 11/1/06 160,000 169,432
- -------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 4.125%
Nts., 9/10/09 1,280,000 1,280,475
- -------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 450,000 393,750
- -------------------------------------------------------------------------------
Morgan Stanley, 6.60% Nts., 4/1/12 570,000 636,656
- -------------------------------------------------------------------------------
National City Bank, 6.20% Sub.
Nts., 12/15/11 83,000 91,376
- -------------------------------------------------------------------------------
NiSource Finance Corp.:
3.20% Nts., 11/1/06 180,000 178,462
7.875% Sr. Unsec. Nts., 11/15/10 790,000 929,821
- -------------------------------------------------------------------------------
Northrop Grumman Corp., 7.125%
Sr. Nts., 2/15/11 767,000 881,327
- -------------------------------------------------------------------------------
Petroleos Mexicanos, 9.50% Sr. Sub.
Nts., 9/15/27 365,000 458,988
- -------------------------------------------------------------------------------
PF Export Receivables Master Trust,
3.748% Sr. Nts., Series B, 6/1/13 9 424,641 412,316
- -------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695%
Bonds, Series C, 12/18/23 9 900,000 1,145,817
- -------------------------------------------------------------------------------
Prudential Insurance Co. of America,
8.30% Nts., 7/1/25 9 920,000 1,178,061
- -------------------------------------------------------------------------------
PSEG Energy Holdings LLC, 7.75%
Unsec. Nts., 4/16/07 2 595,000 632,188
- -------------------------------------------------------------------------------
R&B Falcon Corp., 9.50% Sr. Unsec.
Nts., 12/15/08 500,000 593,204
- -------------------------------------------------------------------------------
Raytheon Co., 6.50% Unsec. Nts.,
7/15/05 225,000 229,049
- -------------------------------------------------------------------------------
Safeway, Inc., 4.80% Sr. Unsec. Nts.,
7/16/07 1,445,000 1,480,099
- -------------------------------------------------------------------------------
Spieker Properties LP, 6.75%
Unsec. Unsub. Nts., 1/15/08 360,000 390,458
- -------------------------------------------------------------------------------
Sprint Capital Corp.:
7.125% Sr. Unsec. Nts., 1/30/06 595,000 619,028
8.75% Nts., 3/15/32 530,000 708,297
- -------------------------------------------------------------------------------
Starwood Hotels & Resorts
Worldwide, Inc., 7.375% Nts., 5/1/07 470,000 503,488
- -------------------------------------------------------------------------------
Sterling Chemicals, Inc., 10% Sr.
Sec. Nts., 12/19/07 8 221,615 222,723
- -------------------------------------------------------------------------------
SunTrust Banks, Inc.:
4% Nts., 10/15/08 640,000 646,461
7.75% Unsec. Sub. Nts., 5/1/10 57,000 66,275
- -------------------------------------------------------------------------------
TCI Communications, Inc., 9.80%
Sr. Unsec. Debs., 2/1/12 1,145,000 1,477,881
- -------------------------------------------------------------------------------
TECO Energy, Inc., 10.50% Sr.
Unsec. Nts., 12/1/07 475,000 549,805
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES Continued
Telefonos de Mexico SA de CV,
4.50% Nts., 11/19/08 $ 530,000 $ 534,857
- -------------------------------------------------------------------------------
Time Warner Cos., Inc., 9.125%
Debs., 1/15/13 530,000 682,359
- -------------------------------------------------------------------------------
Time Warner Entertainment Co. LP,
10.15% Sr. Nts., 5/1/12 500,000 656,851
- -------------------------------------------------------------------------------
Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11 565,000 627,150
- -------------------------------------------------------------------------------
TXU Corp., 4.80% Nts., 11/15/09 9 555,000 556,591
- -------------------------------------------------------------------------------
Tyco International Group SA:
6.375% Sr. Unsec. Unsub. Nts.,
2/15/06 850,000 878,557
6.375% Nts., 10/15/11 750,000 829,192
6.75% Sr. Unsub. Nts., 2/15/11 378,000 424,194
- -------------------------------------------------------------------------------
Univision Communications, Inc.:
2.875% Sr. Unsec. Nts., 10/15/06 163,000 160,910
3.50% Sr. Unsec. Nts., 10/15/07 845,000 835,577
- -------------------------------------------------------------------------------
Volkswagen Credit, Inc., 2.33% Nts.,
7/21/05 3,9 1,225,000 1,225,103
- -------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec.
Unsub. Nts., 6/15/07 1,225,000 1,272,553
- -------------------------------------------------------------------------------
Waste Management, Inc.:
7% Sr. Nts., 7/15/28 220,000 248,893
7.125% Sr. Unsec. Nts., 10/1/07 800,000 869,420
- -------------------------------------------------------------------------------
Western Forest Products, Inc.,
15% Sec. Nts., 7/28/09 8,9 146,000 165,345
- -------------------------------------------------------------------------------
Weyerhaeuser Co., 5.50% Unsec.
Unsub. Nts., 3/15/05 250,000 251,163
- -------------------------------------------------------------------------------
Yum! Brands, Inc., 8.50% Sr. Unsec.
Nts., 4/15/06 1,230,000 1,307,014
---------------
Total Non-Convertible Corporate
Bonds and Notes (Cost $77,208,011) 79,998,603
- -------------------------------------------------------------------------------
STRUCTURED NOTES--0.6%
- -------------------------------------------------------------------------------
Deutsche Bank AG, COUNTS Corp.
Sec. Credit Linked Nts., Series 2003-1,
3.78%, 1/7/05 2,3 (Cost $3,550,000) 3,550,000 3,539,350
- -------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--5.9%
- -------------------------------------------------------------------------------
Undivided interest of 2.49% in joint
repurchase agreement (Principal Amount/Value
$1,443,703,000, with a maturity value of
$1,443,962,867) with UBS Warburg LLC, 2.16%,
dated 12/31/04, to be repurchased at
$36,015,482 on 1/3/05, collateralized by
Federal National Mortgage Assn., 5%--6%,
4/1/34--10/1/34, with a value of
$1,474,609,071 (Cost $36,009,000) 36,009,000 36,009,000
- -------------------------------------------------------------------------------
Total Investments, at Value (excluding
Investments Purchased with Cash
Collateral from Securities Loaned)
(Cost $609,300,383) 707,716,968
15 | OPPENHEIMER BALANCED FUND/VA
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANED--2.0%
- -------------------------------------------------------------------------------
MASTER FLOATING NOTES--0.2%
Bear Stearns, 2.493%, 1/3/05 12 $ 500,000 $ 500,000
- -------------------------------------------------------------------------------
Merrill Lynch Mortgage Capital,
2.413%, 1/3/05 12 500,000 500,000
---------------
1,000,000
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT--1.8%
Undivided interest of 0.39% in joint repurchase
agreement (Principal Amount/Value $2,800,000,000,
with a maturity value of $2,800,550,669) with
Nomura Securities, 2.36%, dated 12/31/04, to
be repurchased at $10,968,169 on 1/3/05,
collateralized by U.S. Government Mortgage
Agencies, 2.58%-7.50%, 1/15/08-10/15/44,
with a value of $2,908,566,289 12 10,966,012 10,966,012
---------------
Total Investments Purchased with
Cash Collateral from Securities
Loaned (Cost $11,966,012) 11,966,012
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $621,266,395) 118.6% 719,682,980
- -------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (18.6) (112,742,772)
---------------------------------
NET ASSETS 100.0% $ 606,940,208
=================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Illiquid security. The aggregate value of illiquid securities as of December
31, 2004 was $13,118,632, which represents 2.16% of the Fund's net assets. See
Note 9 of Notes to Financial Statements.
3. Represents the current interest rate for a variable or increasing rate
security.
4. When-issued security or forward commitment to be delivered and settled after
December 31, 2004. See Note 1 of Notes to Financial Statements.
5. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $5,333,862 or 0.88% of the Fund's net assets
as of December 31, 2004.
6. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $596,322 or 0.10% of the Fund's net assets as of
December 31, 2004.
7. Zero coupon bond reflects effective yield on the date of purchase.
8. Interest or dividend is paid-in-kind.
9. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $7,425,540 or 1.22% of the Fund's net
assets as of December 31, 2004.
10. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts with an aggregate
market value of $785,467. See Note 6 of Notes to Financial Statements.
11. Issue is in default. See Note 1 of Notes to Financial Statements.
12. The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 10 of Notes to Financial
Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16 | OPPENHEIMER BALANCED FUND/VA
STATEMENT OF ASSETS AND LIABILITIES December 31, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value (including securities loaned of
$32,538,035) (cost $621,266,395)--see accompanying
statement of investments $ 719,682,980
- --------------------------------------------------------------------------------
Cash 752,712
- --------------------------------------------------------------------------------
Collateral for securities loaned 21,172,558
- --------------------------------------------------------------------------------
Unrealized appreciation on swap contracts 39,477
- --------------------------------------------------------------------------------
Receivables and other assets:
Investments sold on a when-issued basis or forward commitment 34,157,333
Interest, dividends and principal paydowns 2,698,161
Futures margins 171,264
Shares of beneficial interest sold 160,472
Other 9,836
----------------
Total assets 778,844,793
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Return of collateral for securities loaned 33,138,570
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $138,238,645 purchased on a
when-issued basis or forward commitment) 138,452,752
Shares of beneficial interest redeemed 202,423
Shareholder communications 35,195
Distribution and service plan fees 33,267
Trustees' compensation 13,840
Transfer and shareholder servicing agent fees 1,709
Other 26,829
----------------
Total liabilities 171,904,585
- --------------------------------------------------------------------------------
NET ASSETS $ 606,940,208
================
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 34,997
- --------------------------------------------------------------------------------
Additional paid-in capital 477,924,685
- --------------------------------------------------------------------------------
Accumulated net investment income 9,981,717
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign
currency transactions 20,056,825
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 98,941,984
----------------
NET ASSETS $ 606,940,208
================
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
Non-Service Shares:
Net asset value, redemption price per share and offering
price per share (based on net assets of $547,290,257
and 31,542,247 shares of beneficial interest outstanding) $ 17.35
- --------------------------------------------------------------------------------
Service Shares:
Net asset value, redemption price per share and offering
price per share (based on net assets of $59,649,951
and 3,455,362 shares of beneficial interest outstanding) $ 17.26
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | OPPENHEIMER BALANCED FUND/VA
STATEMENT OF OPERATIONS For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest $ 8,070,767
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $92,103) 5,180,617
- --------------------------------------------------------------------------------
Portfolio lending fees 28,817
----------------
Total investment income 13,280,201
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 4,101,747
- --------------------------------------------------------------------------------
Distribution and service plan fees -- Service shares 99,391
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Non-Service shares 10,110
Service shares 10,010
- --------------------------------------------------------------------------------
Shareholder communications:
Non-Service shares 34,192
Service shares 2,425
- --------------------------------------------------------------------------------
Custodian fees and expenses 20,673
- --------------------------------------------------------------------------------
Trustees' compensation 17,269
- --------------------------------------------------------------------------------
Other 40,636
----------------
Total expenses 4,336,453
Less reduction to custodian expenses (13,820)
----------------
Net expenses 4,322,633
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 8,957,568
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on:
Investments (including premiums on options exercised) 50,334,810
Closing of futures contracts 1,583,889
Closing and expiration of option contracts written 331,434
Foreign currency transactions 197,105
Swap contracts 229,352
Net increase from payment by affiliate 13,067
----------------
Net realized gain 52,689,657
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (6,627,575)
Translation of assets and liabilities denominated in
foreign currencies 340,324
Futures contracts (4,983)
Option contracts 249,912
Swap contracts 31,513
----------------
Net change in unrealized appreciation (6,010,809)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 55,636,416
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 | OPPENHEIMER BALANCED FUND/VA
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2004 2003
- -----------------------------------------------------------------------------------------------
OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income $ 8,957,568 $ 8,796,089
- -----------------------------------------------------------------------------------------------
Net realized gain 52,689,657 1,352,031
- -----------------------------------------------------------------------------------------------
Net change in unrealized appreciation (6,010,809) 99,178,424
---------------------------------
Net increase in net assets resulting from operations 55,636,416 109,326,544
- -----------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------
Dividends from net investment income:
Non-Service shares (5,486,430) (13,791,025)
Service shares (294,219) (86,954)
- -----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Non-Service shares (31,808,087) (18,122,603)
Service shares 29,880,516 20,531,465
- -----------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------
Total increase 47,928,196 97,857,427
- -----------------------------------------------------------------------------------------------
Beginning of period 559,012,012 461,154,585
---------------------------------
End of period (including accumulated net investment income
of $9,981,717 and $5,770,535, respectively) $ 606,940,208 $ 559,012,012
=================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER BALANCED FUND/VA
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NON-SERVICE SHARES YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.92 $ 13.16 $ 15.40 $ 16.55 $ 17.46
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .26 1 .27 .50 .53 .72
Net realized and unrealized gain (loss) 1.33 2.90 (2.02) (.19) .38
----------------------------------------------------------------------------
Total from investment operations 1.59 3.17 (1.52) .34 1.10
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.16) (.41) (.51) (.64) (.82)
Distributions from net realized gain -- -- (.21) (.85) (1.19)
----------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.16) (.41) (.72) (1.49) (2.01)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.35 $ 15.92 $ 13.16 $ 15.40 $ 16.55
============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 10.10% 24.96% (10.40)% 2.22% 6.44%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 547,290 $ 533,710 $ 458,848 $ 593,033 $ 589,298
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 528,655 $ 475,389 $ 517,516 $ 599,324 $ 566,724
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.59% 1.82% 3.31% 3.42% 4.36%
Total expenses 0.74% 4 0.76% 4 0.74% 4 0.76% 4 0.76% 4
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 5 248% 42% 30% 42%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Total returns are not annualized for
periods less than one full year. Total return information does not reflect
expenses that apply at the separate account level or to related insurance
products. Inclusion of these charges would reduce the total return figures for
all periods shown. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. The portfolio turnover rate excludes purchase transactions and sales
transactions of To Be Announced (TBA) mortgage-related securities of
$1,460,076,994 and $1,473,590,963, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | OPPENHEIMER BALANCED FUND/VA
SERVICE SHARES YEAR ENDED DECEMBER 31, 2004 2003 2002 1
- --------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.87 $ 13.14 $ 14.51
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 2 .39 .13
Net realized and unrealized gain (loss) 1.31 2.74 (1.50)
-------------------------------------------
Total from investment operations 1.54 3.13 (1.37)
- --------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.15) (.40) --
Distributions from net realized gain -- -- --
-------------------------------------------
Total dividends and/or distributions to shareholders (.15) (.40) --
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.26 $ 15.87 $ 13.14
===========================================
- --------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 3 9.79% 24.69% (9.44)%
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 59,650 $ 25,302 $ 2,306
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 39,851 $ 9,908 $ 1,037
- --------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.41% 1.37% 3.30%
Total expenses 1.02% 5 1.01% 5 0.99% 5
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 6 248% 42%
1. For the period from May 1, 2002 (inception of offering) to December 31, 2002.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Total returns are not annualized for
periods less than one full year. Total return information does not reflect
expenses that apply at the separate account level or to related insurance
products. Inclusion of these charges would reduce the total return figures for
all periods shown. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. The portfolio turnover rate excludes purchase transactions and sales
transactions of To Be Announced (TBA) mortgage-related securities of
$1,460,076,994 and $1,473,590,963, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER BALANCED FUND/VA
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Balanced Fund/VA (the Fund), formerly Oppenheimer Multiple
Strategies Fund/VA, is a separate series of Oppenheimer Variable Account Funds
(the Trust), an open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek a high total investment return, which includes current income and
capital appreciation in the value of its shares. The Trust's investment advisor
is OppenheimerFunds, Inc. (the Manager).
The Fund offers two classes of shares. Both classes are sold at their
offering price, which is the net asset value per share, to separate investment
accounts of participating insurance companies as an underlying investment for
variable life insurance policies, variable annuity contracts or other investment
products. The class of shares designated as Service shares is subject to a
distribution and service plan. Both classes of shares have identical rights and
voting privileges with respect to the Fund in general and exclusive voting
rights on matters that affect that class alone. Earnings, net assets and net
asset value per share may differ due to each class having its own expenses, such
as transfer and shareholder servicing agent fees and shareholder communications,
directly attributable to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities listed
or traded on National Stock Exchanges or other domestic or foreign exchanges are
valued based on the last sale price of the security traded on that exchange
prior to the time when the Fund's assets are valued. Securities traded on NASDAQ
are valued based on the closing price provided by NASDAQ prior to the time when
the Fund's assets are valued. In the absence of a sale, the security is valued
at the last sale price on the prior trading day, if it is within the spread of
the closing bid and asked prices, and if not, at the closing bid price.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of 60 days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. Securities may be valued primarily
using dealer-supplied valuations or a portfolio pricing service authorized by
the Board of Trustees. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective exchanges will be fair
valued. Fair value is determined in good faith using consistently applied
procedures under the supervision of the Board of Trustees. Short-term "money
market type" debt securities with remaining maturities of sixty days or less are
valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying financial statements. The Fund records a realized gain or loss when
a structured note is sold or matures. As of December 31, 2004, the market value
of these securities comprised 0.6% of the Fund's net assets and resulted in
unrealized cumulative losses of $10,650.
22 | OPPENHEIMER BALANCED FUND/VA
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of December 31, 2004, the Fund had purchased
$138,238,645 of securities on a when-issued basis or forward commitment and sold
$34,157,333 of securities issued on a when-issued basis or forward commitment.
In connection with its ability to purchase or sell securities on a
when-issued basis, the Fund may enter into forward roll transactions with
respect to mortgage-related securities. Forward roll transactions require the
sale of securities for delivery in the current month, and a simultaneous
agreement with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date. The Fund
records the incremental difference between the forward purchase and sale of each
forward roll as realized gain (loss) on investments or as fee income in the case
of such transactions that have an associated fee in lieu of a difference in the
forward purchase and sale price.
Risks of entering into forward roll transactions include the potential
inability of the counterparty to meet the terms of the agreement; the potential
of the Fund to receive inferior securities at redelivery as compared to the
securities sold to the counterparty; counterparty credit risk; and the potential
pay down speed variance between the mortgage-related pools.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of December 31, 2004, securities with an
aggregate market value of $221,875, representing 0.04% of the Fund's net assets,
were in default.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars as of the close of The New York Stock Exchange (the
Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for
business. Amounts related to the purchase and sale of foreign securities and
investment income are translated at the rates of exchange prevailing on the
respective dates of such transactions. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
23 | OPPENHEIMER BALANCED FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION BASED
UNDISTRIBUTED ON COST OF SECURITIES
NET UNDISTRIBUTED ACCUMULATED AND OTHER INVESTMENTS
INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES
-----------------------------------------------------------------------------
$10,362,511 $21,392,409 $803,612 $98,038,867
1. The Fund had $803,612 of straddle losses which were deferred.
2. During the fiscal year ended December 31, 2004, the Fund utilized $28,540,378
of capital loss carryforward to offset capital gains realized in that fiscal
year.
3. During the fiscal year ended December 31, 2003, the Fund did not utilize any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for December 31, 2004. Net assets of
the Fund were unaffected by the reclassifications.
REDUCTION TO
INCREASE TO ACCUMULATED NET
INCREASE TO ACCUMULATED NET REALIZED GAIN
PAID-IN CAPITAL INVESTMENT INCOME ON INVESTMENTS 4
-----------------------------------------------------------------
$1,654,641 $1,034,263 $2,688,904
4. $1,654,641, all of which was long-term capital gain, was distributed in
connection with Fund share redemptions.
The tax character of distributions paid during the years ended December 31, 2004
and December 31, 2003 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
---------------------------------------------------------------------
Distributions paid from:
Ordinary income $5,780,649 $13,877,979
24 | OPPENHEIMER BALANCED FUND/VA
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of December 31, 2004 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 621,634,306
Federal tax cost of other investments (16,548,740)
--------------
Total federal tax cost $ 605,085,566
==============
Gross unrealized appreciation $ 105,187,798
Gross unrealized depreciation (7,148,931)
--------------
Net unrealized appreciation $ 98,038,867
==============
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
25 | OPPENHEIMER BALANCED FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED DECEMBER 31, 2004 YEAR ENDED DECEMBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------------
NON-SERVICE SHARES
Sold 2,625,394 $ 42,309,798 2,968,658 $ 42,421,336
Dividends and/or distributions reinvested 342,260 5,486,430 1,109,495 13,791,025
Redeemed (4,948,306) (79,604,315) (5,419,511) (74,334,964)
-------------------------------------------------------------------
Net decrease (1,980,652) $ (31,808,087) (1,341,358) $ (18,122,603)
===================================================================
- -------------------------------------------------------------------------------------------------------------------------------
SERVICE SHARES
Sold 2,003,047 $ 32,170,140 1,500,492 $ 21,676,028
Dividends and/or distributions reinvested 18,400 294,219 7,012 86,954
Redeemed (160,331) (2,583,843) (88,818) (1,231,517)
-------------------------------------------------------------------
Net increase 1,861,116 $ 29,880,516 1,418,686 $ 20,531,465
===================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than U.S. government obligations and short-term obligations, for the year ended
December 31, 2004, were $331,990,724 and $301,035,350, respectively. There were
purchases of $52,280,455 and sales of $43,715,083 of U.S. government and
government agency obligations for the year ended December 31, 2004. In addition,
there were purchases of $1,460,076,994 and sales of $1,473,590,963 of To Be
Announced (TBA) mortgage-related securities for the year ended December 31,
2004.
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust which provides for a fee at an
annual rate of 0.75% of the first $200 million of average annual net assets,
0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the
next $200 million and 0.60% of average annual net assets over $800 million.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended December 31, 2004, the Fund paid
$19,256 to OFS for services to the Fund.
Additionally, funds offered in variable annuity separate accounts are
subject to minimum fees of $10,000 per class for class level assets of $10
million or more. Each class is subject to the minimum fee in the event that the
per account fee does not equal or exceed the applicable minimum fee.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FOR SERVICE SHARES. The Fund has adopted a
Distribution and Service Plan for Service shares to pay OppenheimerFunds
Distributor, Inc. (the Distributor), for distribution related services and
personal service and account maintenance for the Fund's Service shares. Under
the Plan, payments are made quarterly at an annual rate of up to 0.25% of the
average annual net assets of Service shares of the Fund. The Distributor
currently uses all of those fees to compensate sponsor(s) of the insurance
product that offers Fund shares, for providing personal service and maintenance
of accounts of their variable contract owners that hold Service shares. The
impact of the service plan is to increase operating expenses of the Service
shares, which results in lower performance compared to the Fund's shares that
are not subject to a service fee. Fees incurred by the Fund under the Plan are
detailed in the Statement of Operations.
26 | OPPENHEIMER BALANCED FUND/VA
- --------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. Following a review of its use of brokerage
commissions for sales that is permitted under its investment advisory agreement,
the Fund's Manager terminated that practice in July 2003. Subsequently, the
Manager paid the Fund $13,067, an amount equivalent to certain of such
commissions incurred in prior years.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of December 31, 2004, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or has expired.
Cash held by the broker to cover initial margin requirements on open
futures contracts is noted in the Statement of Assets and Liabilities.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable and/or payable for the
daily mark to market for variation margin. Realized gains and losses are
reported in the Statement of Operations as the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in the Statement of Operations.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
27 | OPPENHEIMER BALANCED FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS Continued
As of December 31, 2004, the Fund had outstanding futures contracts as follows:
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS DECEMBER 31, 2004 (DEPRECIATION)
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Long Bonds 3/21/05 234 $ 26,325,000 $ 365,428
U.S. Treasury Nts., 10 yr. 3/21/05 253 28,320,188 149,015
------------
514,443
------------
CONTRACTS TO SELL
U.S. Treasury Nts., 2 yr. 3/31/05 156 32,696,625 15,330
U.S. Treasury Nts., 5 yr. 3/21/05 352 38,555,000 (52,265)
------------
(36,935)
------------
$ 477,508
============
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Contracts subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended December 31, 2004 was as follows:
CALL OPTIONS
---------------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS
- ----------------------------------------------------------------------------
Options outstanding as of December 31, 2003 5,287 $ 745,373
Options closed or expired (2,280) (331,434)
Options exercised (3,007) (413,939)
---------------------------
Options outstanding as of December 31, 2004 -- $ --
===========================
28 | OPPENHEIMER BALANCED FUND/VA
- --------------------------------------------------------------------------------
8. TOTAL RETURN SWAP CONTRACTS
The Fund may enter into a total return swap transaction to maintain a total
return on a particular investment, or portion of its portfolio, or for other
non-speculative purposes. Because the principal amount is not exchanged, it
represents neither an asset nor a liability to either counterparty, and is
referred to as notional. The Fund records an increase or decrease to unrealized
gain (loss), in the amount due to or owed by the Fund at termination or
settlement. Total return swaps are subject to risks (if the counterparty fails
to meet its obligations).
As of December 31, 2004, the Fund had entered into the following total return
swap agreements:
PAID BY RECEIVED BY
SWAP NOTIONAL THE FUND AT THE FUND AT TERMINATION UNREALIZED
COUNTERPARTY AMOUNT DECEMBER 31, 2004 DECEMBER 31, 2004 DATES APPRECIATION
- --------------------------------------------------------------------------------------------------------------------------
Value of total return
One-Month LIBOR of Lehman Brothers
Deutsche Bank AG $4,250,000 less 50 basis points CMBS Index 1/1/05 $ 21,173
Value of total return
Goldman Sachs One-Month of Lehman Brothers
Capital Markets LP 4,250,000 LIBOR BBA CMBS Index 3/31/05 18,304
----------
$ 39,477
==========
Index abbreviations are as follows:
CMBS Commercial Mortgage Backed Securities Markets
LIBOR London-Interbank Offered Rate
LIBOR BBA London-Interbank Offered Rate British Bankers Association
- --------------------------------------------------------------------------------
9. ILLIQUID SECURITIES
As of December 31, 2004, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 15% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities.
- --------------------------------------------------------------------------------
10. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of US
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the collateral.
Cash collateral is invested in cash equivalents. The Fund retains a portion of
the interest earned from the collateral. The Fund also continues to receive
interest or dividends paid on the securities loaned. As of December 31, 2004,
the Fund had on loan securities valued at $32,538,035. Cash of $33,138,570 was
received as collateral for the loans, of which $11,966,012 was invested in
approved instruments.
29 | OPPENHEIMER BALANCED FUND/VA
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
11. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor (collectively, the
"Oppenheimer defendants"), as well as 51 of the Oppenheimer funds (as "Nominal
Defendants") excluding the Fund, 31 present and former Directors or Trustees and
9 present and former officers of the funds. This complaint, filed in the U.S.
District Court for the Southern District of New York on January 10, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The Oppenheimer defendants believe that the allegations contained in the
Complaints are without merit and that they, the funds named as Nominal
Defendants, and the Directors/Trustees of those funds have meritorious defenses
against the claims asserted. The Oppenheimer defendants intend to defend these
lawsuits vigorously and to contest any claimed liability, and they have retained
legal counsel to defend such suits. The Oppenheimer defendants believe that it
is premature to render any opinion as to the likelihood of an outcome
unfavorable to them and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
30 | OPPENHEIMER BALANCED FUND/VA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER BALANCED FUND/VA:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Balanced Fund/VA, a series of Oppenheimer Variable Account Funds,
including the statement of investments, as of December 31, 2004, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 2004, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
Additionally, an audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Balanced Fund/VA as of December 31, 2004, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 11, 2005
31 | OPPENHEIMER BALANCED FUND/VA
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2005, if applicable, shareholders of record received information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends of $0.1646 and $0.1521 per share were paid to Non-service and
Service shareholders, respectively, on March 15, 2004, all of which was
designated as ordinary income for federal income tax purposes.
Dividends, if any, paid by the Fund during the fiscal year ended December
31, 2004 which are not designated as capital gain distributions should be
multiplied by 40.81% to arrive at the amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF
INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file new Form N-PX, with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. The Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at www.sec.gov. Those
forms may be reviewed and copied at the SEC's Public Reference Room in
Washington D.C. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
32 | OPPENHEIMER BALANCED FUND/VA
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD BY
FUND, LENGTH OF SERVICE, AGE TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, CO
TRUSTEES 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG,
Chairman of the Board of Chairman of the following private mortgage banking companies: Cherry Creek Mortgage
Trustees (since 2003) and Company (since 1991), Centennial State Mortgage Company (since 1994), The El Paso
Trustee (since 1999) Mortgage Company (since 1993), Transland Financial Services, Inc. (since 1997);
Age: 67 Chairman of the following private companies: Great Frontier Insurance (insurance
agency) (since 1995), Ambassador Media Corporation and Broadway Ventures (since 1984);
a director of the following public companies: Helmerich & Payne, Inc. (oil and gas
drilling/production company) (since 1992) and UNUMProvident (insurance company)
(since 1991). Mr. Armstrong is also a Director/Trustee of Campus Crusade for Christ
and the Bradley Foundation. Formerly a director of the following: Storage Technology
Corporation (a publicly-held computer equipment company) (1991-February 2003), and
International Family Entertainment (television channel) (1992-1997), Frontier Real
Estate, Inc. (residential real estate brokerage) (1994-1999), and Frontier Title
(title insurance agency) (1995-June 1999); a U.S. Senator (January 1979-January 1991).
Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. AVIS, Formerly, Director and President of A.G. Edwards Capital, Inc. (General Partner of
Trustee (since 1993) private equity funds) (until February 2001); Chairman, President and Chief Executive
Age: 73 Officer of A.G. Edwards Capital, Inc. (until March 2000); Vice Chairman and Director
of A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards & Sons, Inc. (its brokerage
company subsidiary) (until March 1999); Chairman of A.G. Edwards Trust Company and
A.G.E. Asset Management (investment advisor) (until March 1999); and a Director (until
March 2000) of A.G. Edwards & Sons and A.G. Edwards Trust Company. Oversees 38
portfolios in the OppenheimerFunds complex.
GEORGE C. BOWEN, Formerly Assistant Secretary and a director (December 1991-April 1999) of Centennial
Trustee (since 1999) Asset Management Corporation; President, Treasurer and a director (June 1989-April
Age: 68 1999) of Centennial Capital Corporation; Chief Executive Officer and a director of
MultiSource Services, Inc. (March 1996-April 1999). Until April 1999 Mr. Bowen held
several positions in subsidiary or affiliated companies of the Manager. Oversees 38
portfolios in the OppenheimerFunds complex.
EDWARD L. CAMERON, A member of The Life Guard of Mount Vernon, George Washington's home (since June
Trustee (since 1999) 2000). Formerly Director (March 2001-May 2002) of Genetic ID, Inc. and its
Age: 66 subsidiaries (a privately held biotech company); a partner (July 1974-June 1999) with
PricewaterhouseCoopers LLP (an accounting firm); and Chairman (July 1994-June 1998) of
Price Waterhouse LLP Global Investment Management Industry Services Group. Oversees 38
portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Director (since February 1998) of Rocky Mountain Elk Foundation (a not-for-profit
Trustee (since 1990) foundation); a director (since 1997) of Putnam Lovell Finance (finance company); a
Age: 63 director (since June 2002) of UNUMProvident (insurance company). Formerly a director
(October 1999-October 2003) of P.R. Pharmaceuticals (a privately company); Chairman
and a director (until October 1996) and President and Chief Executive Officer (until
October 1995) of the Manager; President, Chief Executive Officer and a director (until
October 1995) of Oppenheimer Acquisition Corp., Shareholders Services Inc. and
Shareholder Financial Services, Inc. Overs 38 portfolios in the OppenheimerFunds
complex.
SAM FREEDMAN, Director of Colorado Uplift (a non-profit charity) (since September 1984). Formerly
Trustee (since 1996) (until October 1994) Mr. Freedman held several positions in subsidiary or affiliated
Age: 64 companies of the Manager. Oversees 38 portfolios in the OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey International Studies (an educational organization) (since
Trustee (since 2002) February 2000); a director of The California Endowment (a philanthropic organization)
Age: 58 (since April 2002) and of Community Hospital of Monterey Peninsula (educational
organization) (since February 2002); a director of America Funds Emerging Markets
Growth Fund (since October 1991) (an investment company); an advisor to Credit Suisse
First Boston's Sprout venture capital unit. Mrs. Hamilton also is a member of the
investment committees of the Rockefeller Foundation and of the University of Michigan.
Formerly, Trustee of MassMutual Institutional Funds (open-end investment company)
(1996-May 2004); a director of MML Series Investment Fund (April 1989-May 2004) and
MML Services (April 1987-May 2004) (investment companies); member of the investment
committee (2000-2003) of Hartford Hospital; an advisor (2000-2003) to Unilever
(Holland)'s pension fund; and President (February 1991-April 2000) of ARCO Investment
Management Company. Oversees 37 portfolios in the OppenheimerFunds complex.
33 | OPPENHEIMER BALANCED FUND/VA
TRUSTEES AND OFFICERS Unaudited / Continued
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ROBERT J. MALONE, Chairman, Chief Executive Officer and Director of Steele Street State Bank (a
Trustee (since 2002) commercial banking entity) (since August 2003); director of Colorado UpLIFT (a
Age: 60 non-profit organization) (since 1986); trustee (since 2000) of the Gallagher Family
Foundation (non-profit organization). Formerly, Chairman of U.S. Bank-Colorado (a
subsidiary of U.S. Bancorp and formerly Colorado National Bank,) (July 1996-April 1,
1999), a director of: Commercial Assets, Inc. (a REIT) (1993-2000), Jones Knowledge,
Inc. (a privately held company) (2001-July 2004) and U.S. Exploration, Inc. (oil and
gas exploration) (1997-February 2004). Oversees 37 portfolios in the OppenheimerFunds
complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Institutional Funds (since 1996) and MML Series Investment Fund
Trustee (since 2000) (since 1987) (both open-end investment companies) and the Springfield Library and
Age: 62 Museum Association (since 1995) (museums) and the Community Music School of
Springfield (music school) (since 1996); Trustee (since 1987), Chairman of the Board
(since 2003) and Chairman of the investment committee (since 1994) for the Worcester
Polytech Institute (private university); and President and Treasurer (since January
1999) of the SIS Fund (a private not for profit charitable fund). Formerly, member of
the investment committee of the Community Foundation of Western Massachusetts (1998 -
2003); Chairman (January 1999-July 1999) of SIS & Family Bank, F.S.B. (formerly SIS
Bank) (commercial bank); and Executive Vice President (January 1999-July 1999) of
Peoples Heritage Financial Group, Inc. (commercial bank). Oversees 38 portfolios in
the OppenheimerFunds complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, 225
AND OFFICER LIBERTY STREET, 11TH FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR AN
INDEFINITE TERM, UNTIL HIS RESIGNATION, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President (since
President and Trustee September 2000) of the Manager; President and a director or trustee of other
(since 2001) Oppenheimer funds; President and a director (since July 2001) of Oppenheimer
Age: 55 Acquisition Corp. (the Manager's parent holding company) and of Oppenheimer
Partnership Holdings, Inc. (a holding company subsidiary of the Manager); a director
(since November 2001) of OppenheimerFunds Distributor, Inc. (a subsidiary of the
Manager); Chairman and a director (since July 2001) of Shareholder Services, Inc. and
of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager);
President and a director (since July 2001) of OppenheimerFunds Legacy Program (a
charitable trust program established by the Manager); a director of the following
investment advisory subsidiaries of the Manager: OFI Institutional Asset Management,
Inc., Centennial Asset Management Corporation, Trinity Investment Management
Corporation and Tremont Capital Management, Inc. (since November 2001), HarbourView
Asset Management Corporation and OFI Private Investments, Inc. (since July 2001);
President (since November 1, 2001) and a director (since July 2001) of Oppenheimer
Real Asset Management, Inc.; Executive Vice President (since February 1997) of
Massachusetts Mutual Life Insurance Company (the Manager's parent company); a director
(since June 1995) of DLB Acquisition Corporation (a holding company that owns the
shares of Babson Capital Management LLC); a member of the Investment Company
Institute's Board of Governors (elected to serve from October 3, 2003 through
September 30, 2006). Formerly, Chief Operating Officer (September 2000-June 2001) of
the Manager; President and trustee (November 1999-November 2001) of MML Series
Investment Fund and MassMutual Institutional Funds (open-end investment companies); a
director (September 1999-August 2000) of C.M. Life Insurance Company; President, Chief
Executive Officer and director (September 1999-August 2000) of MML Bay State Life
Insurance Company; a director (June 1989-June 1998) of Emerald Isle Bancorp and
Hibernia Savings Bank (a wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 62
portfolios as Trustee/Director and 21 additional portfolios as Officer in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------------------------------------------
OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. FERREIRA,
LEAVY, MANIOUDAKIS, AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
FLOOR, NEW YORK, NY 10281-1008, FOR MESSRS. VANDEHEY AND WIXTED 6803 S. TUCSON WAY,
CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR
HER EARLIER RESIGNATION, DEATH OR REMOVAL.
EMMANUEL FERREIRA, Vice President of the Manager since January 2003. An officer of 5 portfolios in the
Vice President and Portfolio OppenheimerFunds complex. Formerly, Portfolio Manager at Lashire Investments (July
Manager (since 2003) 1999-December 2002), and a Senior Analyst at Mark Asset Management (July 1997-June
Age: 37 1999).
34 | OPPENHEIMER BALANCED FUND/VA
CHRISTOPHER LEAVY, Senior Vice President of the Manager since September 2000; an officer of 8 portfolios
Vice President and Portfolio in the OppenheimerFunds complex. Formerly a portfolio manager of Morgan Stanley Dean
Manager (since 2003) Witter Investment Management (1997 - September 2000).
Age: 33
ANGELO MANIOUDAKIS, Senior Vice President of the Manager (since April 2002), of HarbourView Asset
Vice President and Management Corporation (since April, 2002 and of OFI Institutional Asset Management,
Portfolio Manager Inc. (since June 2002); an officer of 14 portfolios in the OppenheimerFunds complex.
(since 2003) Formerly Executive Director and portfolio manager for Miller, Anderson & Sherrerd, a
Age: 38 division of Morgan Stanley Investment Management (August 1993-April 2002).
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer of
Treasurer (since 1999) HarbourView Asset Management Corporation, Shareholder Financial Services, Inc.,
Age: 45 Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and
Oppenheimer Partnership Holdings, Inc. (since March 1999), of OFI Private Investments,
Inc. (since March 2000), of OppenheimerFunds International Ltd. and OppenheimerFunds
plc (since May 2000), of OFI Institutional Asset Management, Inc. (since November
2000), and of OppenheimerFunds Legacy Program (a Colorado non-profit corporation)
(since June 2003); Treasurer and Chief Financial Officer (since May 2000) of OFI Trust
Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March
1999) of Oppenheimer Acquisition Corp. Formerly Assistant Treasurer of Centennial
Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy
Program (April 2000-June 2003); Principal and Chief Operating Officer (March
1995-March 1999) at Bankers Trust Company-Mutual Fund Services Division. An officer of
83 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since February
Vice President & Secretary 2002) of the Manager; General Counsel and a director (since November 2001) of the
(since 2001) Distributor; General Counsel (since November 2001) of Centennial Asset Management
Age: 56 Corporation; Senior Vice President and General Counsel (since November 2001) of
HarbourView Asset Management Corporation; Secretary and General Counsel (since
November 2001) of Oppenheimer Acquisition Corp.; Assistant Secretary and a director
(since October 1997) of OppenheimerFunds International Ltd. and OppenheimerFunds plc;
Vice President and a director (since November 2001) of Oppenheimer Partnership
Holdings, Inc.; a director (since November 2001) of Oppenheimer Real Asset Management,
Inc.; Senior Vice President, General Counsel and a director (since November 2001) of
Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private
Investments, Inc. and OFI Trust Company; Vice President (since November 2001) of
OppenheimerFunds Legacy Program; Senior Vice President and General Counsel (since
November 2001) of OFI Institutional Asset Management, Inc.; a director (since June
2003) of OppenheimerFunds (Asia) Limited. Formerly Senior Vice President (May
1985-December 2003), Acting General Counsel (November 2001-February 2002) and
Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary
of Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial
Services, Inc. (November 1989-November 2001); and OppenheimerFunds International Ltd.
(October 1997-November 2001). An officer of 83 portfolios in the OppenheimerFunds
complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the Manager;
Vice President and Chief Vice President (since June 1983) of OppenheimerFunds Distributor, Inc., Centennial
Compliance Officer Asset Management Corporation and Shareholder Services, Inc. Formerly (until February
(since 2004) 2004) Vice President and Director of Internal Audit of OppenheimerFunds, Inc. An
Age: 54 officer of 83 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY
CALLING 1.800.981.2871.
35 | OPPENHEIMER BALANCED FUND/VA
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that Edward L.
Cameron, the Chairman of the Board's Audit Committee, and George C. Bowen, a
member of the Board's Audit Committee, possess the technical attributes
identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit
committee financial experts," and has designated Messrs. Cameron and Bowen as
the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $20,500 in fiscal 2004 and $19,000 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $35,859
in fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $5,548
in fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include: tax compliance, tax planning and tax advice. Tax
compliance generally involves preparation of original and amended
tax returns, claims for a refund and tax payment-planning services.
Tax planning and tax advice includes assistance with tax audits and
appeals, tax advice related to mergers and acquisitions and requests
for rulings or technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two fiscal
years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe
waived provided that: 1) the aggregate amount of all such services
provided constitutes no more than five percent of the total amount
of fees paid by the registrant to it principal accountant during the
fiscal year in which services are provided 2) such services were not
recognized by the registrant at the time of engagement as non-audit
services and 3) such services are promptly brought to the attention
of the audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $41,407
in fiscal 2003 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not include
any prohibited non-audit services as defined by the Securities
Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
account's independence. No such services were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The registrant's Board of Trustees has established a Governance Committee,
one function of which is to create and oversee the process by which shareholders
can submit nominees for positions on the Board. The Governance Committee has not
yet adopted a charter, but anticipates that it will do so by the end of this
calendar year. The Committee has temporarily adopted the process previously
adopted by the Audit Committee regarding shareholder submission of nominees for
board positions. Shareholders may submit names of individuals, accompanied by
complete and properly supported resumes, for the Governance Committee's
consideration by mailing such information to the Committee in care of the Fund.
The Committee may consider such persons at such time as it meets to consider
possible nominees. The Committee, however, reserves solo discretion to determine
the candidates for trustees and independent trustees to recommend to the Board
and/or shareholders and may identify candidates other than those submitted by
Shareholders. The Committee may, but need not, consider the advice and
recommendation of the Manager and its affiliates in selecting nominees. The full
Board elects new trustees except for those instances when a shareholder vote is
required.
Shareholders who desire to communicate with the Board should address
correspondence to the Board of Trustees of the registrant, or to an individual
Trustee c/o the Secretary of the Fund at 6803 South Tucson Way, Centennial,
Colorado 80112 and may submit their correspondence electronically at
WWW.OPPENHEIMERFUNDS.COM under the caption "contact us." If your correspondence
is intended for a particular Trustee, please indicate the name of the Trustee
for whom it is intended. The sender should indicate in the address whether it is
intended for the entire board, the Independent Trustees as group, or to an
individual Trustee. The Governance Committee will consider if a different
process should be recommended to the Board.
ITEM 10. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-3(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-3(c)) as of December 31, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances that information required to be
disclosed by registrant in the reports that it files under the
Securities Exchange Act of 1934 (a) is accumulated and communicated
to registrant's management, including its principal executive
officer and principal financial officer, to allow timely decisions
regarding required disclosure, and (b) is recorded, processed,
summarized and reported, within the time periods specified in the
rules and forms adopted by the U.S. Securities and Exchange
Commission.
(b) There have been no changes in registrant's internal controls over
financial reporting that occurred during the registrant's last
fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)