Annual Report December 31, 1999
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Oppenheimer
Strategic Bond Fund/VA
A Series of Oppenheimer Variable Account Funds
[Logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
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Oppenheimer Variable Account Funds--Oppenheimer Strategic Bond Fund/VA
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Objective
Oppenheimer Strategic Bond Fund/VA, a series of Oppenheimer Variable Account
Funds, primarily seeks a high level of current income principally derived from
interest on debt securities. The Fund primarily invests in three sectors:
foreign fixed-income securities, U.S. government securities and lower rated
high-yield domestic corporate bonds (commonly known as "junk bonds"). Investing
in foreign securities entails additional expenses and risks including foreign
currency fluctuations while investing in junk bonds carries a greater risk of
default.
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Narrative by Art Steinmetz, Co-Portfolio Manager
The Fund's performance during the fiscal year that ended December 31, 1999,
reflected the challenging conditions in the world's fixed-income markets. Poor
market performance in the wake of last year's currency and credit crises in the
emerging markets was only partially offset by greater market stability in 1999.
In addition, higher U.S. interest rates adversely affected the prices of U.S.
government securities, which offset strength in the U.S. corporate bond sector.
Consistent with our longstanding investment strategy, we have continued
to emphasize those areas of the bond market where we have identified attractive
relative values. Emerging-market bonds currently offer yields at the high end of
their range relative to developed-market bonds, providing the potential for
capital appreciation. Although we have not yet seen that potential realized, we
believe that it will occur when investors become convinced that global economic
recovery is truly underway.
Accordingly, we have increased our holdings in the Fund's
emerging-markets sector, where we have focused on attractive values in Southeast
Asia.(1) By the same token, we have de-emphasized investments in Latin American
markets. In our view, these economies may be slow to recover. While attractive
values in Latin American bonds and currencies exist, higher U.S. interest rates
are likely to adversely affect bond prices there. Therefore, we do not yet
believe that the time is right to increase our exposure to Latin America.
We have found particularly attractive values in certain areas of the
U.S. government securities sector. While returns from U.S. Treasury securities
have been negative so far in 1999 because of higher interest rates, total
returns of mortgage-backed securities issued by government agencies have been
mostly positive. Bonds issued by the Federal Home Loan Mortgage Corp., a
government agency, represent a particularly dramatic example of relative value
in this area. We have attempted to take advantage of relative values such as
these by increasing our holdings of mortgage-backed securities, including
"interest-only" securities whose prices tend to increase as interest rates rise.
We have also increased our exposure to high-yield corporate bonds.(2)
Like the profits of the U.S.-based corporations that issue them, these
securities tend to do well in a strong economy. Our favorite corporate sector
continues be the telecommunications industry, which has grown dramatically. More
recently, we have added to our energy holdings as commodities prices have
improved. We've also increased our exposure to economically sensitive companies,
such as producers of chemicals, steel and paper.
With regard to the coming months, we are cautiously optimistic. We have
attempted to position the Fund to take advantage of good values in
emerging-market, mortgage-backed and corporate bonds. If, as we expect, the U.S.
economy remains strong and international economies gain strength next year,
these investments should provide above-average total returns, including high
yields and price appreciation.
Nonetheless, we are prepared for continued volatility in the
fixed-income markets. Higher U.S. interest rates implemented by the Federal
Reserve Board may adversely affect international bond markets, for example.
However, we believe the stage will be set for very attractive returns over the
longer term. Having the patience and discipline to weather short-term volatility
on the road to longer-term gains is the essence of our investment strategy, and
is an important reason Oppenheimer Strategic Bond Fund/VA is part of The Right
Way to Invest.
1. The Fund's portfolio (and duration) is subject to change.
2. Investing in lower rated high-yield domestic corporate bonds (commonly known
as "junk bonds") carries a greater risk of default.
2 Oppenheimer Strategic Bond Fund/VA
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Oppenheimer Variable Account Funds--Oppenheimer Strategic Bond Fund/VA
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Management's discussion of performance. During the Fund's fiscal year that ended
December 31, 1999, the Fund's returns were adversely influenced by declining
bond prices in international markets that were affected by last year's global
credit and currency crises, as well as higher U.S. interest rates. In this
environment, the Manager attempted to position the Fund to take advantage of
depressed values and widened yield spreads. The managers believe that this
strategy will help boost total returns as economic and market conditions
improve. The Fund's portfolio holdings, allocations and strategies are subject
to change.
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Comparing the Fund's performance to the market. The graph that follows shows the
performance of a hypothetical $10,000 investment in the Fund held until December
31, 1999. Performance information does not reflect charges that apply to
separate accounts investing in the Fund. If these charges were taken into
account, performance would be lower. The graph assumes that all dividends and
capital gains distributions were reinvested in additional shares.
The Fund's performance is compared to the performance of both Lehman
Brothers Aggregate Bond Index and Salomon Brothers World Government Bond Index.
The Lehman Brothers Aggregate Bond Index is a broad-based, unmanaged index of
U.S. corporate bond issues, U.S. Government securities and mortgage-backed
securities, widely recognized as a measure of the performance of the domestic
debt securities market. The Salomon Brothers World Government Bond Index is an
unmanaged index of fixed-rate bonds having a maturity of one year or more, and
is widely recognized as a benchmark of fixed income performance on a world-wide
basis. Index performance reflects the reinvestment of income but does not
consider the effect of transaction costs, and none of the data in the graph
shows the effect of taxes. The Fund's performance reflects the effects of the
Fund's business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the investments in the indices.
[Chart]
Comparison of Change in Value of $10,000 Hypothetical Investments in:
OVAF/Oppenheimer Strategic Bond Fund/VA, Lehman Brothers Aggregate Bond Index
and Salomon Brothers World Government Bond Index
<TABLE>
<CAPTION>
OVAF/Oppenheimer Strategic Lehman Brothers Aggregate Salomon Brothers World
Bond Fund/VA Bond Index Government Bond Index
<S> <C> <C> <C>
5.3.93 10000 10000 10000
12.31.93 10425 10466 10530
12.31.94 10031 10161 10777
12.31.95 11569 12038 12829
12.31.96 12965 12475 13293
12.31.97 14094 13680 13324
12.31.98 14503 14868 15364
12.31.99 14913 14746 14708
</TABLE>
Average Annual Total Return of the Fund at 12/31/99
1-Year 2.83% 5 Year 8.25% Life 6.18%
[End Chart]
The Fund's performance may from time to time be subject to substantial
short-term changes, particularly during periods of market or interest rate
volatility. For updates on the Fund's performance, please call us at
1.800.981.2871.
The performance information in the graph for both indices begins on 4/30/93. The
inception date of the Fund is 5/3/93.
Total returns include changes in net asset value per share and does not include
the charges associated with the separate account products, which offer this
fund. Such performance would have been lower if such charges were taken into
account. Total returns and the ending account value in the graph show change in
share value and include reinvestment of all dividends and capital gains
distributions.
Past performance is not predictive of future performance.
Oppenheimer Strategic Bond Fund/VA 3
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Statement of Investments December 31, 1999
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<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
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Mortgage-Backed Obligations--22.3%
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Government Agency--18.5%
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FHLMC/FNMA/Sponsored--8.8%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates, Series 151, Cl. F, 9%, 5/15/21 $ 793,067 $ 819,334
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Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security,
Series 194, Cl. IO, 9.40%-9.462%, 4/1/28(2) 20,681,402 6,913,728
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Federal National Mortgage Assn.:
6.50%, 5/1/29 1,555,497 1,465,559
7%, 1/25/29(3) 6,200,000 5,994,656
7.50%, 1/25/28(3) 3,200,000 3,164,000
7.50%, 8/1/25 405,275 401,730
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Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1993-202, Cl. PH, 6.50%, 2/25/22 4,500,000 4,373,415
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Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 276, Cl. 2, 9.065%, 10/1/24(2) 2,834,208 875,948
Trust 294, Cl. 2, 11.826%, 2/1/28(2) 2,273,267 747,692
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24,756,062
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GNMA/Guaranteed--9.7%
Government National Mortgage Assn.:
6.125%, 11/20/25 174,462 177,215
7%, 3/15/28-7/15/28 15,023,969 14,507,447
7.50%, 2/15/27 2,469,631 2,441,848
8%, 11/15/25-5/15/26 2,222,437 2,246,631
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Government National Mortgage Assn., Gtd. Multiclass Mtg.
Participation Certificates, Series 1999-27, Cl. PQ, 7.50%, 8/16/28 8,220,125 8,044,163
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27,417,304
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Private--3.8%
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Commercial--2.5%
AMMC, Collateralized Bond Obligations, Sub. Bonds,
Series I, Cl. D1, 13.602%, 1/15/12(4) 200,000 200,000
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AMRESCO Commercial Mortgage Funding I Corp.,
Multiclass Mtg. Pass-Through Certificates, Series 1997-C1, Cl. G, 7%, 6/17/29(5) 100,000 76,937
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Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(6) 375,000 267,422
Series 1997-D5, Cl. B1, 6.93%, 2/14/41 300,000 198,984
Series 1997-D5, Cl. B2, 6.93%, 2/14/41 1,250,000 800,781
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CRIIMI MAE Trust I, Collateralized Mtg. Obligations,
Series 1996-C1, Cl. A2, 7.56%, 8/30/05(4) 100,000 93,031
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FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Series 1994-C1, Cl. 2-G, 8.70%, 9/25/25 153,594 147,546
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First Union-Lehman Brothers Commercial Mortgage Trust,
Commercial Mtg. Pass-Through Certificates, Series 1997-C2, Cl. F, 7.50%, 9/18/15 225,000 165,164
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General Motors Acceptance Corp., Collateralized Mtg. Obligations:
Series 1997-C1, Cl. G, 7.414%, 11/15/11 440,000 309,787
Series 1997-C2, Cl. F, 6.75%, 4/16/29 250,000 150,078
</TABLE>
4 Oppenheimer Strategic Bond Fund/VA
<PAGE>
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Statement of Investments (Continued)
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<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
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Commercial (continued)
General Motors Acceptance Corp., Interest-Only Stripped Mtg.-Backed Security,
Series 1997-C1, Cl. X, 8.726%, 7/15/27(2) $4,005,708 $ 301,680
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Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1995-C2, Cl. D, 7.681%, 6/15/21(6) 236,084 232,304
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Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. F, 7.421%, 2/15/28(5)(6) 162,744 117,735
Series 1997-HF1, Cl. F, 6.86%, 2/15/10(5) 150,000 114,844
Series 1997-RR, Cl. D, 7.671%, 4/30/39(5) 450,024 316,072
Series 1997-RR, Cl. E, 7.718%, 4/30/39(5)(6) 300,016 185,213
Series 1997-RR, Cl. F, 7.649%, 4/30/39(5) 600,032 306,204
Series 1997-XL1, Cl. G, 7.695%, 10/3/30(5) 390,000 315,656
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NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates,
Series DMC, Cl. C, 8.921%, 8/12/11(5) 200,000 180,938
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NC Finance Trust, Collateralized Mtg. Obligations, Series 1999-I,
Cl. ECFD, 8.75%, 12/25/28 407,527 395,938
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Nykredit AS, 7% Cv. Bonds, 10/1/29DKK 6,935,000 927,330
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Option One Mortgage Trust, Collateralized Mtg. Obligations,
Series 1999-1A, 10.06%, 3/1/29(5) 291,866 287,671
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Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. D, 9.45%, 5/25/24 57,792 57,115
Series 1994-C2, Cl. E, 8%, 4/25/25 973,568 949,534
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Structured Asset Securities Corp., Multiclass Pass-Through Certificates,
Series 1995-C4, Cl. E, 8.703%, 6/25/26(5)(6) 46,290 44,048
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7,142,012
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Multi-Family--0.5%
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through Certificates, Series 1997-MC1,
Cl. F, 7.452%, 5/20/07(5) 63,720 48,208
Multifamily Mtg. Pass-Through Certificates, Series 1996-MC1,
Cl. G, 7.15%, 6/15/06(4) 800,000 617,500
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Salomon Brothers Mortgage Securities VII, Series 1996-CL,
Cl. F, 9.078%, 1/20/06(6) 1,000,000 738,125
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1,403,833
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Residential--0.8%
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997:
Cl. D, 8.126%, 5/25/08(5)(6) 350,000 273,000
Cl. E, 8.126%, 2/25/11(5)(6) 600,000 402,000
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Residential Asset Securitization Trust, Collateralized Mtg. Obligations,
Non-Accelerated Security, Series 1997-A2, Cl. A8, 7.75%, 4/25/27 1,000,000 986,250
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Salomon Brothers Mortgage Securities VII, Series 1996-B,
Cl. 1, 6.581%, 4/25/26(5) 378,900 249,956
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Salomon, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1998-1A, 5%, 12/25/00(5) 189,699 182,823
-----------
2,094,029
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Total Mortgage-Backed Obligations (Cost $65,313,699) 62,813,240
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U.S. Government Obligations--15.8%
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U.S. Treasury Bonds:
6.50%, 11/15/26(7)(8) 5,200,000 5,070,000
8.125%, 8/15/21 1,415,000 1,624,155
11.875%, 11/15/03 1,000,000 1,180,938
STRIPS, 5.76%, 2/15/19(9) 6,500,000 1,783,704
STRIPS, 5.33%, 5/15/17(9) 6,000,000 1,850,442
STRIPS, 6.24%, 2/15/20(9) 5,704,000 4,028,085
</TABLE>
Oppenheimer Strategic Bond Fund/VA 5
<PAGE>
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Statement of Investments (Continued)
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<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
============================================================================================================
U.S. Government Obligations (continued)
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U.S. Treasury Nts.:
5.625%, 11/30/00 $ 9,705,000 $ 9,671,644
5.875%, 8/15/09 2,750,000 2,664,923
6.50%, 10/15/06 13,000,000 12,967,500
7%, 7/15/06 3,590,000 3,678,630
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Total U.S. Government Obligations (Cost $47,265,561) 44,520,021
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Foreign Government Obligations--16.3%
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Argentina--1.7%
Argentina (Republic of) Bonds:
Bonos de Consolidacion de Deudas, Series I, 2.868%, 4/1/07(6)ARP 1,736,732 1,215,876
Series L, 6.812%, 3/31/05(6) 281,600 256,960
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Argentina (Republic of) Global Unsec. Unsub. Bonds, Series BGL5,
11.375%, 1/30/17 789,000 787,027
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Argentina (Republic of) Nts.:
11%, 12/4/05 1,015,000 1,002,312
Series REGS, 11.75%, 2/12/07ARP 390,000 355,911
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Argentina (Republic of) Unsec. Unsub. Medium-Term Nts., 8.75%, 7/10/02ARP 970,000 875,513
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Banco Hipotecario Nacional (Argentina) Medium-Term Unsec. Nts.,
Series 3, 10.625%, 8/7/06(5) 314,000 313,215
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City of Buenos Aires Bonds, Series 3, 10.50%, 5/28/04ARP 160,000 133,613
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4,940,427
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Australia--0.0%
Australia Postal Corp. Unsec. Unsub. Nts., 6%, 3/25/09AUD 180,000 107,551
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Brazil--1.8%
Brazil (Federal Republic of) Bonds:
10.125%, 5/15/27 236,000 199,125
11.625%, 4/15/04 675,000 676,687
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Brazil (Federal Republic of) Bonds, Series RG, 5.938%, 4/15/12(6) 1,000,000 747,500
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Brazil (Federal Republic of) Capitalization Bonds, 6.916%, 4/15/14 2,387,597 1,799,651
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Brazil (Federal Republic of) Debt Conversion Bonds, 7%, 4/15/12(6) 593,000 443,267
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Brazil (Federal Republic of) Eligible Interest Bonds, 6.937%, 4/15/06(6) 789,600 696,822
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Brazil (Federal Republic of) Gtd. Bonds, 7%, 4/15/09(6) 480,000 391,800
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4,954,852
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Bulgaria--0.6%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.50%, 7/28/24(6) 908,000 727,535
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Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds,
Tranche A, 3%, 7/28/12 (6) 1,359,000 981,877
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1,709,412
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Canada--0.3%
Canada (Government of) Bonds, 7.25%, 6/1/03CAD 1,140,000 813,848
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Colombia--0.4%
Colombia (Republic of) Bonds, 9.75%, 4/23/09 1,000,000 958,750
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Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06 150,000 127,125
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1,085,875
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Finland--0.2%
Finland (Republic of) Bonds, 9.50%, 3/15/04EUR 504,563 593,424
</TABLE>
6 Oppenheimer Strategic Bond Fund/VA
<PAGE>
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Statement of Investments (Continued)
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<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
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France--0.2%
France (Government of) Bonds, Obligations Assimilables du Tresor,
5.50%, 10/25/07EUR 566,906 $ 574,528
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Germany--0.6%
Germany (Republic of) Bonds:
6.75%, 5/13/04EUR 690,000 743,997
Series 98, 5.25%, 1/4/08EUR 945,000 946,673
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1,690,670
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Great Britain--0.6%
United Kingdom Treasury Nts., 8%, 6/10/03GBP 1,070,000 1,813,287
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Greece--0.3%
Hellenic (Republic of) Bonds, 8.60%, 3/26/08GRD 207,200,000 713,012
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Hungary--0.3%
Hungary (Government of) Bonds, Series 01/H, 13.50%, 6/12/01HUF 213,220,000 859,615
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Italy--0.9%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
6%, 11/1/07EUR 455,000 472,382
8.50%, 1/1/04EUR 964,481 1,067,720
8.75%, 7/1/06EUR 766,330 913,142
10.50%, 4/1/05EUR 90,379 111,433
----------
2,564,677
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Ivory Coast--0.1%
Ivory Coast (Government of) Front Loaded Interest Reduction Bonds,
2%, 3/29/18(6) 524,000 96,940
Ivory Coast (Government of) Past Due Interest Bonds, 2%, 3/29/18(4)(6) 564,987 134,185
----------
231,125
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Japan--0.6%
Japan (Government of) Unsec. Bonds, Series 137, 6.50%, 3/20/01JPY 157,000,000 1,649,091
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Jordan--0.0%
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5.50%, 12/23/23(6) 60,000 40,650
- -----------------------------------------------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Disc. Bonds, 7%, 12/23/23(6) 116,000 81,780
----------
122,430
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Mexico--1.7%
United Mexican States Bonds:
6.63%, 12/31/19FRF 7,500,000 980,959
11.375%, 9/15/16 1,070,000 1,213,487
11.50%, 5/15/26 175,000 209,125
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United Mexican States Collateralized Fixed Rate Par Bonds:
Series W-A, 6.25%, 12/31/19 950,000 750,500
Series W-B, 6.25%, 12/31/19 1,900,000 1,501,000
- -----------------------------------------------------------------------------------------------------------
United Mexican States Disc. Bonds, Series C, 6.836%, 12/31/19(6) 250,000 234,687
----------
4,889,758
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Nigeria--0.1%
Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 553,759 349,906
- -----------------------------------------------------------------------------------------------------------
Norway--0.8%
Norway (Government of) Bonds, 9.50%, 10/31/02NOK 17,040,000 2,313,165
- -----------------------------------------------------------------------------------------------------------
Panama--0.4%
Panama (Republic of) Interest Reduction Bonds, 4.25%, 7/17/14(6) 843,000 661,755
- -----------------------------------------------------------------------------------------------------------
Panama (Republic of) Past Due Interest Debs., 5.819%, 7/17/16(6) 588,447 465,609
----------
1,127,364
</TABLE>
Oppenheimer Strategic Bond Fund/VA 7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Peru--0.7%
Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 4.50%, 3/7/17(6) $ 600,000 $ 415,500
- ------------------------------------------------------------------------------------------------------------
Peru (Republic of) Sr. Nts., Zero Coupon, 4.52%, 2/28/16(9) 3,168,653 1,500,991
-----------
1,916,491
- ------------------------------------------------------------------------------------------------------------
Poland--1.0%
Poland (Republic of) Bonds:
12%, 6/12/01PLZ 4,016,000 936,743
Series 1000, 13%, 10/12/00PLZ 4,111,000 968,844
Series 1003, 12%, 10/12/03PLZ 1,010,000 240,359
Series 2 yr., 14%, 2/12/00PLZ 1,000,000 239,952
- ------------------------------------------------------------------------------------------------------------
Poland (Republic of) Past Due Interest Bonds, 6%, 10/27/14(6) 370,000 328,375
-----------
2,714,273
- ------------------------------------------------------------------------------------------------------------
Russia--1.1%
Russia (Government of) Debs., 6.906%, 12/15/15(11)(15) 24,195 4,385
- ------------------------------------------------------------------------------------------------------------
Russia (Government of) Principal Loan Debs., Series 24 yr., 6.906%,
12/15/20(11)(15) 5,190,000 841,753
- ------------------------------------------------------------------------------------------------------------
Russia (Government of) Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03 849,000 623,750
- ------------------------------------------------------------------------------------------------------------
Russia (Government of) Unsec. Bonds, 11%, 7/24/18 593,000 357,283
- ------------------------------------------------------------------------------------------------------------
Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05 1,180,000 734,550
12.75%, 6/24/28 670,000 450,274
-----------
3,011,995
- ------------------------------------------------------------------------------------------------------------
South Africa--0.5%
South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10ZAR 8,242,000 1,290,887
- ------------------------------------------------------------------------------------------------------------
Spain--0.2%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado:
4.50%, 7/30/04EUR 390,786 385,917
6%, 1/31/08EUR 73,323 76,111
-----------
462,028
- ------------------------------------------------------------------------------------------------------------
Turkey--0.3%
Turkey (Republic of) Sr. Unsub. Bonds, 12.375%, 6/15/09 800,000 860,000
- ------------------------------------------------------------------------------------------------------------
Venezuela--0.9%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27 1,559,000 1,018,651
- ------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Disc. Bonds, Series DL, 7%, 12/18/07(6) 1,481,142 1,170,103
- ------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds,
Series B, 6.875%, 3/31/07(6) 42,857 33,643
- ------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) New Money Bonds, Series A, 7.125%, 12/18/05(6) 352,941 276,618
- ------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Unsec. Bonds, 13.625%, 8/15/18 150,000 135,375
-----------
2,634,390
- ------------------------------------------------------------------------------------------------------------
Vietnam--0.0%
Vietnam (Government of) Bonds, 3%, 3/12/28(5)(6) 54,000 18,225
-----------
Total Foreign Government Obligations (Cost $46,664,753) 46,012,306
============================================================================================================
Loan Participations--1.0%
- ------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.,
Tranche 1, 6.812%, 9/4/06(5)(6) 72,000 55,890
- ------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Trust III Nts., Tranche 3:
1.063%, 3/4/10(5)(6)JPY 76,905,000 387,421
6.812%, 3/4/10(5)(6) 457,000 328,469
- ------------------------------------------------------------------------------------------------------------
Central Bank of Indonesia Gtd. Nts., Series 4, 8.625%, 8/25/02(5)(6) 300,000 265,500
</TABLE>
8 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
==========================================================================================================
Loan Participations (continued)
- ----------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 2%, 1/1/09(5)(6) $ 539,523 $ 488,269
Tranche B, 6.844%, 1/1/09(5)(6) 160,000 153,200
- ----------------------------------------------------------------------------------------------------------
PT Bank Ekspor Impor Indonesia Nts., Series 4 yr., 9.406%, 8/25/02(5)(6) 300,000 265,500
- ----------------------------------------------------------------------------------------------------------
PT Lippo Bank Nts., 9.406%, 8/25/02(5)(6) 250,000 221,250
- ----------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 7.955%, 4/28/02 (representing a
basket of reference loans and a total return swap between
Chase Manhattan Bank and the Trust)(5)(6) 750,000 736,900
----------
Total Loan Participations (Cost $2,579,408) 2,902,399
==========================================================================================================
Corporate Bonds and Notes--39.0%
- ----------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.0%
Amtran, Inc.:
9.625% Nts., 12/15/05 100,000 96,500
10.50% Sr. Nts., 8/1/04 150,000 150,750
- ----------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 300,000 288,000
9.375% Sr. Unsec. Nts., 11/15/06 300,000 291,000
10.75% Sr. Nts., 8/1/05 125,000 128,125
- ----------------------------------------------------------------------------------------------------------
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 300,000 283,500
Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 1/1/01(5) 175,000 162,750
- ----------------------------------------------------------------------------------------------------------
Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 750,000 640,312
- ----------------------------------------------------------------------------------------------------------
Greater Toronto Airports Authority, 5.40% Debs., 12/3/02CAD 240,000 161,911
- ----------------------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts.,
Series 1997-A, Cl. B, 6/15/04(5) 82,427 84,233
- ----------------------------------------------------------------------------------------------------------
Pentacon, Inc., 12.25% Sr. Unsec. Nts., Series B, 4/1/09 500,000 452,500
- ----------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07 200,000 189,000
----------
2,928,581
- ----------------------------------------------------------------------------------------------------------
Chemicals--1.4%
ClimaChem, Inc., 10.75% Sr. Unsec. Nts., Series B, 12/1/07 150,000 38,250
- ----------------------------------------------------------------------------------------------------------
Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts., 7/1/09(4) 600,000 624,000
10.125% Sr. Unsec. Sub. Nts., 7/1/09EUR 300,000 320,790
Zero Coupon Sr. Disc. Nts., 13.09%, 12/31/09(4)(9) 850,000 260,312
- ----------------------------------------------------------------------------------------------------------
Lyondell Chemical Co., 10.875% Sr. Sub. Nts., 5/1/09 1,000,000 1,035,000
- ----------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 140,000 145,600
- ----------------------------------------------------------------------------------------------------------
PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07 175,000 135,625
- ----------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 150,000 119,250
- ----------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 100,000 97,500
- ----------------------------------------------------------------------------------------------------------
Polytama International Finance BV, 11.25% Sec. Nts., 6/15/07(5) 136,248 20,097
- ----------------------------------------------------------------------------------------------------------
Reliance Industries Ltd., 10.50% Bonds, 8/6/46 250,000 236,736
- ----------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Unsec. Sub. Nts.,
Series B, 8/1/07 425,000 429,250
- ----------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 50,000 37,000
11.75% Sr. Unsec. Sub. Nts., 8/15/06 190,000 143,450
12.375% Sr. Sec. Nts., Series B, 7/15/06 400,000 416,000
----------
4,058,860
</TABLE>
Oppenheimer Strategic Bond Fund/VA 9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Consumer Durables--0.1%
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 $200,000 $ 147,000
- ------------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 12% Unsec. Nts., 7/15/05(5) 55,500 30,525
- ------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(5) 100,000 109,658
-----------
287,183
- ------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--0.5%
AKI Holdings, Inc.:
0%/13.50% Sr. Disc. Debs., 7/1/09(10) 150,000 71,625
10.50% Sr. Unsec. Nts., 7/1/08 100,000 89,500
- ------------------------------------------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 405,000 407,025
- ------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 8.875% Sr. Unsec. Nts., 4/15/06(11) 350,000 19,250
- ------------------------------------------------------------------------------------------------------------
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08 315,000 152,775
- ------------------------------------------------------------------------------------------------------------
Indorayon International Finance Co. BV, 10% Gtd. Unsec. Unsub. Nts.,
3/29/01(5)(11)(15) 100,000 25,000
- ------------------------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 200,000 187,000
- ------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 250,000 126,250
9% Sr. Nts., 11/1/06 135,000 101,925
- ------------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08(5) 70,000 24,850
- ------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 135,000 122,175
- ------------------------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 100,000 108,500
-----------
1,435,875
- ------------------------------------------------------------------------------------------------------------
Energy--1.8%
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 100,000 91,750
9.625% Sr. Unsec. Nts., Series B, 5/1/05 400,000 379,000
- ------------------------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 245,000 128,625
- ------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 10.875% Sr. Nts., Series B, 12/1/05 125,000 50,625
- ------------------------------------------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 400,000 366,000
- ------------------------------------------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(5) 100,000 47,093
- ------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 9.50% Sr. Sub. Nts., 11/1/06(11)(15) 100,000 81,875
- ------------------------------------------------------------------------------------------------------------
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 250,000 247,500
- ------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., 0%/14.125% Sr. Disc. Nts., 5/1/06(10)(11) 275,000 96,250
- ------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(4) 200,000 171,000
- ------------------------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08 560,000 355,600
- ------------------------------------------------------------------------------------------------------------
Leviathan Gas Pipeline Partners, LP/Leviathan Finance Corp., 10.375%
Sr. Unsec. Sub. Nts., Series B, 6/1/09 400,000 414,000
- ------------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 250,000 208,750
- ------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 370,000 353,350
- ------------------------------------------------------------------------------------------------------------
R&B Falcon Corp., 12.25% Sr. Unsec. Nts., 3/15/06 300,000 328,500
- ------------------------------------------------------------------------------------------------------------
RAM Energy, Inc., 11.50% Sr. Unsec. Nts., 2/15/08 630,000 292,950
- ------------------------------------------------------------------------------------------------------------
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06 375,000 401,250
- ------------------------------------------------------------------------------------------------------------
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 175,000 179,156
- ------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 270,000 264,600
</TABLE>
10 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Energy (continued)
Universal Compression Holdings, Inc.:
0%/9.875% Sr. Disc. Nts., 2/15/08(10) $ 500,000 $ 312,500
0%/11.375% Sr. Disc. Nts., 2/15/09(10) 400,000 214,000
----------
4,984,374
- -------------------------------------------------------------------------------------------------------------
Financial--3.2%
AB Spintab, 5.50% Bonds, Series 169, 9/17/03SEK 3,200,000 372,103
- -------------------------------------------------------------------------------------------------------------
Allgemeine Hypobk AG, 5% Sec. Nts., Series 501, 9/2/09EUR 1,600,000 1,521,193
- -------------------------------------------------------------------------------------------------------------
AMRESCO, Inc.:
9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 300,000 190,500
10% Sr. Sub. Nts., Series 97-A, 3/15/04 100,000 63,500
- -------------------------------------------------------------------------------------------------------------
ASAT Finance LLC, Units (each unit consists of $1,000 principal amount of
12.50% sr. nts., 11/1/06 and one warrant to purchase shares
of common stock)(4)(12) 250,000 270,000
- -------------------------------------------------------------------------------------------------------------
Bakrie Investindo, Zero Coupon Promissory Nts., 7/10/98 (5)(11)(15)IDR 1,000,000,000 21,467
- -------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 7,000 5,565
- -------------------------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG, 5% Sec. Nts., Series 661, 7/28/04EUR 1,023,288 1,026,233
- -------------------------------------------------------------------------------------------------------------
DePfa Pfandbriefbank AG (DePfa-Bank), 5.50% Sec. Nts., 1/15/00EUR 565,000 558,267
- -------------------------------------------------------------------------------------------------------------
Dresdner Funding Trust II, 5.79% Sub. Nts., 6/30/11(4)EUR 550,000 499,856
- -------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, 5.625%, 6/10/03GBP 115,000 178,770
- -------------------------------------------------------------------------------------------------------------
Hypothekenbk in Essen, 3.50% Sec. Debs., 3/17/04EUR 2,915,000 2,759,836
- -------------------------------------------------------------------------------------------------------------
IBJ Preferred Capital Co. (The) LLC, 8.79% Bonds, 12/29/49(4)(6) 400,000 371,446
- -------------------------------------------------------------------------------------------------------------
Local Financial Corp., 11% Sr. Nts., 9/8/04(4) 150,000 156,750
- -------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27(5) 150,000 96,750
- -------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03 150,000 141,750
- -------------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(4)(11)(15) 90,000 3,150
- -------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
11% Nts., 6/18/03(5)(11)(15) 100,000 13,000
24% Nts., 6/19/03 (11)(15)IDR 164,300,000 3,057
- -------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 380,000 349,125
- -------------------------------------------------------------------------------------------------------------
SBS Agro Finance BV, 10.25% Bonds, 7/21/00(5)(11)(15) 339,000 19,492
- -------------------------------------------------------------------------------------------------------------
Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(11)(15) 80,000 38,000
- -------------------------------------------------------------------------------------------------------------
Sovereign Bankcorp, 10.50% Sr. Unsec. Nts., 11/15/06 250,000 256,250
- -------------------------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts., 1/1/28 100,000 75,250
- -------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 129,000 125,775
----------
9,117,085
- -------------------------------------------------------------------------------------------------------------
Food & Drug--0.4%
AmeriKing, Inc., 10.75% Sr. Nts., 12/1/06 125,000 115,625
- -------------------------------------------------------------------------------------------------------------
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02 500,000 237,500
- -------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 560,000 508,200
- -------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc.:
10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03 260,000 32,500
12.625% Sub. Nts., 6/15/02 150,000 50,250
- -------------------------------------------------------------------------------------------------------------
Shoppers Food Warehouse Corp., 9.75% Sr. Nts., 6/15/04 155,000 165,075
----------
1,109,150
</TABLE>
Oppenheimer Strategic Bond Fund/VA 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Food/Tobacco--0.4%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 $150,000 $ 143,625
- -----------------------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(10) 71,000 55,025
- -----------------------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 200,000 184,000
- -----------------------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(11) 200,000 51,000
- -----------------------------------------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 400,000 362,000
- -----------------------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07 200,000 163,000
- -----------------------------------------------------------------------------------------------------------
Triarc Consumer Products Group LLC, 10.25% Sr. Sub. Nts., 2/15/09(4) 200,000 195,000
----------
1,153,650
- -----------------------------------------------------------------------------------------------------------
Forest Products/Containers--1.3%
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/05(11) 150,000 17,250
- -----------------------------------------------------------------------------------------------------------
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 125,000 122,500
8.25% Sr. Unsec. Sub. Nts., 8/1/08 125,000 120,625
- -----------------------------------------------------------------------------------------------------------
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05 250,000 196,250
- -----------------------------------------------------------------------------------------------------------
Fletcher Challenge Finance U.S.A., Inc., 8.05% Debs., 6/15/03NZD 80,000 41,634
- -----------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 200,000 189,500
- -----------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 750,000 769,687
- -----------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05 500,000 467,500
- -----------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 750,000 776,250
10.875% Sr. Sub. Nts., 4/1/08 250,000 247,500
- -----------------------------------------------------------------------------------------------------------
SD Warren Co.:
12% Sr. Sub. Nts., Series B, 12/15/04 200,000 209,500
14% Unsec. Nts., 12/15/06(13) 417,149 469,293
- -----------------------------------------------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 150,000 139,312
----------
3,766,801
- -----------------------------------------------------------------------------------------------------------
Gaming/Leisure--2.0%
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(10) 50,000 20,250
- -----------------------------------------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 100,000 70,500
- -----------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 275,000 254,719
- -----------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 120,000 136,050
- -----------------------------------------------------------------------------------------------------------
Empress Entertainment, Inc., 8.125% Sr. Sub. Nts., 7/1/06 400,000 406,000
- -----------------------------------------------------------------------------------------------------------
Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 450,000 438,750
- -----------------------------------------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05 100,000 71,500
- -----------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 500,000 465,000
- -----------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 11.25% Sr. Sec. Nts., 5/1/07 250,000 262,500
- -----------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 425,000 425,000
- -----------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 350,000 344,750
- -----------------------------------------------------------------------------------------------------------
Isle of Capri Casinos, Inc., 8.75% Sr. Unsec. Nts., 4/15/09 350,000 323,750
- -----------------------------------------------------------------------------------------------------------
Jupiters Ltd., 8.50% Sr. Unsec. Nts., 3/1/06 400,000 384,000
- -----------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07 325,000 300,625
- -----------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority:
8.125% Sr. Nts., 1/1/06 300,000 292,500
8.75% Sr. Unsec. Sub. Nts., 1/1/09 700,000 693,000
</TABLE>
12 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Gaming/Leisure (continued)
Premier Cruise Ltd., 11% Sr. Nts., 3/15/08(4)(11)(15) $ 250,000 $ 60,000
- -------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(10) 200,000 139,000
9.25% Sr. Nts., 4/1/06 100,000 98,750
9.75% Sr. Nts., 6/15/07 250,000 250,000
- -------------------------------------------------------------------------------------------------------
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 200,000 196,250
----------
5,632,894
- -------------------------------------------------------------------------------------------------------
Healthcare--1.1%
Charles River Labs ONC, Units (each unit consists of $1,000 principal
amount of 13.50% sr. sub. nts., 10/1/09 and one warrant to purchase
3.942 shares of common stock)(4)(12) 350,000 365,750
- -------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08 900,000 832,500
- -------------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc.:
8.75% Sr. Nts., 11/15/08(4) 200,000 192,000
8.75% Sr. Nts., 11/15/08(4) 350,000 336,000
- -------------------------------------------------------------------------------------------------------
Kinetic Concepts, Inc., 9.625% Sr. Unsec. Sub. Nts., Series B, 11/1/07 250,000 186,250
- -------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 250,000 203,750
- -------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05 150,000 144,750
- -------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.625% Sr. Sub. Nts., 1/15/07 600,000 582,000
- -------------------------------------------------------------------------------------------------------
Unilab Finance Corp., 12.75% Sr. Sub. Nts., 10/1/09(4) 300,000 312,000
----------
3,155,000
- -------------------------------------------------------------------------------------------------------
Housing--1.0%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 50,000 47,750
- -------------------------------------------------------------------------------------------------------
CB Richard Ellis Services, Inc., 8.875% Sr. Unsec. Sub. Nts., 6/1/06 250,000 223,750
- -------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 400,000 368,000
- -------------------------------------------------------------------------------------------------------
Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 300,000 293,250
- -------------------------------------------------------------------------------------------------------
Falcon Building Products, Inc., 9.50% Sr. Sub. Nts., 6/15/07 100,000 97,500
- -------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 300,000 283,500
- -------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 650,000 632,125
9.25% Sr. Nts., Series B, 3/15/07 150,000 147,000
- -------------------------------------------------------------------------------------------------------
Panolam Industries International, Inc., 11.50% Sr. Sub. Nts., 2/15/09(4) 600,000 613,500
----------
2,706,375
- -------------------------------------------------------------------------------------------------------
Information Technology--1.2%
Amkor Technologies, Inc., 9.25% Sr. Nts., 5/1/06(4) 700,000 686,000
- -------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 200,000 185,000
- -------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 20,000 20,000
- -------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 350,000 309,312
- -------------------------------------------------------------------------------------------------------
Fairchild Semiconductor International, Inc., 10.375% Sr. Unsec. Nts., 10/1/07 500,000 516,250
- -------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08 505,000 486,694
- -------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 6.50% Sub. Nts., 9/30/05(5) 1,000,000 800,000
- -------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 150,000 164,625
- -------------------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07 175,000 144,594
----------
3,312,475
</TABLE>
Oppenheimer Strategic Bond Fund/VA 13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Manufacturing--1.0%
Applied Power, Inc., 8.75% Sr. Sub. Nts., 4/1/09 $ 150,000 $ 147,562
- ------------------------------------------------------------------------------------------------------
Axia, Inc., 10.75% Sr. Sub. Nts., 7/15/08 125,000 115,156
- ------------------------------------------------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09(4) 300,000 318,000
- ------------------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07 150,000 62,250
- ------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05 250,000 201,250
- ------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08 300,000 262,500
- ------------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 250,000 71,250
- ------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 150,000 129,375
- ------------------------------------------------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 270,000 267,300
- ------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 125,000 129,687
- ------------------------------------------------------------------------------------------------------
Iron Mountain, Inc., 8.75% Sr. Sub. Nts., 9/30/09 150,000 143,625
- ------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 250,000 251,250
- ------------------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 200,000 81,000
- ------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 540,000 491,400
- ------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., 4/1/08 150,000 142,500
- ------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03 50,000 49,312
----------
2,863,417
- ------------------------------------------------------------------------------------------------------
Media/Entertainment: Broadcasting--1.3%
Azteca Holdings SA, 11% Sr. Sec. Nts., 6/15/02 155,000 139,887
- ------------------------------------------------------------------------------------------------------
Chancellor Media Corp.:
8.125% Sr. Sub. Nts., Series B, 12/15/07 200,000 200,000
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 400,000 405,000
10.50% Sr. Sub. Nts., Series B, 1/15/07 90,000 98,100
- ------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 600,000 573,000
- ------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 95,000 99,275
- ------------------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., Series B, 5/15/04(6) 100,000 107,000
- ------------------------------------------------------------------------------------------------------
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10 800,000 800,000
- ------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 150,000 139,125
9% Sr. Unsec. Sub. Nts., 7/15/07 210,000 197,925
- ------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., 9.625% Sr. Sub. Nts., 11/1/09 400,000 404,000
- ------------------------------------------------------------------------------------------------------
TV Azteca SA de CV:
10.125% Sr. Nts., Series A, 2/15/04 100,000 89,500
10.50% Sr. Nts., Series B, 2/15/07 150,000 130,500
- ------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 275,000 261,937
9% Sr. Sub. Nts., Series B, 1/15/06(15) 100,000 96,750
----------
3,741,999
</TABLE>
14 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--2.2%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 $ 350,000 $ 315,875
8.375% Sr. Nts., Series B, 2/1/08 100,000 93,250
9.25% Sr. Nts., 10/1/02 385,000 385,000
9.375% Sr. Nts., 11/15/09 500,000 492,500
10.50% Sr. Unsec. Nts., Series B, 7/15/04 70,000 72,975
- ----------------------------------------------------------------------------------------------------------
Bresnan Communications, Inc., 0%/9.25% Sr. Disc. Nts., 2/1/09(10) 250,000 173,750
- ----------------------------------------------------------------------------------------------------------
Charter Communication Holdings LLC/Charter Communication Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(10) 1,700,000 1,005,125
8.25% Sr. Unsec. Nts., 4/1/07 400,000 371,000
- ----------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06 250,000 265,000
- ----------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 940,000 949,400
- ----------------------------------------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(5) 62,802 62,802
- ----------------------------------------------------------------------------------------------------------
EchoStar II, 8.25% Sinking Fund Bonds, 11/9/01(5) 78,168 78,169
- ----------------------------------------------------------------------------------------------------------
Falcon Holding Group LP:
0%/9.285% Sr. Disc. Debs., Series B, 4/15/10(10) 350,000 263,812
8.375% Sr. Unsec. Debs., Series B, 4/15/10 200,000 202,750
- ----------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09(4) 400,000 415,000
- ----------------------------------------------------------------------------------------------------------
NTL Communications Corp., 9.875% Sr. Nts., 11/15/09(4)EUR 200,000 202,790
- ----------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07 200,000 214,250
- ----------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07CAD 400,000 278,450
- ----------------------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts.,
Series B, 2/15/08(10) 770,000 496,650
----------
6,338,548
- ----------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media--1.4%
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 700,000 623,000
- ----------------------------------------------------------------------------------------------------------
IPC Magazines Group plc, 9.625% Bonds, 3/15/08(5)GBP 300,000 295,637
- ----------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07(5) 150,000 147,750
- ----------------------------------------------------------------------------------------------------------
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 50,000 51,250
- ----------------------------------------------------------------------------------------------------------
Metromedia International Group, Inc., 0%/10.50% Sr. Unsec. Disc. Nts.,
9/30/07(5)(10) 436,950 207,551
- ----------------------------------------------------------------------------------------------------------
Premier Graphics, Inc., 11.50% Sr. Unsec. Nts., 12/1/05 200,000 141,000
- ----------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc.:
8.875% Sr. Unsec. Sub. Nts., 12/15/10 250,000 177,500
9.50% Sr. Unsec. Sub. Nts., 6/1/08 500,000 380,000
- ----------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Unsec. Sub. Nts., 12/1/08 200,000 191,000
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 500,000 473,750
- ----------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 8.375% Sr. Debs., 3/15/23 300,000 313,677
- ----------------------------------------------------------------------------------------------------------
WRC Media Corp., Units (each unit consists of $1,000 principal amount
of 12.75% sr. sub. nts., 11/15/09 and one warrant to purchase 1.353
shares of common stock)(4)(12) 800,000 798,000
----------
3,800,115
</TABLE>
Oppenheimer Strategic Bond Fund/VA 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--7.9%
Adelphia Business Solutions, Inc., 12% Sr. Sub. Nts., 11/1/07 $ 400,000 $428,000
- ---------------------------------------------------------------------------------------------------------
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(10) 700,000 448,000
- ---------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(10) 200,000 173,000
7.625% Bonds, 7/31/08DEM 500,000 257,604
8.875% Sr. Nts., 11/30/07DEM 100,000 53,772
10.125% Sr. Nts., 11/30/07GBP 170,000 288,367
Units (each unit consists of $1,000 principal amount of 0%/12% sr. disc. nts.,
12/15/06 and one warrant to purchase 7.8 ordinary shares)(10)(12) 200,000 203,000
- ---------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07(10) 250,000 239,375
- ---------------------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 80,000 84,600
- ---------------------------------------------------------------------------------------------------------
Convergent Communications, Inc., 13% Sr. Nts., 4/1/08 50,000 35,375
- ---------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc., 0%/13.50% Sr. Disc. Nts., 3/15/08(10) 700,000 444,500
- ---------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(10) 825,000 783,750
- ---------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 50,000 49,750
- ---------------------------------------------------------------------------------------------------------
Equinix, Inc., Units (each unit consists of $1,000 principal amount of
13% sr. nts., 12/1/07 and one warrant to purchase 11.255
shares of common stock)(4)(12) 200,000 205,000
- ---------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
10.75% Sr. Nts., 12/15/09(4) 850,000 869,125
11.25% Sr. Nts., 7/1/08 665,000 689,937
- ---------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc., 0%/13% Sr. Disc. Nts., 4/15/08(10) 175,000 97,125
- ---------------------------------------------------------------------------------------------------------
Focal Communications Corp., 0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(10) 250,000 163,750
- ---------------------------------------------------------------------------------------------------------
Global Crossing Ltd., 9.625% Sr. Nts., 5/15/08 510,000 512,550
- ---------------------------------------------------------------------------------------------------------
Global Telesystems Group, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06(4)EUR 250,000 254,745
- ---------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts., 12/15/05(4)(10) 25,000 28,000
- ---------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc./GST Network Funding Corp., Inc., 0%/10.50%
Sr. Disc. Nts., 5/1/08(10) 125,000 60,937
- ---------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(10) 255,000 189,975
- ---------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(10) 195,000 146,737
- ---------------------------------------------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(10) 115,000 61,237
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
8.50% Sr. Nts., Series B, 1/15/08 250,000 230,000
8.60% Sr. Unsec. Nts., Series B, 6/1/08 225,000 207,000
8.875% Sr. Nts., 11/1/07 365,000 341,275
- ---------------------------------------------------------------------------------------------------------
Jazztel plc, 13.25% Sr. Nts., 12/15/09(4)EUR 900,000 911,987
- ---------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(10) 600,000 345,000
- ---------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(10) 1,000,000 610,000
9.125% Sr. Unsec. Nts., 5/1/08 250,000 236,875
- ---------------------------------------------------------------------------------------------------------
McLeodUSA, Inc.:
8.125% Sr. Unsec. Nts., 2/15/09 725,000 679,687
8.375% Sr. Nts., 3/15/08 513,000 487,350
9.25% Sr. Nts., 7/15/07 75,000 75,281
- ---------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 250,000 257,500
10% Sr. Unsec. Nts., Series B, 11/15/08 400,000 411,000
</TABLE>
16 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
Netia Holdings BV:
0%/11% Sr. Disc. Nts., 11/1/07(10)DEM 400,000 $ 134,816
0%/11% Sr. Disc. Nts., Series B, 11/1/07(10)DEM 200,000 67,408
0%/11.25% Sr. Disc. Nts., Series B, 11/1/07(10) 100,000 65,250
10.25% Sr. Nts., Series B, 11/1/07 50,000 42,625
- ----------------------------------------------------------------------------------------------------------
Netia Holdings II BV, 13.50% Sr. Nts., 6/15/09(4)EUR 400,000 414,637
- ----------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 200,000 189,000
9.625% Sr. Nts., 10/1/07 350,000 343,000
10.75% Sr. Unsec. Nts., 11/15/08 300,000 310,500
10.75% Sr. Unsec. Nts., 6/1/09 310,000 320,075
- ----------------------------------------------------------------------------------------------------------
NTL Communications Corp., 0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(10) 85,000 60,563
- ----------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(10) 300,000 208,500
0%/9.75% Sr. Nts., Series B, 4/15/09(10)GBP 775,000 723,820
0%/10.75% Sr. Unsec. Unsub. Nts., Series B, 4/1/08(10)GBP 115,000 123,035
7% Cv. Unsec. Sub. Nts., 12/15/08 100,000 264,500
10% Sr. Nts., Series B, 2/15/07 100,000 103,250
- ----------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(11) 200,000 149,000
- ----------------------------------------------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05(14) 700,000 695,625
10.50% Sr. Nts., 12/1/06(4)EUR 100,000 101,898
- ----------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.:
0%/8.29% Sr. Unsec. Disc. Nts., Series B, 2/1/08(10) 365,000 283,788
0%/9.47% Sr. Disc. Nts., 10/15/07(10) 495,000 403,425
- ----------------------------------------------------------------------------------------------------------
RSL Communications plc:
0%/10% Bonds, 3/15/08(10)DEM 100,000 31,903
10.50% Gtd. Sr. Nts., 11/15/08 250,000 236,250
- ----------------------------------------------------------------------------------------------------------
Shaw Communications, Inc., 8.54% Debs., 9/30/27CAD 340,000 211,797
- ----------------------------------------------------------------------------------------------------------
Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09(4)EUR 500,000 507,603
- ----------------------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/9.875% Sr. Nts., 4/15/09(4)(10)GBP 300,000 307,753
0%/11% Sr. Disc. Debs., 10/1/07(10) 200,000 187,500
- ----------------------------------------------------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 500,000 485,000
- ----------------------------------------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 100,000 103,500
- ----------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV:
0%/13.375% Sr. Disc. Nts., 11/1/09(4)(10) 500,000 282,500
10.875% Sr. Nts., 8/1/09EUR 750,000 765,178
10.875% Sr. Nts., 8/1/09 500,000 508,750
11.25% Sr. Nts., 11/1/09(4)EUR 250,000 257,261
- ----------------------------------------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 225,000 230,625
11.25% Sr. Unsec. Nts., 12/1/08 500,000 527,500
13.50% Sr. Unsec. Nts., 6/15/04 65,000 71,663
- ----------------------------------------------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 500,000 498,750
- ----------------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(10) 500,000 292,500
- ----------------------------------------------------------------------------------------------------------
Worldwide Fiber, Inc., 12% Sr. Nts., 8/1/09(4) 100,000 103,500
-----------
22,175,414
</TABLE>
Oppenheimer Strategic Bond Fund/VA 17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications--3.6%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 $100,000 $ 79,625
- --------------------------------------------------------------------------------------------------
Celcaribe SA, 14.50% Sr. Sec. Nts., 3/15/04 150,000 125,250
- --------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Disc. Nts., 10/1/07(10) 400,000 43,500
- --------------------------------------------------------------------------------------------------
Clearnet Communications, Inc., 0%/14.75% Sr. Disc. Nts., 12/15/05(10) 25,000 24,656
- --------------------------------------------------------------------------------------------------
Comunicacion Celular SA, 0%/14.125% Sr. Unsec. Deferred Bonds, 3/1/05(4)(10) 350,000 168,000
- --------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(10) 500,000 315,000
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(10) 500,000 378,125
- --------------------------------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(10) 175,000 101,063
- --------------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 460,000 522,100
- --------------------------------------------------------------------------------------------------
Geotek Communications, Inc.:
0%/15% Sr. Sec. Disc. Nts., Series B, 7/15/05(10)(11)(15) 90,000 36,450
12% Cv. Sr. Sub. Nts., 2/15/01(11)(15) 210,000 1,313
- --------------------------------------------------------------------------------------------------
ICO Global Communications (Holdings) Ltd., Units (each unit consists
of $1,000 principal amount of 15% sr. nts., 8/1/05 and one warrant to
purchase 19.85 shares of common stock)(11)(12) 100,000 46,500
- --------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 300,000 271,500
- --------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts., Series B, 10/15/07(10)CAD 300,000 139,398
0%/14% Sr. Disc. Nts., Series B, 6/1/06(10) 300,000 266,250
- --------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(10) 410,000 330,050
- --------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/9.95% Sr. Disc. Nts., 2/15/08(10) 245,000 172,725
0%/10.65% Sr. Disc. Nts., 9/15/07(10) 800,000 600,000
9.75% Sr. Disc. Nts., 8/15/04 300,000 310,500
- --------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(4) 735,000 793,800
11.625% Sr. Nts., 8/15/06 630,000 670,950
11.625% Sr. Nts., Series A, 8/15/06 400,000 426,000
- --------------------------------------------------------------------------------------------------
Orange plc:
8% Sr. Nts., 8/1/08 250,000 253,438
8.75% Sr. Unsec. Nts., 6/1/06 250,000 260,000
- --------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 200,000 145,000
- --------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(10) 550,000 255,750
- --------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(10) 325,000 214,500
- --------------------------------------------------------------------------------------------------
Polska Telefoniz Cyfrowa International Financial II SA,
11.25% Sr. Sub. Nts., 12/1/09(4)EUR 200,000 203,796
- --------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
9.125% Sr. Sec. Nts., Series B, 12/15/06 250,000 254,375
11.75% Sr. Sub. Nts., 7/15/07 275,000 301,125
- --------------------------------------------------------------------------------------------------
PTC International Finance BV, 0%/10.75% Gtd. Sr. Unsec.
Sub. Bonds, 7/1/07(5)(10) 134,000 90,115
- --------------------------------------------------------------------------------------------------
Real Time Data Co., 11% Disc. Nts., 5/31/09(4)(13) 118,366 113,825
- --------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 300,000 308,250
- --------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(10) 700,000 416,500
</TABLE>
18 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications (continued)
Spectrasite Holdings, Inc., 0%/12% Sr. Disc. Nts., 7/15/08(10) $500,000 $ 301,250
- -----------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.,
0%/12.50% Sr. Disc. Nts., 8/15/06(10) 65,000 60,188
- -----------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04 200,000 184,000
- -----------------------------------------------------------------------------------------------------
Voicestream Wireless Corp., 10.375% Sr. Nts., 11/15/09(4) 900,000 931,500
-----------
10,116,367
- -----------------------------------------------------------------------------------------------------
Metals/Minerals--1.5%
AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(4) 250,000 163,125
- -----------------------------------------------------------------------------------------------------
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 500,000 475,000
9.125% Sr. Nts., 12/15/06 300,000 306,750
- -----------------------------------------------------------------------------------------------------
California Steel Industries Corp., 8.50% Sr. Unsec. Nts., Series B, 4/1/09 200,000 193,000
- -----------------------------------------------------------------------------------------------------
Centaur Mining & Exploration Ltd., 11% Sr. Nts., 12/1/07 100,000 99,625
- -----------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 500,000 477,500
- -----------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 50,000 42,250
- -----------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 250,000 251,250
- -----------------------------------------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(10) 250,000 81,250
- -----------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 995,000 900,475
- -----------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 500,000 517,500
- -----------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 500,000 495,000
- -----------------------------------------------------------------------------------------------------
Republic Technologies International Holdings LLC/RTI Capital Corp., Units
(each unit consists of $1,000 principal amount of 13.75% sr. nts., 7/15/09
and one warrant to purchase Cl. D common stock at $0.01 per share)(12) 200,000 133,000
-----------
4,135,725
- -----------------------------------------------------------------------------------------------------
Retail--0.4%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 236,000 225,380
- -----------------------------------------------------------------------------------------------------
Central Termica Guemes, 12% Bonds, 11/26/01(4)(11)(15) 100,000 5,000
- -----------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08 300,000 211,500
- -----------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 100,000 91,500
- -----------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 100,000 93,000
- -----------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08 225,000 193,500
- -----------------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 200,000 195,000
-----------
1,014,880
- -----------------------------------------------------------------------------------------------------
Service--1.4%
Allied Waste North America, Inc.:
7.875% Sr. Unsec. Nts., Series B, 1/1/09 435,000 386,606
10% Sr. Sub. Nts., 8/1/09(4) 950,000 855,000
- -----------------------------------------------------------------------------------------------------
Dura Operating Corp., 9% Sr. Sub. Nts., Series B, 5/1/09EUR 400,000 379,413
- -----------------------------------------------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09 200,000 195,000
- -----------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 350,000 343,000
- -----------------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
6.75% Cv. Sr. Sub. Nts., 9/15/03 125,000 60,000
7.375% Gtd. Sr. Unsec. Nts., 8/15/05 250,000 200,000
</TABLE>
Oppenheimer Strategic Bond Fund/VA 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Service (continued)
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09 $ 400,000 $ 389,000
- ------------------------------------------------------------------------------------------------------------
United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 250,000 241,250
- ------------------------------------------------------------------------------------------------------------
URS Corp., 12.25% Sr. Sub. Nts., Series B, 5/1/09 500,000 515,000
- ------------------------------------------------------------------------------------------------------------
US Unwired, Inc., 0%/13.375% Sr. Disc. Nts., 11/1/09(4)(10) 700,000 413,000
------------
3,977,269
- ------------------------------------------------------------------------------------------------------------
Transportation--2.5%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 450,000 439,313
- ------------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04(4) 300,000 301,500
- ------------------------------------------------------------------------------------------------------------
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 300,000 280,500
- ------------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 75,000 29,438
- ------------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts., 4/15/06 250,000 248,125
- ------------------------------------------------------------------------------------------------------------
Federal-Mogul Corp., 7.875% Nts., 7/1/10 300,000 267,254
- ------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04GBP 540,000 864,345
- ------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 500,000 525,000
- ------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc.:
9.125% Sr. Sub. Nts., 7/15/07 100,000 98,250
11% Sr. Sub. Nts., 7/15/06 225,000 236,250
- ------------------------------------------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05 425,000 388,875
- ------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 300,000 115,500
- ------------------------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 200,000 202,000
Millennium Seacarriers, Inc., Units (each unit consists of $1,000 principal
amount of 12% first priority ship mtg. sr. sec. nts., 7/15/05 and one
warrant to purchase five shares of common stock)(5)(12) 250,000 143,750
- ------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(4) 275,000 127,875
Units (each unit consists of $1,000 principal amount of 11.63% second
priority ship mtg. nts., 6/30/07 and 7.66 warrants)(4)(6)(12) 150,000 11,250
- ------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07(5) 1,300,000 1,228,500
- ------------------------------------------------------------------------------------------------------------
Pycsa Panama SA, 10.28% Sr. Sec. Bonds, 12/15/12(5) 195,800 116,012
- ------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Sub. Nts., 10/15/09(4) 400,000 410,000
- ------------------------------------------------------------------------------------------------------------
Terex Corp., 8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08 100,000 95,000
- ------------------------------------------------------------------------------------------------------------
TFM SA de CV, 10.25% Sr. Nts., 6/15/07 200,000 184,500
- ------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 430,000 278,963
- ------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 13.375% Sr. Disc. Nts.,
Series B, 12/15/03 300,000 307,500
- ------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(5) 184,770 83,609
------------
6,983,309
- ------------------------------------------------------------------------------------------------------------
Utility--0.4%
Beaver Valley II Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 199,000 198,751
- ------------------------------------------------------------------------------------------------------------
Calpine Corp.:
7.75% Sr. Nts., 4/15/09 450,000 427,500
8.75% Sr. Nts., 7/15/07 230,000 231,725
10.50% Sr. Nts., 5/15/06 100,000 106,000
- ------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11 250,000 267,687
------------
1,231,663
------------
Total Corporate Bonds and Notes (Cost $120,275,567) 110,027,009
</TABLE>
20 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
============================================================================================================
Preferred Stocks--2.1%
- ------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(13) 2,995 $ 54,659
- ------------------------------------------------------------------------------------------------------------
BankUnited Capital Trust, 10.25% Gtd. Bonds, 12/31/26 100,000 90,250
- ------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A(5)(13) 19,767 494,175
- ------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Sr. Exchangeable, Non-Vtg.(13) 61 16,622
- ------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable,
Series B, Non-Vtg.(13) 242 240,185
- ------------------------------------------------------------------------------------------------------------
Contour Energy Co., $2.625 Cum. Cv.(15) 1,800 3,375
- ------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv., Series B, Non-Vtg. 46,000 759,000
- ------------------------------------------------------------------------------------------------------------
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. 2,000 70,750
- ------------------------------------------------------------------------------------------------------------
Doane Products Co., 14.25% Exchangeable, Non-Vtg.(5)(15) 5,000 222,500
- ------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
12.25% Sr. Exchangeable, Non-Vtg.(13) 253 254,897
13% Sr. Exchangeable, Non-Vtg.(13) 319 348,507
- ------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(13) 185 37,462
- ------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(5)(15) 5,000 231,250
- ------------------------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr., Series C, Non-Vtg.(5) 4,491 11,227
- ------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank FSB Glendale California, l2% Non-Cum.
Exchangeable Perpetual, Series A(5) 20 300
- ------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.(13) 135 123,188
- ------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., Depositary Shares Representing one
one-hundredth 7% Cum. Cv. Jr., Series E, Non-Vtg.(4) 2,100 71,400
- ------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc.:
13%, Non-Vtg.(4)(13) 9 7,493
Units (each unit consists of $1,000 principal amount of 13% sr.
exchangeable preferred stock
and one warrant to purchase 30 shares of common stock)(5)(12)(13) 50 44,625
- ------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable
Preferred Stock, Non-Vtg.(13) 6,061 68,186
- ------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(13) 121 121,303
- ------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Cum., Non-Vtg.(13) 19,029 1,022,809
- ------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(13) 24 246,000
- ------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable, Series H, Non-Vtg. 8,000 698,000
9.20% Exchangeable, Series F, Non-Vtg. 1,000 91,750
- ------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(13) 235 241,463
- ------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc.:
13.75% Cum. Nts., Series B, 3/15/09, Non-Vtg.(13) 10 50,250
13.75% Exchangeable(4) 2 10,050
- ------------------------------------------------------------------------------------------------------------
Star Gas Partners, LP 187 2,478
- ------------------------------------------------------------------------------------------------------------
Walden Residential Properties, Inc.:
9.16% Cv., Series B, Non-Vtg. 10,000 241,250
9.20% Sr. 1,000 15,563
----------
Total Preferred Stocks (Cost $7,931,185) 5,890,967
============================================================================================================
Other Securities--0.0%
- ------------------------------------------------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts., 4/30/05NZD 60,000 32,036
14.50% Cv. Sub. Nts., 9/30/00NZD 60,000 32,981
----------
Total Other Securities (Cost $91,017) 65,017
</TABLE>
Oppenheimer Strategic Bond Fund/VA 21
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares Note 1
<S> <C> <C>
============================================================================================================
Common Stocks--0.9%
- ------------------------------------------------------------------------------------------------------------
Celcaribe SA(4)(15) 24,390 $ 39,634
- ------------------------------------------------------------------------------------------------------------
Coinstar, Inc.(15) 700 9,800
- ------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc.(15) 2,404 41,469
- ------------------------------------------------------------------------------------------------------------
Horizon Group Properties, Inc.(15) 358 1,208
- ------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(15) 320 12,420
- ------------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc.(15) 10,327 547,977
- ------------------------------------------------------------------------------------------------------------
Optel, Inc.(15) 210 2
- ------------------------------------------------------------------------------------------------------------
Premier Holdings Ltd.(15) 18,514 62,485
- ------------------------------------------------------------------------------------------------------------
Price Communications Corp. 33,471 930,936
- ------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(15) 370 4
- ------------------------------------------------------------------------------------------------------------
UnitedGlobalCom, Inc., Cl. A(15) 1,814 128,114
- ------------------------------------------------------------------------------------------------------------
Vail Resorts, Inc.(15) 15,500 278,031
- ------------------------------------------------------------------------------------------------------------
Viatel, Inc.(15) 1,189 63,760
- ------------------------------------------------------------------------------------------------------------
Weatherford International, Inc. 7,581 302,766
- ------------------------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc.(15) 6,273 8,625
- ------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $891,044) 2,427,231
<CAPTION>
Units
<S> <C> <C>
============================================================================================================
Rights, Warrants and Certificates--0.1%
- ------------------------------------------------------------------------------------------------------------
Adelphia Business Solutions, Inc. Wts., Exp. 4/15/01(5) 60 10,500
- ------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Wts., Exp. 2/25/00 1,315 2,762
- ------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07(5) 16,000 4,800
- ------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/15/05 165 3,706
- ------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/15/03(5) 200 10,025
- ------------------------------------------------------------------------------------------------------------
Concentric Network Corp. Wts., Exp. 12/15/07(5) 100 26,512
- ------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08 400 4,900
- ------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(5) 175 26,272
- ------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/15/05(5) 7,500 75
- ------------------------------------------------------------------------------------------------------------
Globix Corp. Wts., Exp. 5/1/05 325 78,000
- ------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/1/01 2,404 2,103
- ------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/23/03 1,668 --
Exp. 1/23/03(5) 953 10
Exp. 5/1/05(5) 2,181 218
Exp. 9/1/04(5) 2,800 2,976
- ------------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/00(5) 531 7,969
- ------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 825 10,181
- ------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/31/02 200 --
- ------------------------------------------------------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07(5) 270 --
- ------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(5) 725 2,221
- ------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08(5) 200 100
- ------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(5) 150 1,819
- ------------------------------------------------------------------------------------------------------------
Mexico Value Rts., Exp. 6/30/03 384,000 --
- ------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(5) 600 40,017
</TABLE>
22 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Units Note 1
<S> <C> <C>
==================================================================================================================
Rights, Warrants and Certificates (continued)
- ------------------------------------------------------------------------------------------------------------------
Millennium Seacarriers, Inc. Wts., Exp. 7/15/05(5) 250 $ 281
- ------------------------------------------------------------------------------------------------------------------
Occidente y Caribe Celular SA Wts., Exp. 3/15/04(5) 800 12,100
- ------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc.:
Wts., Exp. 6/1/06(5) 300 15
14% Sr. Disc. Nts. Wts., Exp. 3/31/03 300 15
- ------------------------------------------------------------------------------------------------------------------
Real Time Data Co. Wts., Exp. 5/31/04(5) 36,431 364
- ------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/1/05(4) 1,500 33,562
--------
Total Rights, Warrants and Certificates (Cost $26,622) 281,503
<CAPTION>
Principal
Amount(1)
<S> <C> <C>
==================================================================================================================
Structured Instruments--3.8%
- ------------------------------------------------------------------------------------------------------------------
Citibank NA (Nassau Branch), Mexican Peso Linked Nts.:
26.10%, 10/29/01MXN 5,630,625 611,970
27.40%, 9/20/01 384,000 417,869
- ------------------------------------------------------------------------------------------------------------------
Citibank NA (New York), Mexican Peso Linked Nts., 23.95%, 11/5/01MXN 7,280,764 771,876
- ------------------------------------------------------------------------------------------------------------------
Citibank NA, Polish Zloty Linked Nts., 16.10%, 11/3/00PLZ 2,542,214 609,271
- ------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch), Russian OFZ Linked Nts.:
14%, 9/27/00(5)RUR 3,610,000 73,042
15%, 2/23/00(5)RUR 8,008,000 207,615
18.339%, 2/23/00(5) 240,000 171,422
18.598%, 10/25/00(5) 240,000 125,058
25%, 2/6/02(5)(6)RUR 277,180 4,035
25%, 2/6/02(5)(6)RUR 277,180 3,535
25%, 5/22/02(5)(6)RUR 277,180 3,691
25%, 6/5/02(5)(6)RUR 277,180 3,669
25%, 6/5/02(5)(6)RUR 3,150,400 57,977
25%, 9/18/02(5)(6)RUR 277,180 3,416
25%, 10/9/02(5)(6)RUR 277,180 3,641
25%, 2/5/03(5)(6)RUR 277,180 3,472
25%, 5/21/03(5)(6)RUR 277,180 3,254
25%, 6/4/03(5)(6)RUR 277,180 3,247
25%, 9/17/03(5)(6)RUR 277,180 3,113
25%, 10/8/03(5)(6)RUR 277,180 3,324
25%, 1/21/04(5)(6)RUR 277,180 3,114
Series 1, 25%, 6/4/03(6)RUR 2,561,555 41,561
Zero Coupon, 46.10%, 12/15/01(5)(9)RUR 950,000 7,990
- ------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Indian Rupee/Japanese Yen Linked Nts., Zero Coupon,
12.56%, 8/17/01(9) 350,000 244,685
- ------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Indonesian Rupiah Linked Nts., 13.667%, 6/30/00 475,000 457,615
- ------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, New York, Philippine Peso/Japanese Yen Linked Nts.,
10.55%, 5/12/00 135,000 106,933
- ------------------------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell, Lehman High Yield Index Linked Nts., 8.75%, 5/5/00 750,000 757,433
- ------------------------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell, Turkish Lira Treasury Bill Linked Nts., Zero Coupon,
79.84%, 5/24/00(9)TRL 346,810,000,000 525,506
- ------------------------------------------------------------------------------------------------------------------
Goldman, Sachs & Co. Argentina Local Market Securities Trust,
11.30%, 4/1/00 [representing debt of Argentina (Republic of) Bonos del
Tesoro Bonds, Series 10, 11.30%, 4/1/00 and an interest rate swap
between Goldman Sachs and the Trust](5) 26,086 24,946
</TABLE>
Oppenheimer Strategic Bond Fund/VA 23
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market Value
Amount(1) Note 1
<S> <C> <C>
===================================================================================================================
Structured Instruments (continued)
- -------------------------------------------------------------------------------------------------------------------
J.P. Morgan & Co., Inc. Emerging Market Bond Index Linked Nts., 9.50%, 7/14/00 $ 2,493,380 $ 2,801,542
- -------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. Turkey Treasury Bond Linked Nts.:
87.282%, 1/9/01(6)TRL 350,300,000,000 790,565
87.283%, 1/7/01(6)TRL 185,000,000,000 417,512
- -------------------------------------------------------------------------------------------------------------------
Russia (Government of) Federal Loan Bonds:
Series 5022, 15%, 2/23/00(5)RUR 5,417,000 140,441
Series 27010, 25%, 9/17/03(5)(6)RUR 3,590,420 57,082
- -------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc. Brazil Credit Linked Nts.:
6%, 4/2/03(5) 310,000 246,831
Series 2, 6%, 4/2/03(5) 310,000 246,831
- -------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc. Turkey Treasury Bill Linked Nts.:
92.10%, 8/24/00(6) 320,000 270,371
94.10%, 8/24/00(6) 372,386 317,359
- -------------------------------------------------------------------------------------------------------------------
Salomon, Inc. Indonesian Rupiah Linked Nts.:
29.55%, 4/12/00 50,000 64,156
32.65%, 4/6/00 135,000 173,035
- -------------------------------------------------------------------------------------------------------------------
Standard Chartered Bank, Philippine Peso/Japanese Yen Linked Nts.,
16.04%, 5/10/00 130,000 93,509
- -------------------------------------------------------------------------------------------------------------------
Total Structured Instruments (Cost $12,506,847) 10,873,514
<CAPTION>
Date Strike Contracts
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Options Purchased--0.1%
- -------------------------------------------------------------------------------------------------------------------
European Monetary Unit Put (5) 1/14/00 1.020EUR 10,160,000 174,912
- -------------------------------------------------------------------------------------------------------------------
Hong Kong Dollar Put 1/11/00 7.894HKD 4,815,340 --
- -------------------------------------------------------------------------------------------------------------------
Japanese Yen Put 3/6/00 105.950JPY 144,000,000 8,496
- -------------------------------------------------------------------------------------------------------------------
South Korean Won Call 6/1/00 1,100.000KRW 1,600,500,000 20,406
- -------------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York, The Emerging
Markets Bond Index Linked Nts. Call (5) 1/19/00 349.730% 1,600 126,056
- -------------------------------------------------------------------------------------------------------------------
Total Options Purchased (Cost $224,174) 329,870
- -------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $303,769,877) 101.4% 286,143,077
- -------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (1.4) (4,057,459)
------------- ------------
Net Assets 100.0% $282,085,618
============= ============
</TABLE>
24 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP--Argentine Peso IDR--Indonesian Rupiah
AUD--Australian Dollar JPY--Japanese Yen
CAD--Canadian Dollar KRW--South Korean Won
DEM--German Mark MXN--Mexican Nuevo Peso
DKK--Danish Krone NOK--Norwegian Krone
EUR--Euro NZD--New Zealand Dollar
FRF--French Franc PLZ--Polish Zloty
GBP--British Pound Sterling RUR--Russian Ruble
GRD--Greek Drachma SEK--Swedish Krona
HKD--Hong Kong Dollar TRL--Turkish Lira
HUF--Hungarian Forint ZAR--South African Rand
2. 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.
3. When-issued security to be delivered and settled after December 31, 1999.
4. 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 $16,799,089 or 5.96% of the Fund's net
assets as of December 31, 1999.
5. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
6. Represents the current interest rate for a variable or increasing rate
security.
7. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
8. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
Principal Expiration Exercise Premium Market Value
Subject to Call/Put Date Price Received Note 1
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brazilian Real Put (BRR) 3,347,205 1/28/00 2.054BRR $55,420 $ 3,347
Japanese Yen Call (JPY) 144,000,000 3/6/00 96.100JPY 14,910 13,104
------- -------
$70,330 $16,451
======= =======
</TABLE>
9. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
11. Issuer is in default.
12. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, principal amount disclosed represents total
underlying principal.
13. Interest or dividend is paid in kind.
14. Securities with an aggregate market value of $577,958 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
15. Non-income producing security.
See accompanying Notes to Financial Statements.
Oppenheimer Strategic Bond Fund/VA 25
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
================================================================================================
Assets
Investments, at value (cost $303,769,877)--see accompanying statement $286,143,077
- ------------------------------------------------------------------------------------------------
Cash 780,123
- ------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $20,652) 20,652
- ------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 56,495
- ------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and principal paydowns 5,466,483
Shares of beneficial interest sold 168,739
Investments sold 26,690
Other 4,848
------------
Total assets 292,667,107
================================================================================================
Liabilities
Unrealized depreciation on foreign currency contracts 102,696
- ------------------------------------------------------------------------------------------------
Options written, at value (premiums received $70,330)--see accompanying statement 16,451
- ------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $9,294,950 purchased on a when-issued basis) 9,303,817
Shares of beneficial interest redeemed 1,098,260
Closed foreign currency contracts 16,992
Daily variation on futures contracts 675
Transfer and shareholder servicing agent fees 184
Trustees' compensation 22
Other 42,392
- ------------------------------------------------------------------------------------------------
Total liabilities 10,581,489
================================================================================================
Net Assets $282,085,618
============
================================================================================================
Composition of Net Assets
Paid-in capital $285,264,616
- ------------------------------------------------------------------------------------------------
Undistributed net investment income 22,685,394
- ------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (8,158,504)
- ------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (17,705,888)
- ------------------------------------------------------------------------------------------------
Net assets--applicable to 56,728,056 shares of beneficial
interest outstanding $282,085,618
============
================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $4.97
</TABLE>
See accompanying Notes to Financial Statements.
26 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
======================================================================================
Investment Income
Interest (net of foreign withholding taxes of $68,279) $26,884,872
- --------------------------------------------------------------------------------------
Dividends 554,128
-----------
Total income 27,439,000
======================================================================================
Expenses
Management fees 2,066,323
- --------------------------------------------------------------------------------------
Custodian fees and expenses 35,149
- --------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 2,108
- --------------------------------------------------------------------------------------
Trustees' compensation 1,291
- --------------------------------------------------------------------------------------
Other 55,271
-----------
Total expenses 2,160,142
Less expenses paid indirectly (11,572)
-----------
Net expenses 2,148,570
======================================================================================
Net Investment Income 25,290,430
======================================================================================
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investments (including premiums on options exercised) (6,481,356)
Closing of futures contracts 406,580
Closing and expiration of option contracts written 203,611
Foreign currency transactions (2,492,662)
- --------------------------------------------------------------------------------------
Net realized loss (8,363,827)
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (5,804,195)
Translation of assets and liabilities denominated in foreign currencies (2,989,088)
-----------
Net change (8,793,283)
-----------
Net realized and unrealized loss (17,157,110)
======================================================================================
Net Increase in Net Assets Resulting from Operations $ 8,133,320
===========
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Strategic Bond Fund/VA 27
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
===========================================================================================================
Operations
Net investment income $ 25,290,430 $ 20,451,817
- -----------------------------------------------------------------------------------------------------------
Net realized loss (8,363,827) (2,696,918)
- -----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (8,793,283) (11,476,607)
------------ ------------
Net increase in net assets resulting from operations 8,133,320 6,278,292
===========================================================================================================
Dividends and/or Distributions to Shareholders
- -----------------------------------------------------------------------------------------------------------
Dividends from net investment income (15,617,496) (3,974,494)
- -----------------------------------------------------------------------------------------------------------
Distributions from net realized gain -- (2,561,341)
===========================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 10,369,398 71,618,535
===========================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------
Total increase 2,885,222 71,360,992
- -----------------------------------------------------------------------------------------------------------
Beginning of period 279,200,396 207,839,404
------------ ------------
End of period (including undistributed net investment
income of $22,685,394 and $15,570,425, respectively) $282,085,618 $279,200,396
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
28 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $5.12 $5.12 $5.09 $4.91 $4.60
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .39 .39 .38 .38
Net realized and unrealized gain (loss) (.31) (.24) .04 .19 .30
- ------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations .14 .15 .43 .57 .68
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.29) (.09) (.39) (.39) (.37)
Distributions from net realized gain -- (.06) (.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.29) (.15) (.40) (.39) (.37)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.97 $5.12 $5.12 $5.09 $4.91
===== ===== ===== ===== =====
- ------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(1) 2.83% 2.90% 8.71% 12.07% 15.33%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $282,086 $279,200 $207,839 $118,716 $60,098
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $278,668 $250,227 $159,934 $82,604 $37,698
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.08% 8.17% 8.23% 8.48% 9.32%
Expenses 0.78% 0.80%(3) 0.83%(3) 0.85%(3) 0.85%(3)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 81% 134% 150% 144% 87%
</TABLE>
1. Assumes a $1,000 hypothetical initial 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.
2. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999, were $242,578,613 and $216,840,010, respectively.
See accompanying Notes to Financial Statements.
Oppenheimer Strategic Bond Fund/VA 29
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies Oppenheimer Strategic Bond Fund/VA (the Fund)
is a separate series of Oppenheimer Variable Account Funds (the Trust), a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek a high level of current income principally derived from interest of debt
securities and seeks to enhance that income by writing covered call option on
debt securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
Structured Notes. The Fund invests in foreign currency-linked structured notes
whose market value and redemption price are linked to foreign currency exchange
rates. The structured notes may be leveraged, which increases the notes'
volatility relative to the face of the security. Fluctuations in value of these
securities are recorded as unrealized gains and losses in the accompanying
financial statements. As of December 31, 1999, the market value of these
securities comprised 3.85% of the Fund's net assets and resulted in realized and
unrealized losses of $1,597,657. The Fund also hedges a portion of the foreign
currency exposure generated by these securities, as discussed in Note 5.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. Normally the
settlement date occurs within six months after the transaction date; however,
the fund may, from time to time, purchase securities whose settlement date
extends beyond six months and possibly as long as two years or more beyond trade
date. During this period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior to their
delivery. The Fund maintains segregated assets with a market value equal to or
greater than the amount of its purchase commitments. The purchase of securities
on a when-issued or forward commitment basis may increase the volatility of the
Fund's net asset value to the extent the Fund makes such purchases while
remaining substantially fully invested. As of December 31, 1999, the Fund had
entered into outstanding when-issued or forward commitments of $9,294,950.
In connection with its ability to purchase securities on a when-issued
or forward commitment basis, the Fund may enter into mortgage dollar-rolls in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. The Fund records each dollar-roll as a sale and a new purchase
transaction.
30 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Security Credit Risk. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of 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, 1999, securities with an
aggregate market value of $1,533,192, representing 0.54% of the Fund's net
assets, were in default.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments
is separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. As of December 31,
1999, the Fund had available for federal income tax purposes an unused capital
loss carryover of approximately $6,413,000, which expires between 2006 and 2007.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of distributions made during the year from net investment income or
net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year in which
the income or realized gain was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect a
decrease in undistributed net investment income of $2,557,965. Accumulated net
realized loss on investments was decreased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
Oppenheimer Strategic Bond Fund/VA 31
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1999 Year Ended December 31, 1998
------------------------------ -----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Sold 13,301,419 $65,503,594 21,445,910 $109,659,739
Dividends and/or distributions reinvested 3,226,755 15,617,496 1,279,028 6,535,835
Redeemed (14,369,937) (70,751,692) (8,759,684) (44,577,039)
----------- ----------- ---------- ------------
Net increase 2,158,237 $10,369,398 13,965,254 $ 71,618,535
=========== =========== ========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized depreciation on securities and options
written of $17,572,921 was composed of gross appreciation of $6,256,650, and
gross depreciation of $23,829,571.
================================================================================
4. Management 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. The annual fees are 0.75% of the
first $200 million of average annual net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the
next $200 million and 0.50% of average annual net assets over $1 billion. The
Fund's management fee for the year ended December 31, 1999 was 0.74% of average
annual net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer agent for the Fund and is responsible for maintaining the
shareholder registry and shareholder accounting records for the Fund. OFS
provides these services for cost.
================================================================================
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 for operational purposes and to seek to protect against
adverse exchange rate fluctuations. 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 foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of
the foreign currency transactions. Realized gains and losses are reported with
all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
32 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Foreign Currency Contracts (continued)
As of December 31, 1999, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized Unrealized
Contract Description Dates Amounts (000s) December 31, 1999 Appreciation Depreciation
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
British Pound Sterling (GBP) 1/24/00 185 EUR $ 298,855 $ -- $ 826
Euro (EUR) 2/24/00 1,200 JPY 1,212,790 -- 43,034
Japanese Yen (JPY) 2/7/00 254,500 JPY 2,505,580 -- 1,562
------- --------
-- 45,422
------- --------
Contracts to Sell
- -----------------
British Pound Sterling (GBP) 1/30/00-6/5/00 980 GBP 1,582,807 3,914 14,584
Euro (EUR) 1/24/00-6/5/00 2,170 EUR 2,192,917 44,664 --
Euro (EUR) 1/24/00 289 GBP 291,763 7,917 --
Hong Kong Dollar (HKD) 1/26/00-1/31/00 4,859 HKD 625,030 -- 15,030
Japanese Yen (JPY) 2/24/00 129,600 EUR 1,279,172 -- 23,348
Mexican Nuevo Peso (MXN) 2/17/00 6,270 MXN 649,557 -- 4,312
------- --------
56,495 57,274
------- --------
Total Unrealized Appreciation and Depreciation $56,495 $102,696
======= ========
</TABLE>
================================================================================
6. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund may recognize a realized gain or loss when the contract is
closed or expires.
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.
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.
Oppenheimer Strategic Bond Fund/VA 33
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
6. Futures Contracts (continued)
As of December 31, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Date Contracts December 31, 1999 (Depreciation)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
Euro-Bund 3/8/00 33 $3,458,613 $(35,868)
U.S. Treasury Bonds, 20 yr. 3/22/00 22 2,000,625 (40,906)
U.S. Treasury Nts., 10 yr. 3/22/00 6 575,156 (9,047)
--------
(85,821)
--------
Contracts to Sell
- -----------------
Canadian Government Bonds, 10 yr. 3/22/00 5 409,383 2,522
Euro-Schatz 3/8/00 71 7,338,365 20,128
Japanese Government Bonds, 10 yr. 3/9/00 2 2,598,259 (33,845)
United Kingdom Long Gilt 3/29/00 3 539,949 11,486
U.S. Treasury Nts., 5 yr. 3/22/00 31 3,038,484 39,094
--------
39,385
--------
$(46,436)
========
</TABLE>
================================================================================
7. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options
to hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the
principal exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. 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.
34 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
7. Option Activity (continued)
Written option activity for the year ended December 31, 1999, was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
---------------------------- -------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Options outstanding as of
December 31, 1998 147,606,100 $ 25,235 -- $ --
Options written 509,978,550 50,659 28,409,390 402,988
Options closed or expired (513,584,650) (60,984) (25,059,496) (273,394)
Options exercised -- -- (2,689) (74,174)
------------ -------- ----------- ---------
Options outstanding as of
December 31, 1999 144,000,000 $ 14,910 3,347,205 $ 55,420
============ ======== =========== =========
</TABLE>
================================================================================
8. Illiquid or Restricted Securities and Currency
As of December 31, 1999, investments in securities and currency included issues
that are illiquid or restricted. Restricted securities are often purchased in
private placement transactions, are not registered under the Securities Act of
1933, may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. A security may also
be considered illiquid if it lacks a readily available market or if its
valuation has not changed for a certain period of time. The Fund intends to
invest no more than 15% of its net assets (determined at the time of purchase
and reviewed periodically) in illiquid or restricted securities. Certain
restricted securities, eligible for resale to qualified institutional investors,
are not subject to that limitation. The aggregate value of illiquid or
restricted securities subject to this limitation as of December 31, 1999, was
$13,116,671, which represents 4.64% of the Fund's net assets, of which $629,649
is considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation Per
Unit as of
Acquisition Cost Per December 31,
Security Dates Unit 1999
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Bonds
- -----
TAGHeuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95 100.00% 109.66%
Stocks and Warrants
- -------------------
CGA Group Ltd., Preferred 6/17/97 $25.00 $25.00
- ----------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07 6/17/97 -- 0.30
- ----------------------------------------------------------------------------------------------------
Real Time Data Wts., Exp. 5/31/04 6/30/99 0.01 0.01
Currency
- --------
Russian Ruble 12/22/99-
12/28/99 0.04 0.04
</TABLE>
Oppenheimer Strategic Bond Fund/VA 35
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Oppenheimer Strategic Bond Fund/VA:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Strategic Bond Fund/VA (which is a
series of Oppenheimer Variable Account Funds) as of December 31, 1999, the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1999 and 1998 and the
financial highlights for the period five years prior, to December 31, 1999.
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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of Oppenheimer
Strategic Bond Fund/VA as of December 31, 1999, the results of its operations,
the changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Denver, Colorado
January 24, 2000
36 Oppenheimer Strategic Bond Fund/VA
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information
- --------------------------------------------------------------------------------
================================================================================
In early 2000 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Dividends paid by the Fund during the fiscal year ended December 31,
1999 which are not designated as capital gain distributions should be multiplied
by 2.40% to arrive at the net 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.
Oppenheimer Strategic Bond Fund/VA 37
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA
- --------------------------------------------------------------------------------
A Series of Oppenheimer Variable Account Funds
<TABLE>
<S> <C>
=======================================================================================
Officers and Trustees James C. Swain, Trustee and Chairman of the Board
Bridget A. Macaskill, President
William H. Armstrong, Trustee
Robert G. Avis, Trustee
William A. Baker, Trustee
Edward L. Cameron, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
John S. Kowalik, Vice President
David P. Negri, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
=======================================================================================
Investment Advisor OppenheimerFunds, Inc.
=======================================================================================
Transfer Agent OppenheimerFunds Services
=======================================================================================
Custodian of Portfolio Securities The Bank of New York
=======================================================================================
Independent Auditors Deloitte & Touche LLP
=======================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of
Oppenheimer Strategic Bond Fund/VA. This report
must be preceded or accompanied by a Prospectus
of Oppenheimer Strategic Bond Fund/VA. For
material information concerning the Fund, see
the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by
any bank, are not insured by the FDIC or any
other agency, and involve investment risks,
including the possible loss of the principal
amount invested.
</TABLE>
38 Oppenheimer Strategic Bond Fund/VA
<PAGE>
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