Semiannual Report June 30, 2000
Oppenheimer
Strategic Bond Fund/VA
A Series of Oppenheimer Variable Account Funds
[logo]OppenheimerFunds(R)
The Right Way to Invest
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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, seeks a high level of current income principally derived from interest on
debt securities and seeks to enhance income by writing covered call options 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
than higher-rated fixed income securities.
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Narrative by Art Steinmetz, Co-Portfolio Manager
The Fund generated positive returns in a very challenging investment environment
with cumulative total return for the six month period ending June 30, 2000 of
1.76%.(1) During this reporting period, stronger-than-expected economic growth
fueled investors' concerns that inflationary pressures might emerge. As a
result, interest rates and most bond yields rose. Because bond yields and prices
move in opposite directions, higher interest rates eroded the value of many
fixed-income securities. However, we focused the portfolio on the highest
yielding, best performing sectors of the bond market and were able to provide
positive returns in a declining market.
When the reporting period began on January 1, 2000, the Federal Reserve
Board ("Fed"), had already implemented three interest-rate hikes. They did so in
response to concerns that unsustainable economic growth might ignite
inflationary pressures. While inflation had not yet accelerated, early warning
signs included very low unemployment, high levels of consumer spending and
borrowing, and rising commodities prices. When the economy subsequently gained
momentum, the Fed stepped in, repeatedly raising short-term interest rates in
February and March. These increases were quickly reflected in lower bond prices.
The bond market was also influenced by supply-and-demand factors. For
example, U.S. Treasury securities provided the least attractive returns during
the reporting period because of a fall-off in investor demand. In a robust
economic environment, investors appeared to prefer higher yielding,
credit-sensitive bonds--such as corporate and emerging-markets securities--over
interest-rate-sensitive bonds such as U.S. Treasury securities.
Given the interest-rate and demand environment, our goal during the
period was to avoid interest-rate sensitive securities and emphasize higher
yielding, credit-sensitive securities. As such, we increased our exposure to
credit-sensitive bonds such as high-yield corporate securities, emerging-market
bonds and certain types of mortgage-backed securities. By focusing on bonds
providing above-average income streams, we helped offset the effects of
declining bond prices on the portfolio.
While U.S. Treasuries comprised only about 7% of the portfolio, we
emphasized long-term issues, which benefited the Fund. Since the beginning of
the year, despite falling bond prices in the overall market, the limited supply
and high demand for longer-term assets pushed prices of 30-year Treasuries up
and yields down. As a result, long bonds actually outperformed shorter issues.
Of the three credit-sensitive market sectors in which we invest,
emerging-market bonds contributed the most to performance. Consistent with our
contrarian investment style, we purchased many of our emerging-market holdings
in 1998, when they were out-of-favor as a result of the global financial crisis.
We bought many of these bonds when they were inexpensive, and their prices have
since risen as market conditions and investor interest improved. As of June 30,
2000, emerging-market bonds comprised about 13% of the Fund's portfolio.
In the mortgage-backed securities sector, our holdings of "interest
only" bonds performed well. Unlike most fixed-income securities, prices of
"interest only" bonds appreciate when interest rates rise. At the end of the
reporting period, interest-only bonds comprised about 5% of the portfolio, while
the entire mortgage-backed securities sector accounted for about 23% of
assets.(2)
Because of ongoing market volatility, the Fund's returns may fluctuate and may
be less than the results shown.
1.Includes 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 is not annualized and would have been lower if such charges were
taken into account.
2. The Fund's portfolio is subject to change.
2 Oppenheimer Strategic Bond Fund/VA
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Oppenheimer Variable Account Funds--Oppenheimer Strategic Bond Fund/VA
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Our holdings of high-yield corporate bonds, in turn, provided modestly positive
returns. Although high-yield bonds generally outperformed U.S. Treasury
securities during the period, they were adversely affected by their own, unique
supply-and-demand influences. When interest rates began to rise in 1999,
corporations began to issue more debt in order to avoid potentially higher
interest rates in 2000. However, investor demand fell as stocks continued to
generate high returns. This relative imbalance constrained the performance of
high-yield corporate bonds.
Our holdings of foreign bonds from developed markets were somewhat hurt
by the strength of the U.S. dollar relative to most European currencies,
including the euro. European economies are generally growing at slower rates
than the U.S. economy, making U.S. investments more attractive to domestic and
foreign investors alike. In Japan, the relationship between the Japanese yen and
the U.S. dollar has been relatively stable. However, poor economic conditions in
Japan have led to relatively unattractive low bond yields.
In terms of the near future, we remain optimistic. We expect the Fed
will maintain its tightening bias with respect to U.S. monetary policy and could
raise short-term interest rates later in the year. However, it appears that the
market may have already taken this into account. Therefore, we believe that any
further price erosion should be limited.
If interest rates continue to rise and the economy slows, the most
substantial effects may be felt in the stock market and the high yield markets.
If highly valued stocks experience a sharp correction because of investors'
expectations of lower corporate profits, investors may turn to the higher
quality, lower yielding sectors of the bond market. We would likely seek to take
advantage of such a situation by employing various sophisticated hedging
strategies, rather than by dramatically restructuring the portfolio.
Regardless of future economic events, however, we intend to continue to
manage the Fund in a way that takes advantage of the changing relationships
among the various sectors of the bond market. In fact, adhering to our long-term
investment approach is an important part of what it means at OppenheimerFunds to
be The Right Way to Invest.
Oppenheimer Strategic Bond Fund/VA 3
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Statement of Investments June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal Market Value
Amount Note 1
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<S> <C> <C>
Mortgage-Backed Obligations--22.5%
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Government Agency--18.7%
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FHLMC/FNMA/Sponsored--9.4%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates:
8%, 7/1/30(1) $ 3,100,000 $ 3,117,453
Series 151, Cl. F, 9%, 5/15/21 708,053 735,264
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Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security,
Series 194, Cl. IO, 11.19%, 4/1/28(2) 41,955,499 13,402,815
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Federal National Mortgage Assn.:
6.50%, 5/1/29 1,503,079 1,418,682
7.50%, 8/1/25 383,496 379,661
7.50%, 7/1/29(1) 3,200,000 3,154,496
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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 4,384,665
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Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security,
Trust 294, Cl. 2, 12.38%, 2/1/28(2) 2,156,382 689,369
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27,282,405
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GNMA/Guaranteed--9.3%
Government National Mortgage Assn.:
7%, 3/15/28-7/15/28 14,407,125 14,011,508
7.125%, 11/20/25 152,214 152,929
7.50%, 2/15/27 2,254,532 2,240,532
8%, 11/15/25-5/15/26 2,145,215 2,170,851
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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 8,209,850
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26,785,670
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Private--3.8%
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Commercial--3.1%
AMRESCO Commercial Mortgage Funding I Corp., Multiclass Mtg. Pass-Through Certificates,
Series 1997-C1, Cl. G, 7%, 6/17/29(3) 100,000 79,031
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Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates:
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(4) 375,000 283,828
Series 1997-D5, Cl. B1, 6.93%, 2/14/41 300,000 192,844
Series 1997-D5, Cl. B2, 6.93%, 2/14/41 1,250,000 770,313
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CRIIMI MAE Trust I, Collateralized Mtg. Obligations, Series 1996-C1, Cl. A2, 7.56%, 8/30/05(5) 100,000 94,934
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FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Series 1994-C1, Cl. 2-G, 8.70%, 9/25/25 153,594 147,594
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First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates:
Series 1997, Cl. D, 8.083%, 5/25/08(3)(4) 350,000 288,859
Series 1997, Cl. E, 8.083%, 2/25/11(3)(4) 600,000 438,750
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First Union-Lehman Brothers Commercial Mortgage Trust, Commercial Mtg.
Pass-Through Certificates, Series 1997-C2, Cl. F, 7.50%, 9/18/15 225,000 169,242
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General Motors Acceptance Corp., Collateralized Mtg. Obligations:
Series 1997-C1, Cl. G, 7.414%, 11/15/11 440,000 322,850
Series 1997-C2, Cl. F, 6.75%, 4/16/29 250,000 147,617
Series 1998-C1, Cl. E, 7.089%, 3/15/11(4) 800,000 725,250
4 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
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Commercial (continued)
General Motors Acceptance Corp. Commercial Mtg. Securities, Inc., Mtg.
Pass-Through Certificates,
Interest-Only Stripped Mtg.-Backed Security,
Series 1997-C1, Cl. X, 8.28%, 7/15/27(2) $3,921,491 $ 297,788
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Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1995-C2, Cl. D, 7.755%, 6/15/21(4) 209,054 206,050
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Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. F, 7.415%, 2/15/28(4)(5) 162,744 120,837
Series 1997-HF1, Cl. F, 6.86%, 2/15/10(3) 150,000 120,328
Series 1997-RR, Cl. D, 7.766%, 4/30/39(3) 450,024 334,073
Series 1997-RR, Cl. E, 7.748%, 4/30/39(3)(4) 300,016 199,605
Series 1997-RR, Cl. F, 7.766%, 4/30/39(3) 600,032 334,331
Series 1997-XL1, Cl. G, 7.695%, 10/3/30(3) 390,000 325,406
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Mortgage Capital Funding, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1997-MC1, Cl. F, 7.452%, 5/20/07(3) 63,720 52,330
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Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through Certificates,
Series 1996-MC1, Cl. G, 7.15%, 6/15/06(5) 1,800,000 1,504,406
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NationsCommercial Corp., NB Commercial Mtg. Pass-Through Certificates,
Series DMC, Cl. C, 8.921%, 8/12/11(3) 200,000 181,969
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Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. D, 9.45%, 5/25/24 26,397 26,245
Series 1994-C2, Cl. E, 8%, 4/25/25 963,026 941,358
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Salomon Brothers Mortgage Securities VII, Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. F1, 8.888%, 1/20/06(4) 1,000,000 747,500
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Structured Asset Securities Corp., Multiclass Pass-Through Certificates,
Series 1995-C4, Cl. E, 8.849%, 6/25/26(3)(4) 46,290 45,046
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9,098,384
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Multi-Family--0.2%
AMMC, Collateralized Bond Obligations Sub. Bonds, Series I, Cl. D1, 13.602%, 1/15/12(3) 200,000 195,200
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Option One Mortgage Trust, Collateralized Mtg. Obligations, Series 1999-1A, 10.06%, 3/1/29(3) 246,621 242,229
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Salomon Brothers Mortgage Securities VII, Commercial Mtg. Pass-through Certificates,
Series 1998-1A, 5%, 11/25/27(3) 177,472 169,930
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607,359
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Residential--0.5%
Ameriquest Finance Trust, Collateralized Mtg. Obligations, Series 2000-2, 8.50%, 8/17/01(3) 775,000 750,781
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NC Finance Trust, Collateralized Mtg. Obligations, Series 1999-I, Cl. ECFD, 8.75%, 12/25/28 337,853 315,893
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Salomon Brothers Mortgage Securities VII, Commercial Mtg. Pass-Through Certificates,
Series 1996-B, Cl. 1, 6.79%, 4/25/26(3) 374,815 244,801
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1,311,475
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Total Mortgage-Backed Obligations (Cost $67,358,346) 65,085,293
Oppenheimer Strategic Bond Fund/VA 5
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
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U.S. Government Obligations--11.8%
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U.S. Treasury Bonds:
6.50%, 11/15/26(6) $5,200,000 $ 5,425,878
8.125%, 8/15/21 1,415,000 1,725,859
8.875%, 2/15/19 735,000 944,246
11.875%, 11/15/03 500,000 582,500
STRIPS, 5.76%, 2/15/19(7) 6,500,000 2,063,048
STRIPS, 6.24%, 5/15/05(7) 5,704,000 4,199,832
STRIPS, 5.33%, 5/15/17(7) 6,000,000 2,114,490
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U.S. Treasury Nts.:
5.625%, 11/30/00 9,705,000 9,680,737
6%, 8/15/09 1,373,000 1,362,274
6.50%, 10/15/06 6,000,000 6,069,378
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Total U.S. Government Obligations (Cost $35,346,224) 34,168,242
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Foreign Government Obligations--22.8%
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Argentina--2.6%
Argentina (Republic of) Bonds:
11.75%, 6/15/15 1,175,000 1,066,312
12%, 2/1/20 405,000 378,675
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Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
Series I, 2.807%, 4/1/07(4)(ARP) 2,757,897 1,900,580
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Argentina (Republic of) Global Unsec. Unsub. Bonds, Series BGL5, 11.375%, 1/30/17 1,392,000 1,249,320
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Argentina (Republic of) Unsec. Unsub. Medium-Term Nts., 8.75%, 7/10/02(ARP) 384,000 345,189
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Argentina (Republic of) Unsec. Unsub. Nts., 11.75%, 4/7/09 2,572,000 2,398,390
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City of Buenos Aires Bonds, Series 3, 10.50%, 5/28/04(ARP) 160,000 133,227
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7,471,693
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Belgium--1.0%
Belgium (Kingdom of) Bonds, Series 35, 5.75%, 9/28/10(EUR) 3,060,000 2,975,556
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Brazil--3.3%
Brazil (Federal Republic of) Bonds:
12.25%, 3/6/30 790,000 726,800
12.75%, 1/15/20 870,000 836,451
Series 15 yr., 7.437%, 4/15/09(4) 755,000 632,312
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Brazil (Federal Republic of) Debt Conversion Bonds:
Series 18 yr., 7.437%, 4/15/12(4) 1,863,000 1,373,962
Series 20 yr., 8%, 4/15/14 825,044 608,470
Series D, 7.437%, 4/15/12(4) 1,195,000 881,312
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Brazil (Federal Republic of) Eligible Interest Bonds, 7.375%, 4/15/06(4) 79,050 72,232
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Brazil (Federal Republic of) Gtd. Disc. Bonds, 7.375%, 4/15/24(4) 780,000 618,150
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Brazil (Federal Republic of) Par Bonds, 6%, 4/15/24(4) 1,705,000 1,116,775
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Brazil (Federal Republic of) Unsub. Bonds, 14.50%, 10/15/09 2,605,000 2,787,350
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9,653,814
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Bulgaria--0.2%
Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds,
Tranche A, 2.75%, 7/28/12(4) 649,000 478,638
6 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
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Canada--0.1%
Canada (Government of) Bonds:
7%, 12/1/06(CAD) 425,000 $ 303,090
Series J24, 10.25%, 2/1/04(CAD) 130,000 99,560
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402,650
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Colombia--0.2%
Colombia (Republic of) Nts., 8.625%, 4/1/08 55,000 41,113
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Colombia (Republic of) Unsec. Unsub. Bonds, 7.625%, 2/15/07 520,000 378,300
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Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06 150,000 117,375
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536,788
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Finland--0.2%
Finland (Republic of) Bonds, 9.50%, 3/15/04(EUR) 504,563 551,820
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France--2.5%
France (Government of) Obligations Assimilables du Tresor Bonds, 5.50%, 4/25/10(EUR) 5,735,000 5,543,723
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France (Government of) Treasury Nts., 4.75%, 3/12/02(EUR) 1,900,000 1,813,818
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7,357,541
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Germany--1.7%
Germany (Republic of) Bonds:
5.375%, 1/4/10(EUR) 2,400,000 2,325,947
7.375%, 12/2/02(EUR) 2,500,000 2,518,961
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4,844,908
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Great Britain--0.6%
United Kingdom Treasury Nts., 8%, 6/10/03(GBP) 1,070,000 1,707,346
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Greece--0.2%
Hellenic (Republic of) Bonds, 8.60%, 3/26/08(GRD) 207,200,000 677,101
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Hungary--0.3%
Hungary (Government of) Bonds, Series 01/H, 13.50%, 6/12/01(HUF) 213,220,000 808,738
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Ivory Coast--0.0%
Ivory Coast (Government of) Past Due Interest Bonds, Series F, 1.90%, 3/29/18(8)(9)(FRF) 2,892,750 69,752
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Japan--1.6%
Japan (Government of) Bonds, Series 185, 3.10%, 3/20/06(JPY) 444,100,000 4,601,968
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Jordan--0.0%
Hashemite (Kingdom of Jordan) Disc. Bonds, 7.75%, 12/23/23(4) 36,000 27,810
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Mexico--1.8%
United Mexican States Bonds:
11.375%, 9/15/16 870,000 996,150
11.50%, 5/15/26 1,145,000 1,379,725
Series A, 7.313%, 12/31/19(4) 105,000 103,163
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United Mexican States Disc. Bonds:
Series B, 7.603%, 12/31/19(4) 75,000 73,828
Series C, 7.80%, 12/31/19(4) 170,000 167,025
Series D, 7.925%, 12/31/19(4) 250,000 245,625
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United Mexican States Nts., 9.875%, 2/1/10 2,040,000 2,116,500
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5,082,016
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Norway--0.5%
Norway (Government of) Bonds, 9.50%, 10/31/02(NOK) 10,515,000 1,291,909
Oppenheimer Strategic Bond Fund/VA 7
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
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Panama--0.2%
Panama (Republic of) Bonds, 8.875%, 9/30/27 $ 275,000 $ 232,375
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Panama (Republic of) Interest Reduction Bonds, 4.25%, 7/17/14(4) 456,000 364,800
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597,175
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Peru--0.8%
Peru (Republic of) Past Due Interest Bonds, Series 20 yr., 4.50%, 3/7/17(4) 1,145,000 762,856
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Peru (Republic of) Sr. Nts., Zero Coupon, 4.52%, 2/28/16(7) 3,071,174 1,460,344
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2,223,200
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Poland--0.1%
Poland (Republic of) Past Due Interest Bonds, 6%, 10/27/14(4) 370,000 330,688
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Russia--2.3%
Russia (Government of) Debs., 12/15/15(8)(9) 24,195 7,531
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Russia (Government of) Principal Loan Debs., Series 24 yr., 12/15/20(8)(9) 4,597,000 1,415,014
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Russian Federation Bonds, 2.25%, 3/31/30(1)(4) 9,910,000 3,706,959
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Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05 602,000 468,055
12.75%, 6/24/28 1,342,000 1,151,637
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6,749,196
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Spain--0.7%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado:
4.50%, 7/30/04(EUR) 1,220,000 1,040,883
7.90%, 2/28/02(EUR) 1,100,000 1,099,770
-----------
2,140,653
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Sweden--0.2%
Sweden (Kingdom of) Bonds, Series 1034, 9%, 4/20/09(SEK) 4,500,000 644,717
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The Netherlands--0.7%
The Netherlands (Government of) Bonds, 6%, 1/15/06(EUR) 1,915,000 1,900,887
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Turkey--0.4%
Turkey (Republic of) Bonds, 11.75%, 6/15/10 550,000 563,131
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Turkey (Republic of) Sr. Unsec. Unsub. Nts., 11.875%, 1/15/30 230,000 245,238
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Turkey (Republic of) Sr. Unsub. Bonds, 12.375%, 6/15/09 385,000 409,063
-----------
1,217,432
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Venezuela--0.6%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27(10) 399,000 263,839
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Venezuela (Republic of) Disc. Bonds, Series DL, 7.875%, 12/18/07(10) 1,442,142 1,173,544
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Venezuela (Republic of) Unsec. Bonds, 13.625%, 8/15/18 150,000 139,125
-----------
1,576,508
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Vietnam--0.0%
Vietnam (Government of) Bonds, 3.25%, 3/12/28(4) 54,000 17,280
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Total Foreign Government Obligations (Cost $65,935,690) 65,937,784
8 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
================================================================================================================================
Loan Participations--0.7%
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Algeria (Republic of) Reprofiled Debt Loan Participation Nts., Tranche 1, 7.188%, 9/4/06(3)(4) $ 217,000 $ 179,974
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Algeria (Republic of) Trust III Nts., Tranche 3, 7.188%, 3/4/10(3)(4) 457,000 356,174
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Central Bank of Indonesia Gtd. Nts., Series 4, 9.875%, 8/25/02(3)(4) 300,000 258,750
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ING Barings LLC, Bank Mandiri Loans, Series 5C, 8.344%, 6/1/05(3)(4) 250,000 182,500
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Morocco (Kingdom of) Loan Participation Agreement, Tranche A, 7.75%, 1/1/09(3)(4) 395,000 354,513
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PT Bank Ekspor Impor Indonesia Nts., Series 4 yr., 9.875%, 8/25/02(3)(4) 300,000 258,750
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Shoshone Partners Loan Trust Sr. Nts., 8.252%, 4/28/02 (representing a basket of
reference loans and a total return swap between Chase Manhattan Bank and the Trust)(3)(4) 750,000 576,683
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Total Loan Participations (Cost $2,214,002) 2,167,344
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Corporate Bonds and Notes--35.5%
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Aerospace/Defense--0.6%
BE Aerospace, Inc., 9.50% Sr. Unsec. Sub. Nts., 11/1/08 250,000 231,250
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Constellation Finance LLC, 9.80% Airline Receivable Asset-Backed Nts.,
Series 1997-1, 1/1/01(3) 175,000 162,750
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Fairchild Corp., 10.75% Sr. Unsec. Sub. Nts., 4/15/09 550,000 383,625
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Greater Toronto Airports Authority, 5.40% Debs., 12/3/02(CAD) 240,000 159,133
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Loral Space & Communications Ltd., 9.50% Sr. Nts., 1/15/06 300,000 219,000
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Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts., Series 1997-A, Cl. B, 6/15/04(3) 77,728 79,073
--------------------------------------------------------------------------------------------------------------------------------
Pentacon, Inc., 12.25% Sr. Unsec. Nts., Series B, 4/1/09 550,000 305,250
--------------------------------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., Series B, 9/1/07(3) 200,000 191,000
----------
1,731,081
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Chemicals--1.3%
Georgia Gulf Corp., 10.375% Sr. Sub. Nts., 11/1/07(5) 200,000 209,000
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Huntsman Corp./ICI Chemical Co. plc:
10.125% Sr. Unsec. Sub. Nts., 7/1/09 600,000 607,500
10.125% Sr. Unsec. Sub. Nts., 7/1/09(EUR) 300,000 298,364
Zero Coupon Sr. Unsec. Disc. Nts., 13.09%, 12/31/09(7) 750,000 251,250
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Lyondell Chemical Co., 10.875% Sr. Sub. Nts., 5/1/09(11) 1,000,000 997,500
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NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 140,000 143,500
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PCI Chemicals Canada, Inc., 9.25% Sec. Nts., 10/15/07(3) 175,000 109,375
--------------------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 250,000 166,250
--------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 100,000 85,500
--------------------------------------------------------------------------------------------------------------------------------
Polytama International Finance BV, 11.25% Sec. Nts., 6/15/07(3) 145,104 7,618
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Reliance Industries Ltd., 10.25% Unsec. Debs., Series B, 1/15/97 300,000 259,254
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Sterling Chemicals, Inc.:
11.75% Sr. Unsec. Sub. Nts., 8/15/06 290,000 239,250
12.375% Sr. Sec. Nts., Series B, 7/15/06 400,000 408,000
----------
3,782,361
--------------------------------------------------------------------------------------------------------------------------------
Consumer Durables--0.2%
Boyds Collection Ltd. (The), 9% Sr. Unsec. Sub. Nts., Series B, 5/15/08 236,000 208,860
--------------------------------------------------------------------------------------------------------------------------------
Holmes Products Corp., 9.875% Sr. Unsec. Sub. Nts., Series B, 11/15/07 200,000 141,000
--------------------------------------------------------------------------------------------------------------------------------
Home Interiors & Gifts, Inc., 10.125% Sr. Sub. Nts., 6/1/08(3) 150,000 86,250
--------------------------------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 12% Unsec. Nts., 7/15/05(3) 55,000 35,750
--------------------------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(3) 100,000 107,636
----------
579,496
Oppenheimer Strategic Bond Fund/VA 9
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--0.5%
AKI Holdings, Inc., 0%/13.50% Sr. Disc. Debs., 7/1/09(12) $ 150,000 $ 71,625
--------------------------------------------------------------------------------------------------------------------------------
AKI, Inc., 10.50% Sr. Unsec. Nts., 7/1/08 100,000 79,500
--------------------------------------------------------------------------------------------------------------------------------
Bell Sports, Inc., 11% Sr. Unsec. Sub. Nts., Series B, 8/15/08 405,000 405,000
--------------------------------------------------------------------------------------------------------------------------------
Globe Manufacturing Corp., 10% Sr. Unsec. Sub. Nts., Series B, 8/1/08(3) 315,000 36,225
--------------------------------------------------------------------------------------------------------------------------------
Indorayon International Finance Co. BV, 10% Gtd. Unsec. Unsub. Nts., 3/29/01(3)(8)(9) 100,000 25,000
--------------------------------------------------------------------------------------------------------------------------------
Phillips-Van Heusen Corp., 9.50% Sr. Unsec. Sub. Nts., 5/1/08 200,000 183,000
--------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp.:
8.625% Sr. Unsec. Sub. Nts., 2/1/08 150,000 76,500
9% Sr. Nts., 11/1/06 135,000 97,875
--------------------------------------------------------------------------------------------------------------------------------
Salton, Inc., 10.75% Sr. Unsec. Sub. Nts., 12/15/05 425,000 420,750
--------------------------------------------------------------------------------------------------------------------------------
Styling Technology Corp., 10.875% Sr. Unsec. Sub. Nts., 7/1/08 70,000 7,350
--------------------------------------------------------------------------------------------------------------------------------
Williams (J. B.) Holdings, Inc., 12% Sr. Nts., 3/1/04 100,000 96,500
----------
1,499,325
--------------------------------------------------------------------------------------------------------------------------------
Energy--1.9%
Chesapeake Energy Corp.:
9.125% Sr. Unsec. Nts., 4/15/06 100,000 94,000
9.625% Sr. Unsec. Nts., Series B, 5/1/05 400,000 390,000
--------------------------------------------------------------------------------------------------------------------------------
Clark Refinancing & Marketing, Inc., 8.875% Sr. Sub. Nts., 11/15/07 245,000 158,025
--------------------------------------------------------------------------------------------------------------------------------
Denbury Management, Inc., 9% Sr. Sub. Nts., 3/1/08 400,000 366,000
--------------------------------------------------------------------------------------------------------------------------------
Empresa Electric del Norte Grande SA, 10.50% Sr. Debs., 6/15/05(3) 100,000 40,250
--------------------------------------------------------------------------------------------------------------------------------
Frontier Oil Corp., 11.75% Sr. Nts., 11/15/09 400,000 402,000
--------------------------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(5) 400,000 375,000
--------------------------------------------------------------------------------------------------------------------------------
Grant Geophysical, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/15/08(3) 560,000 344,400
--------------------------------------------------------------------------------------------------------------------------------
Leviathan Gas Pipeline Partners LP/Leviathan Finance Corp., 10.375% Sr.
Unsec. Sub. Nts., Series B, 6/1/09(3) 400,000 406,000
--------------------------------------------------------------------------------------------------------------------------------
Ocean Rig Norway AS, 10.25% Sr. Sec. Nts., 6/1/08 400,000 334,000
--------------------------------------------------------------------------------------------------------------------------------
Parker Drilling Co., 9.75% Sr. Unsec. Nts., Series D, 11/15/06 400,000 389,000
--------------------------------------------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sr. Sub. Nts., Series B, 5/15/07 370,000 351,500
--------------------------------------------------------------------------------------------------------------------------------
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(3) 630,000 312,637
--------------------------------------------------------------------------------------------------------------------------------
RBF Finance Co., 11% Sr. Sec. Nts., 3/15/06 375,000 403,594
--------------------------------------------------------------------------------------------------------------------------------
Statia Terminals International NV/Statia Terminals (Canada), Inc.,
11.75% First Mtg. Nts., Series B, 11/15/03 175,000 175,875
--------------------------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 270,000 257,850
--------------------------------------------------------------------------------------------------------------------------------
Universal Compression Holdings, Inc., 0%/9.875% Sr. Disc. Nts., 2/15/08(12) 500,000 362,500
----------
5,491,131
--------------------------------------------------------------------------------------------------------------------------------
Financial--1.2%
AMRESCO, Inc.:
9.875% Sr. Sub. Nts., Series 98-A, 3/15/05 300,000 153,000
10% Sr. Sub. Nts., Series 97-A, 3/15/04 100,000 51,000
--------------------------------------------------------------------------------------------------------------------------------
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)(5)(13) 250,000 321,250
--------------------------------------------------------------------------------------------------------------------------------
Bakrie Investindo, Zero Coupon Promissory Nts., 7/10/1998(3)(8)(9)(IDR) 1,000,000,000 17,138
--------------------------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 7,000 5,285
10 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Financial (continued)
Federal Home Loan Bank, 5.625% Unsec. Unsub. Nts., 6/10/03(GBP) 115,000 $ 170,557
--------------------------------------------------------------------------------------------------------------------------------
Hanvit Bank:
0%/12.75% Unsec. Sub. Nts., 3/1/10(5)(12) 795,000 787,050
0%/12.75% Unsec. Sub. Nts., 3/1/10(12) 470,000 465,300
--------------------------------------------------------------------------------------------------------------------------------
IBJ Preferred Capital Co. (The) LLC, 8.79% Bonds, 12/29/49(4)(5) 400,000 366,090
--------------------------------------------------------------------------------------------------------------------------------
LaBranche & Co., Inc., 12% Sr. Sub. Nts., 3/1/07(5) 200,000 200,250
--------------------------------------------------------------------------------------------------------------------------------
Local Financial Corp., 11% Sr. Nts., 9/8/04(5) 150,000 151,125
--------------------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Capital Nts., 8/1/27 150,000 80,250
--------------------------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03(3) 150,000 137,250
--------------------------------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/04(3)(8)(9) 90,000 3,150
--------------------------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
11% Nts., 6/18/03(3)(8)(9) 100,000 13,000
24% Nts., 6/19/03(8)(9)(IDR) 164,300,000 2,440
--------------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust, 9.75% Sr. Sec. Nts., Series B, 4/1/08 245,000 212,538
--------------------------------------------------------------------------------------------------------------------------------
SBS Agro Finance BV, 10.25% Bonds, 7/21/00(3)(8)(9) 339,000 9,323
--------------------------------------------------------------------------------------------------------------------------------
Southern Pacific Funding Corp., 11.50% Sr. Nts., 11/1/04(3)(8)(9) 80,000 37,600
--------------------------------------------------------------------------------------------------------------------------------
Sovereign Bancorp, Inc., 10.50% Sr. Unsec. Nts., 11/15/06 250,000 248,125
--------------------------------------------------------------------------------------------------------------------------------
Veritas Capital Trust, 10% Nts., 1/1/28 100,000 31,250
--------------------------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 129,000 117,390
----------
3,580,361
--------------------------------------------------------------------------------------------------------------------------------
Food & Drug--0.4%
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02 500,000 222,500
--------------------------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 500,000 420,000
--------------------------------------------------------------------------------------------------------------------------------
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07 200,000 190,000
--------------------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc.:
10.75% Jr. Sub. Deferred Coupon Nts., 11/1/03(8)(9) 100,000 6,500
11.625% Sub. Nts., 6/15/02(8)(9) 200,000 51,000
12.625% Sub. Nts., 6/15/02(8)(9) 180,000 45,900
--------------------------------------------------------------------------------------------------------------------------------
Shoppers Food Warehouse Corp., 9.75% Sr. Nts., 6/15/04 155,000 162,635
----------
1,098,535
--------------------------------------------------------------------------------------------------------------------------------
Food/Tobacco--0.5%
Aurora Foods, Inc., 8.75% Sr. Sub. Nts., Series B, 7/1/08 150,000 84,750
--------------------------------------------------------------------------------------------------------------------------------
Del Monte Foods Co., 0%/12.50% Sr. Disc. Nts., Series B, 12/15/07(12) 71,000 53,073
--------------------------------------------------------------------------------------------------------------------------------
New World Pasta Co., 9.25% Sr. Nts., 2/15/09(3) 425,000 255,000
--------------------------------------------------------------------------------------------------------------------------------
Packaged Ice, Inc., 9.75% Sr. Unsec. Nts., Series B, 2/1/05 200,000 167,000
--------------------------------------------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10(3)(8)(9) 200,000 59,000
--------------------------------------------------------------------------------------------------------------------------------
SmithField Foods, Inc., 7.625% Sr. Unsec. Sub. Nts., 2/15/08 400,000 360,000
--------------------------------------------------------------------------------------------------------------------------------
Sparkling Spring Water Group Ltd., 11.50% Sr. Sec. Sub. Nts., 11/15/07(3) 200,000 159,000
--------------------------------------------------------------------------------------------------------------------------------
Triarc Consumer Products Group LLC, 10.25% Sr. Sub. Nts., 2/15/09 200,000 194,500
----------
1,332,323
--------------------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--1.2%
Ball Corp.:
7.75% Sr. Unsec. Nts., 8/1/06 125,000 118,125
8.25% Sr. Unsec. Sub. Nts., 8/1/08 125,000 118,125
--------------------------------------------------------------------------------------------------------------------------------
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05 250,000 126,250
Oppenheimer Strategic Bond Fund/VA 11
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Forest Products/Containers (continued)
Doman Industries Ltd., 8.75% Sr. Nts., 3/15/04 $300,000 $ 234,000
--------------------------------------------------------------------------------------------------------------------------------
Fletcher Challenge Ltd., 14.50% Cv. Sub. Nts., 9/30/00(NZD) 60,000 28,603
--------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07 200,000 159,000
--------------------------------------------------------------------------------------------------------------------------------
Packaging Corp. of America, 9.625% Sr. Unsec. Sub. Nts., 4/1/09 750,000 748,125
--------------------------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 10.625% Second Priority Sr. Sec. Nts., 4/15/05 500,000 442,500
--------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp.:
10.625% Sr. Unsec. Nts., 8/1/07 750,000 731,250
10.875% Sr. Sub. Nts., 4/1/08 250,000 221,250
--------------------------------------------------------------------------------------------------------------------------------
SD Warren Co., 14% Unsec. Nts., 12/15/06(14) 417,149 463,035
--------------------------------------------------------------------------------------------------------------------------------
U.S. Timberlands Co. LP, 9.625% Sr. Nts., 11/15/07 150,000 132,750
----------
3,523,013
--------------------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--1.9%
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 275,000 251,625
--------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 120,000 127,800
--------------------------------------------------------------------------------------------------------------------------------
Florida Panthers Holdings, Inc., 9.875% Sr. Sub. Nts., 4/15/09 450,000 424,125
--------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 500,000 465,625
--------------------------------------------------------------------------------------------------------------------------------
Hollywood Casino Corp., 11.25% Sr. Sec. Nts., 5/1/07 250,000 256,875
--------------------------------------------------------------------------------------------------------------------------------
Hollywood Park, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 2/15/07 325,000 325,000
--------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 425,000 420,750
--------------------------------------------------------------------------------------------------------------------------------
Intrawest Corp., 9.75% Sr. Nts., 8/15/08 350,000 348,250
--------------------------------------------------------------------------------------------------------------------------------
Isle of Capri Casinos, Inc., 8.75% Sr. Unsec. Nts., 4/15/09 350,000 325,500
--------------------------------------------------------------------------------------------------------------------------------
Jupiters Ltd., 8.50% Sr. Unsec. Nts., 3/1/06(3) 400,000 375,000
--------------------------------------------------------------------------------------------------------------------------------
Meristar Hospitality Corp., 8.75% Sr. Unsec. Sub. Nts., 8/15/07 325,000 290,875
--------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority:
8.125% Sr. Nts., 1/1/06 300,000 286,500
8.75% Sr. Unsec. Sub. Nts., 1/1/09 700,000 668,500
--------------------------------------------------------------------------------------------------------------------------------
Premier Cruise Ltd., 11% Sr. Nts., 3/15/08(3)(8)(9) 250,000 60,000
--------------------------------------------------------------------------------------------------------------------------------
Premier Parks, Inc.:
0%/10% Sr. Disc. Nts., 4/1/08(12) 200,000 136,750
9.25% Sr. Nts., 4/1/06 100,000 94,500
9.75% Sr. Nts., 6/15/07 100,000 97,125
--------------------------------------------------------------------------------------------------------------------------------
Six Flags Entertainment Corp., 8.875% Sr. Nts., 4/1/06 200,000 192,000
--------------------------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.875% Sr. Sub. Nts., 7/1/10(5) 200,000 200,106
--------------------------------------------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City Funding, Inc., 11.25% First Mtg. Nts., 5/1/06 25,000 17,750
----------
5,364,656
--------------------------------------------------------------------------------------------------------------------------------
Healthcare--1.0%
Fresenius Medical Care Capital Trust II, 7.875% Nts., 2/1/08(3) 900,000 803,250
--------------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust III, 7.375% Nts., 2/1/08(DEM) 25,000 12,362
--------------------------------------------------------------------------------------------------------------------------------
ICN Pharmaceutical, Inc.:
8.75% Sr. Nts., 11/15/08(5) 200,000 198,000
9.75% Sr. Nts., 11/15/08(5) 350,000 346,500
--------------------------------------------------------------------------------------------------------------------------------
Kinetic Concepts, Inc., 9.625% Sr. Unsec. Sub. Nts., Series B, 11/1/07 250,000 193,750
--------------------------------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 9% Sr. Sub. Nts., 2/15/08 250,000 127,500
12 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Healthcare (continued)
Oxford Health Plans, Inc., 11% Sr. Unsec. Nts., 5/15/05 $ 150,000 $ 156,000
--------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.625% Sr. Sub. Nts., 1/15/07 650,000 624,000
--------------------------------------------------------------------------------------------------------------------------------
Unilab Finance Corp., 12.75% Sr. Sub. Nts., 10/1/09 300,000 310,500
----------
2,771,862
--------------------------------------------------------------------------------------------------------------------------------
Housing--0.7%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B, 12/15/06 50,000 41,875
--------------------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 400,000 350,000
--------------------------------------------------------------------------------------------------------------------------------
Del Webb Corp., 10.25% Sr. Unsec. Sub. Nts., 2/15/10 300,000 261,750
--------------------------------------------------------------------------------------------------------------------------------
Formica Corp., 10.875% Sr. Unsec. Sub. Nts., Series B, 3/1/09 425,000 333,625
--------------------------------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 300,000 273,000
--------------------------------------------------------------------------------------------------------------------------------
Nortek, Inc.:
9.125% Sr. Nts., Series B, 9/1/07 650,000 604,500
9.25% Sr. Nts., Series B, 3/15/07 150,000 141,000
----------
2,005,750
--------------------------------------------------------------------------------------------------------------------------------
Information Technology--1.2%
Amkor Technologies, Inc., 9.25% Sr. Unsec. Nts., 5/1/06 700,000 693,875
--------------------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts., Series B, 8/1/05 250,000 176,875
--------------------------------------------------------------------------------------------------------------------------------
Details, Inc., 10% Sr. Sub. Nts., Series B, 11/15/05 200,000 189,000
--------------------------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor International, Inc., 10.375% Sr. Unsec. Nts., 10/1/07 500,000 511,250
--------------------------------------------------------------------------------------------------------------------------------
Fisher Scientific International, Inc., 9% Sr. Unsec. Sub. Nts., 2/1/08 505,000 464,600
--------------------------------------------------------------------------------------------------------------------------------
Flextronics International Ltd., 9.875% Sr. Sub. Nts., 7/1/10(5) 500,000 506,250
--------------------------------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 6.50% Sub. Nts., 9/30/05(3) 1,000,000 840,000
----------
3,381,850
--------------------------------------------------------------------------------------------------------------------------------
Manufacturing--0.9%
Applied Power, Inc., 8.75% Sr. Sub. Nts., 4/1/09 175,000 182,000
--------------------------------------------------------------------------------------------------------------------------------
Blount, Inc., 13% Sr. Sub. Nts., 8/1/09 200,000 205,000
--------------------------------------------------------------------------------------------------------------------------------
Burke Industries, Inc., 10% Sr. Sub. Nts., 8/15/07(3) 150,000 53,625
--------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Industries, Inc., 9.375% Sr. Unsec. Sub. Nts., 3/1/08(3) 300,000 256,500
--------------------------------------------------------------------------------------------------------------------------------
Grove Worldwide LLC, 9.25% Sr. Sub. Nts., 5/1/08 200,000 77,000
--------------------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 150,000 115,500
--------------------------------------------------------------------------------------------------------------------------------
Insilco Corp., 12% Sr. Sub. Nts., 8/15/07 400,000 397,500
--------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B, 6/1/05 125,000 126,250
--------------------------------------------------------------------------------------------------------------------------------
Iron Mountain, Inc., 8.75% Sr. Sub. Nts., 9/30/09 150,000 138,750
--------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Unsec. Nts., Series D, 8/1/07 300,000 276,000
--------------------------------------------------------------------------------------------------------------------------------
Moll Industries, Inc., 10.50% Sr. Unsec. Sub. Nts., 7/1/08 200,000 36,000
--------------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Sr. Sub. Nts., Series B, 6/15/07 540,000 496,800
--------------------------------------------------------------------------------------------------------------------------------
Terex Corp.:
8.875% Sr. Unsec. Sub. Nts., 4/1/08(3) 50,000 45,250
8.875% Sr. Unsec. Sub. Nts., Series C, 4/1/08(3) 100,000 90,500
--------------------------------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(3) 50,000 47,000
----------
2,543,675
Oppenheimer Strategic Bond Fund/VA 13
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Broadcasting--0.9%
Chancellor Media Corp.:
8.125% Sr. Sub. Nts., Series B, 12/15/07 $ 200,000 $ 202,250
8.75% Sr. Unsec. Sub. Nts., Series B, 6/15/07 400,000 403,000
--------------------------------------------------------------------------------------------------------------------------------
Cumulus Media, Inc., 10.375% Sr. Unsec. Sub. Nts., 7/1/08 300,000 255,000
--------------------------------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Unsec. Sub. Nts., Series B, 3/15/09 600,000 550,500
--------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 50,000 51,375
--------------------------------------------------------------------------------------------------------------------------------
Radio One, Inc., 12% Sr. Sub. Nts., Series B, 5/15/04(4) 100,000 108,500
--------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 100,000 88,500
9% Sr. Unsec. Sub. Nts., 7/15/07 210,000 189,525
--------------------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., 9.625% Sr. Sub. Nts., 11/1/09 400,000 400,000
--------------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 275,000 254,375
9% Sr. Sub. Nts., Series B, 1/15/06 100,000 94,500
----------
2,597,525
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video--3.0%
Adelphia Communications Corp.:
7.875% Sr. Unsec. Nts., 5/1/09 350,000 296,625
8.375% Sr. Nts., Series B, 2/1/08 100,000 88,875
9.25% Sr. Nts., 10/1/02 385,000 381,631
9.375% Sr. Nts., 11/15/09 500,000 465,000
10.50% Sr. Unsec. Nts., Series B, 7/15/04 70,000 70,350
--------------------------------------------------------------------------------------------------------------------------------
Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.:
0%/9.92% Sr. Unsec. Disc. Nts., 4/1/11(12) 1,750,000 997,500
8.25% Sr. Unsec. Nts., 4/1/07 400,000 355,000
10% Sr. Nts., 4/1/09(5) 50,000 48,500
--------------------------------------------------------------------------------------------------------------------------------
Classic Cable, Inc., 10.50% Sr. Sub. Nts., 3/1/10 200,000 185,500
--------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07(12) 250,000 234,375
--------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 9.875% Sr. Sub. Nts., 5/15/06 250,000 256,250
--------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts., 12/15/05(12) 825,000 786,844
--------------------------------------------------------------------------------------------------------------------------------
Diamond Holdings plc, 9.125% Sr. Nts., 2/1/08 50,000 46,500
--------------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09 1,045,000 1,008,425
--------------------------------------------------------------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(3) 41,060 41,061
--------------------------------------------------------------------------------------------------------------------------------
EchoStar II Sinking Fund, 8.25% Bonds, 11/9/01(3) 58,948 58,949
--------------------------------------------------------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital, Inc., 9.75% Sr. Nts., 10/1/09 400,000 394,000
--------------------------------------------------------------------------------------------------------------------------------
NTL Communications Corp.:
0%/12.375% Sr. Unsec. Nts., Series B, 10/1/08(12) 85,000 54,400
9.875% Sr. Nts., 11/15/09(5)(EUR) 200,000 171,589
--------------------------------------------------------------------------------------------------------------------------------
NTL, Inc.:
0%/9.75% Sr. Deferred Coupon Nts., Series B, 4/1/08(12) 300,000 188,250
0%/9.75% Sr. Nts., Series B, 4/15/09(12)(GBP) 775,000 621,834
0%/10.75% Sr. Unsec. Unsub. Nts., Series B, 4/1/08(12)(GBP) 115,000 108,376
10% Sr. Nts., Series B, 2/15/07 100,000 95,000
--------------------------------------------------------------------------------------------------------------------------------
Rogers Cablesystems Ltd., 10% Second Priority Sr. Sec. Debs., 12/1/07 200,000 205,500
--------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07(CAD) 400,000 269,285
14 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Cable/Wireless Video (continued)
Telewest Communications plc:
0%/9.875% Sr. Nts., 4/15/09(5)(12)(GBP) $425,000 $ 350,657
0%/11% Sr. Disc. Debs., 10/1/07(12) 200,000 190,500
--------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., 0%/10.75% Sr. Disc. Nts., Series B, 2/15/08(12) 770,000 542,850
--------------------------------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV, 10.875% Sr. Unsec. Nts., Series B, 8/1/09 250,000 218,750
----------
8,732,376
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Diversified Media--1.1%
Amazon.com, Inc., 0%/10% Sr. Unsec. Disc. Nts., 5/1/08(12) 550,000 299,750
--------------------------------------------------------------------------------------------------------------------------------
AMC Entertainment, Inc., 9.50% Sr. Unsec. Sub. Nts., 2/1/11 500,000 227,500
--------------------------------------------------------------------------------------------------------------------------------
IPC Magazines Group plc:
0%/10.75% Bonds, 3/15/08(12)(GBP) 200,000 180,154
9.625% Bonds, 3/15/08(3)(GBP) 300,000 390,586
--------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 150,000 144,750
--------------------------------------------------------------------------------------------------------------------------------
Lamar Media Corp., 9.625% Sr. Unsec. Sub. Nts., 12/1/06 50,000 50,500
--------------------------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc.:
9.125% Sr. Unsec. Sub. Nts., 12/1/08 200,000 202,000
9.125% Sr. Unsec. Sub. Nts., Series B, 2/1/08 500,000 505,000
--------------------------------------------------------------------------------------------------------------------------------
Time Warner Entertainment Co. LP, 8.375% Sr. Debs., 3/15/23 300,000 307,277
--------------------------------------------------------------------------------------------------------------------------------
WRC Media, Inc./Weekly Reader Corp./Compass Learning Corp,
12.75% Sr. Sub. Nts., 11/15/09(5) 800,000 740,000
----------
3,047,517
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications--7.9%
360networks, Inc.:
12% Sr. Unsec. Sub. Nts., 8/1/09 100,000 95,000
13% Sr. Unsec. Nts., 5/1/08(5) 250,000 251,250
13% Sr. Unsec. Nts., 5/1/08(5)(EUR) 250,000 236,055
--------------------------------------------------------------------------------------------------------------------------------
Adelphia Business Solutions, Inc., 12% Sr. Sub. Nts., 11/1/07 400,000 378,000
--------------------------------------------------------------------------------------------------------------------------------
Colo.com, Units (each unit consists of $1,000 principal amount of 13.875% sr. nts.,
3/15/10 and one warrant to purchase 19.9718 shares of common stock at $.01 per share)(5)(13) 400,000 432,000
--------------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc:
0%/12% Sr. Unsec. Disc. Nts., 12/15/06(12) 200,000 177,250
7.625% Bonds, 7/31/08(DEM) 600,000 271,284
8.875% Sr. Nts., 11/30/07(DEM) 100,000 48,032
10.125% Sr. Nts., 11/30/07(GBP) 170,000 259,937
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)(12)(13) 200,000 254,750
--------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 12.75% Sr. Unsec. Nts., 12/15/07 80,000 84,800
--------------------------------------------------------------------------------------------------------------------------------
Covad Communications Group, Inc.:
0%/13.50% Sr. Disc. Nts., 3/15/08(12) 350,000 173,250
12% Sr. Nts., 2/15/10(5) 50,000 39,250
--------------------------------------------------------------------------------------------------------------------------------
Equinix, Inc., 13% Sr. Nts., 12/1/07(5) 200,000 190,750
--------------------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.:
10.75% Sr. Unsec. Sub. Nts., 12/15/09 850,000 824,500
11.25% Sr. Nts., 7/1/08 665,000 661,675
--------------------------------------------------------------------------------------------------------------------------------
FLAG Telecom Holdings Ltd.:
11.625% Sr. Nts., 3/30/10(5) 150,000 146,250
11.625% Sr. Nts., 3/30/10(3)(EUR) 150,000 132,287
Oppenheimer Strategic Bond Fund/VA 15
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
Focal Communications Corp.:
0%/12.125% Sr. Unsec. Disc. Nts., 2/15/08(12) $ 250,000 $170,000
11.875% Sr. Nts., 1/15/10(5) 375,000 378,750
--------------------------------------------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08 510,000 497,250
--------------------------------------------------------------------------------------------------------------------------------
Global Telesystems Group, Inc., 10.50% Sr. Unsec. Bonds, 12/1/06(5)(EUR) 250,000 192,619
--------------------------------------------------------------------------------------------------------------------------------
Globix Corp., 12.50% Sr. Unsec. Nts., 2/1/10 600,000 495,000
--------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(12) 195,000 162,338
--------------------------------------------------------------------------------------------------------------------------------
ICG Services, Inc., 0%/10% Sr. Exchangeable Unsec. Disc. Nts., 2/15/08(12) 115,000 60,375
--------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.:
0%/12.25% Sr. Disc. Nts., Series B, 3/1/09(12) 500,000 303,750
8.50% Sr. Nts., Series B, 1/15/08 250,000 231,250
8.60% Sr. Unsec. Nts., Series B, 6/1/08 225,000 209,250
8.875% Sr. Nts., 11/1/07 365,000 343,100
--------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts., Series B, 2/1/06(12) 500,000 463,750
--------------------------------------------------------------------------------------------------------------------------------
Jazztel plc, 13.25% Sr. Nts., 12/15/09(5)(EUR) 900,000 774,309
--------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., 0%/12.50% Sr. Unsec. Disc. Nts., 2/15/08(12) 600,000 285,000
--------------------------------------------------------------------------------------------------------------------------------
Level 3 Communications, Inc.:
0%/10.50% Sr. Disc. Nts., 12/1/08(12) 1,000,000 612,500
9.125% Sr. Unsec. Nts., 5/1/08 250,000 225,625
11% Sr. Nts., 3/15/08(5) 250,000 248,750
11.25% Sr. Nts., 3/15/10(5) 250,000 247,500
--------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc.:
8.125% Sr. Unsec. Nts., 2/15/09 725,000 656,125
8.375% Sr. Nts., 3/15/08 513,000 474,525
9.25% Sr. Nts., 7/15/07 75,000 72,750
--------------------------------------------------------------------------------------------------------------------------------
Metromedia Fiber Network, Inc.:
10% Sr. Nts., 12/15/09 550,000 544,500
10% Sr. Unsec. Nts., Series B, 11/15/08 400,000 396,000
--------------------------------------------------------------------------------------------------------------------------------
Metromedia International Group, Inc., 0%/10.50% Sr. Unsec. Disc. Nts., 9/30/07(12) 436,950 220,660
--------------------------------------------------------------------------------------------------------------------------------
MGC Communications, Inc./Mpower Communications Corp., 13% Sr. Nts., 4/1/10(5) 500,000 472,500
--------------------------------------------------------------------------------------------------------------------------------
Netia Holdings BV, 0%/11.25% Sr. Disc. Nts., Series B, 11/1/07(3)(12) 40,000 26,800
--------------------------------------------------------------------------------------------------------------------------------
Netia Holdings II BV, 13.50% Sr. Nts., 6/15/09(EUR) 175,000 168,594
--------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc.:
9% Sr. Nts., 3/15/08 250,000 230,000
9.625% Sr. Nts., 10/1/07 350,000 331,625
10.75% Sr. Unsec. Nts., 11/15/08 300,000 297,000
10.75% Sr. Unsec. Nts., 6/1/09 310,000 306,900
--------------------------------------------------------------------------------------------------------------------------------
NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/10(5) 350,000 253,750
--------------------------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05(8)(9) 100,000 75,500
--------------------------------------------------------------------------------------------------------------------------------
PSINet, Inc.:
10% Sr. Unsec. Nts., Series B, 2/15/05(11) 700,000 647,500
10.50% Sr. Nts., 12/1/06(5)(EUR) 100,000 89,389
--------------------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc.:
0%/8.29% Sr. Unsec. Disc. Nts., Series B, 2/1/08(12) 365,000 288,530
0%/9.47% Sr. Disc. Nts., 10/15/07(12) 495,000 416,569
--------------------------------------------------------------------------------------------------------------------------------
RCN Corp., 10.125% Sr. Unsec. Nts., 1/15/10 800,000 670,000
--------------------------------------------------------------------------------------------------------------------------------
Rhythms NetConnections, Inc., 14% Sr. Unsec. Nts., 2/15/10(5) 500,000 365,000
16 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Telecommunications (continued)
RSL Communications plc:
0%/10% Bonds, 3/15/08(3)(12)(DEM) $100,000 $ 22,546
10.50% Sr. Unsec. Nts., 11/5/08 250,000 173,750
12.875% Sr. Unsec. Nts., 3/1/10(5) 600,000 453,000
--------------------------------------------------------------------------------------------------------------------------------
Shaw Communications, Inc., 8.54% Debs., 9/30/27(CAD) 340,000 216,852
--------------------------------------------------------------------------------------------------------------------------------
Tele1 Europe BV, 11.875% Sr. Nts., 12/1/09(5)(EUR) 500,000 470,912
--------------------------------------------------------------------------------------------------------------------------------
Teligent, Inc., 11.50% Sr. Nts., 12/1/07 500,000 390,000
--------------------------------------------------------------------------------------------------------------------------------
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 100,000 97,250
--------------------------------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV:
0%/13.375% Sr. Unsec. Disc. Nts., Series B, 11/1/09(12) 500,000 245,000
0%/13.75% Sr. Unsec. Disc. Nts., Series B, 2/1/10(12) 200,000 95,000
10.875% Sr. Nts., 8/1/09(EUR) 750,000 629,081
11.25% Sr. Nts., 11/1/09(5)(EUR) 250,000 212,390
--------------------------------------------------------------------------------------------------------------------------------
Verio, Inc.:
10.375% Sr. Unsec. Nts., 4/1/05 225,000 237,375
11.25% Sr. Unsec. Nts., 12/1/08 500,000 563,750
13.50% Sr. Unsec. Nts., 6/15/04 65,000 73,694
--------------------------------------------------------------------------------------------------------------------------------
Versatel Telecom International NV, 11.25% Sr. Nts., 3/30/10(5)(EUR) 600,000 537,056
--------------------------------------------------------------------------------------------------------------------------------
Viatel, Inc., 11.25% Sr. Sec. Nts., 4/15/08 500,000 372,500
--------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc., 0%/13.25% Sr. Unsec. Disc. Nts., Series B, 3/1/05(12) 500,000 283,125
--------------------------------------------------------------------------------------------------------------------------------
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/10(5) 400,000 375,000
-----------
23,009,934
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications--3.6%
Arch Communications, Inc., 12.75% Sr. Nts., 7/1/07 100,000 77,000
--------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA,14.50% Sr. Sec. Nts., 3/15/04 90,000 72,338
--------------------------------------------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/14% Sr. Unsec. Disc. Nts., 10/1/07(8)(9)(12) 400,000 31,500
--------------------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc., 0%/14.75% Sr. Disc. Nts., 12/15/05(12) 25,000 25,938
--------------------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp.:
0%/10.375% Sr. Disc. Nts., 5/15/11(12) 500,000 308,125
0%/10.625% Sr. Unsec. Disc. Nts., 11/15/07(12) 500,000 372,500
10.75% Sr. Nts., 8/1/11 200,000 203,750
--------------------------------------------------------------------------------------------------------------------------------
CTI Holdings SA, 0%/11.50% Sr. Deferred Coupon Nts., 4/15/08(12) 175,000 101,063
--------------------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc., 11.25% Sr. Nts., 7/15/10(5) 825,000 826,031
--------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01(8)(9) 210,000 --
--------------------------------------------------------------------------------------------------------------------------------
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)(8)(9)(13) 100,000 58,500
--------------------------------------------------------------------------------------------------------------------------------
IPCS, Inc., Units (each unit consists of $1,000 principal amount of 0%/14% sr. disc. nts.,
7/15/10 and one warrant to purchase 2,971,830 shares of common stock)(1)(5)(12)(13) 300,000 157,500
--------------------------------------------------------------------------------------------------------------------------------
Leap Wireless International, Inc., Units (each unit consists of 12.50% sr. nts.,
4/15/10 and one warrant to purchase 5.146 shares of common stock)(5)(13) 275,000 243,375
--------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts., Series B, 10/15/07(12)(CAD) 300,000 134,136
0%/14% Sr. Disc. Nts., Series B, 6/1/06(12) 300,000 278,250
--------------------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts., 6/1/06(3)(12) 410,000 350,550
Oppenheimer Strategic Bond Fund/VA 17
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Media/Entertainment: Wireless Communications (continued)
Nextel Communications, Inc.:
0%/9.95% Sr. Disc. Nts., 2/15/08(12) $245,000 $ 180,688
0%/10.65% Sr. Disc. Nts., 9/15/07(12) 800,000 632,000
--------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.50% Sr. Nts., 9/15/09(5) 735,000 790,125
11.625% Sr. Nts., 8/15/06 630,000 683,550
11.625% Sr. Nts., Series A, 8/15/06 400,000 434,000
--------------------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04(3) 200,000 157,000
--------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(3)(12) 675,000 280,125
--------------------------------------------------------------------------------------------------------------------------------
Pinnacle Holdings, Inc., 0%/10% Sr. Unsec. Disc. Nts., 3/15/08(12) 325,000 225,875
--------------------------------------------------------------------------------------------------------------------------------
Polska Telefoniz Cyfrowa International Financial II SA, 11.25% Sr. Sub. Nts., 12/1/09(3)(EUR) 200,000 196,273
--------------------------------------------------------------------------------------------------------------------------------
Price Communications Wireless, Inc.:
9.125% Sr. Sec. Nts., Series B, 12/15/06 250,000 253,750
11.75% Sr. Sub. Nts., 7/15/07 275,000 297,000
--------------------------------------------------------------------------------------------------------------------------------
PTC International Finance BV, 0%/10.75% Gtd. Sr. Unsec. Sub. Bonds, 7/1/07(12) 134,000 95,475
--------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co., 13% Disc. Nts., 5/31/09(5)(14) 118,366 116,362
--------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 300,000 292,500
--------------------------------------------------------------------------------------------------------------------------------
Satelites Mexicanos SA, 10.125% Sr. Nts., 11/1/04 300,000 201,750
--------------------------------------------------------------------------------------------------------------------------------
SBA Communications Corp., 0%/12% Sr. Unsec. Disc. Nts., 3/1/08(12) 700,000 497,000
--------------------------------------------------------------------------------------------------------------------------------
Spectrasite Holdings, Inc.:
0%/12% Sr. Disc. Nts., 7/15/08(12) 500,000 350,000
10.75% Sr. Nts., 3/15/10(5) 600,000 601,500
--------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 0%/12.50% Sr. Disc. Nts., 8/15/06(12) 65,000 62,563
--------------------------------------------------------------------------------------------------------------------------------
VoiceStream Wireless Corp., 10.375% Sr. Nts., 11/15/09(5) 900,000 936,000
-----------
10,524,092
--------------------------------------------------------------------------------------------------------------------------------
Metals/Minerals--1.1%
AEI Resources, Inc., 11.50% Sr. Sub. Nts., 12/15/06(5) 250,000 26,250
--------------------------------------------------------------------------------------------------------------------------------
AK Steel Corp.:
7.875% Sr. Unsec. Nts., 2/15/09 500,000 446,250
9.125% Sr. Nts., 12/15/06 300,000 289,500
--------------------------------------------------------------------------------------------------------------------------------
California Steel Industries Corp., 8.50% Sr. Unsec. Nts., Series B, 4/1/09 200,000 184,000
--------------------------------------------------------------------------------------------------------------------------------
Centaur Mining & Exploration Ltd., 11% Sr. Nts., 12/1/07 100,000 80,500
--------------------------------------------------------------------------------------------------------------------------------
Great Lakes Carbon Corp., 10.25% Sr. Sub. Nts., Series B, 5/15/08 500,000 437,500
--------------------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc., 10.75% Sr. Sub. Nts., 2/1/08 50,000 41,250
--------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 250,000 228,750
--------------------------------------------------------------------------------------------------------------------------------
Metallurg Holdings, Inc., 0%/12.75% Sr. Disc. Nts., 7/15/08(12) 450,000 117,000
--------------------------------------------------------------------------------------------------------------------------------
Metallurg, Inc., 11% Sr. Nts., 12/1/07 700,000 556,500
--------------------------------------------------------------------------------------------------------------------------------
National Steel Corp., 9.875% First Mtg. Bonds, Series D, 3/1/09 500,000 420,000
--------------------------------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 500,000 466,250
--------------------------------------------------------------------------------------------------------------------------------
Republic Technologies International LLC/RTI Capital Corp., 13.75% Sr. Sec. Nts., 7/15/09 200,000 36,250
-----------
3,330,000
18 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Retail--0.1%
Central Termica Guemes, 12% Bonds, 11/26/01(3)(8)(9) $100,000 $ 5,250
--------------------------------------------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 9.125% Sr. Unsec. Sub. Nts., 5/1/08(3) 200,000 115,000
--------------------------------------------------------------------------------------------------------------------------------
Finlay Enterprises, Inc., 9% Debs., 5/1/08 100,000 88,500
--------------------------------------------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 8.375% Sr. Nts., 5/1/08 100,000 89,500
----------
298,250
--------------------------------------------------------------------------------------------------------------------------------
Service--1.5%
Allied Waste North America, Inc.:
7.875% Sr. Unsec. Nts., Series B, 1/1/09 435,000 373,013
10% Sr. Unsec. Sub. Nts., Series B, 8/1/09 750,000 630,000
--------------------------------------------------------------------------------------------------------------------------------
American Plumbing & Mechanical, Inc., 11.625% Gtd. Sr. Sub. Nts., Series B, 10/15/08 425,000 398,438
--------------------------------------------------------------------------------------------------------------------------------
AP Holdings, Inc., 0%/11.25% Sr. Disc. Nts., 3/15/08(12) 50,000 5,250
--------------------------------------------------------------------------------------------------------------------------------
Apcoa, Inc., 9.25% Sr. Unsec. Sub. Nts., 3/15/08 100,000 35,625
--------------------------------------------------------------------------------------------------------------------------------
Charles River Laboratories, Inc., 13.50% Sr. Sub. Nts., 10/1/09(5) 350,000 363,125
--------------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 350,000 267,750
--------------------------------------------------------------------------------------------------------------------------------
IT Group, Inc., 11.25% Sr. Unsec. Sub. Nts., Series B, 4/1/09 200,000 180,000
--------------------------------------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 350,000 323,750
--------------------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos, 9.50% Bonds, 9/15/27 245,000 248,675
--------------------------------------------------------------------------------------------------------------------------------
Protection One, Inc., 7.375% Sr. Unsec. Nts., 8/15/05 400,000 300,000
--------------------------------------------------------------------------------------------------------------------------------
Safety-Kleen Corp., 9.25% Sr. Unsec. Nts., 5/15/09(8)(9) 400,000 10,000
--------------------------------------------------------------------------------------------------------------------------------
United Rentals, Inc., 9.25% Sr. Unsec. Sub. Nts., Series B, 1/15/09 250,000 226,875
--------------------------------------------------------------------------------------------------------------------------------
URS Corp., 12.25% Sr. Sub. Nts., Series B, 5/1/09 500,000 515,000
--------------------------------------------------------------------------------------------------------------------------------
US Unwired, Inc., 0%/13.375% Sr. Unsec. Sub. Disc. Nts., Series B, 11/1/09(12) 900,000 492,750
----------
4,370,251
--------------------------------------------------------------------------------------------------------------------------------
Transportation--2.5%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 450,000 433,125
--------------------------------------------------------------------------------------------------------------------------------
Amtran, Inc.:
9.625% Nts., 12/15/05(3) 100,000 87,750
10.50% Sr. Nts., 8/1/04 450,000 417,375
--------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
9.25% Sr. Nts., 4/15/08 300,000 286,500
9.375% Sr. Unsec. Nts., 11/15/06 300,000 289,500
10.75% Sr. Nts., 8/1/05 125,000 127,656
--------------------------------------------------------------------------------------------------------------------------------
Budget Group, Inc., 9.125% Sr. Unsec. Nts., 4/1/06 500,000 322,500
--------------------------------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 75,000 19,125
--------------------------------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Sr. Unsec. Sub. Nts., 4/15/06 250,000 241,875
--------------------------------------------------------------------------------------------------------------------------------
Dura Operating Corp., 9% Sr. Sub. Nts., Series B, 5/1/09(EUR) 400,000 368,102
--------------------------------------------------------------------------------------------------------------------------------
Federal-Mogul Corp., 7.875% Nts., 7/1/10 300,000 209,382
--------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04(GBP) 540,000 819,672
--------------------------------------------------------------------------------------------------------------------------------
Great Lakes Dredge & Dock Corp., 11.25% Sr. Unsec. Sub. Nts., 8/15/08 500,000 501,875
--------------------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc.:
9.125% Sr. Sub. Nts., 7/15/07 50,000 45,000
11% Sr. Sub. Nts., 7/15/06 225,000 222,188
--------------------------------------------------------------------------------------------------------------------------------
HDA Parts System, Inc., 12% Sr. Sub. Nts., 8/1/05(3) 150,000 101,250
--------------------------------------------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 200,000 193,000
Oppenheimer Strategic Bond Fund/VA 19
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
--------------------------------------------------------------------------------------------------------------------------------
Transportation (continued)
Millenium Seacarriers, Inc., Units (each unit consists of $1,000 principal amount
of 11.65% first priority ship mtg. sr. sec. nts., 7/15/05 and one warrant to purchase
five shares of common stock)(3)(4)(13) $ 250,000 $ 131,250
--------------------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc, 10.50% First Priority Ship Mtg. Nts., 6/30/07(5) 175,000 70,875
--------------------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., Series D, 6/15/07 1,300,000 1,137,500
--------------------------------------------------------------------------------------------------------------------------------
Tenneco, Inc., 11.625% Sr. Unsec. Sub. Nts., Series B, 10/15/09 400,000 358,000
--------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 430,000 316,050
--------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 13.375% Sr. Disc. Nts., Series B, 12/15/03 300,000 298,875
--------------------------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(5) 180,752 96,251
------------
7,094,676
--------------------------------------------------------------------------------------------------------------------------------
Utility--0.3%
Azurix Corp., 10.75% Sr. Nts., 2/15/10(5) 250,000 241,875
--------------------------------------------------------------------------------------------------------------------------------
Calpine Corp., 8.75% Sr. Nts., 7/15/07 230,000 224,538
--------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11 250,000 262,936
--------------------------------------------------------------------------------------------------------------------------------
Funding Corp./Beaver Valley Funding Corp., 9% Second Lease Obligation Bonds, 6/1/17 199,000 199,000
------------
928,349
------------
Total Corporate Bonds and Notes (Cost $116,838,102) 102,618,389
Shares
================================================================================================================================
Preferred Stocks--2.0%
--------------------------------------------------------------------------------------------------------------------------------
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.(3)(14) 3,192 26,334
--------------------------------------------------------------------------------------------------------------------------------
BankUnited Capital Trust, 10.25% Capital Securities, Non-Vtg. 100,000 85,000
--------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A(3)(14) 24,210 605,250
--------------------------------------------------------------------------------------------------------------------------------
Clark USA, Inc., 11.50% Cum. Sr. Exchangeable, Non-Vtg.(14) 64 12,960
--------------------------------------------------------------------------------------------------------------------------------
Concentric Network Corp., 13.50% Sr. Redeemable Exchangeable, Series B, Non-Vtg.(14) 259 256,086
--------------------------------------------------------------------------------------------------------------------------------
Contour Energy Co., $2.625 Cum. Cv.(9) 1,800 11,925
--------------------------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv., Series B, Non-Vtg.(9) 46,000 779,125
--------------------------------------------------------------------------------------------------------------------------------
Crown American Realty Trust, 11% Cum., Series A, Non-Vtg. 2,000 75,500
--------------------------------------------------------------------------------------------------------------------------------
Doane Products Co., 14.25% Exchangeable, Non-Vtg.(3)(9) 5,000 191,250
--------------------------------------------------------------------------------------------------------------------------------
Dobson Communications Corp.:
12.25% Sr. Exchangeable, Non-Vtg.(14) 261 252,517
13% Sr. Exchangeable, Non-Vtg.(14) 340 352,750
--------------------------------------------------------------------------------------------------------------------------------
e.spire Communications, Inc., 12.75% Jr. Redeemable, Non-Vtg.(14) 197 38,661
--------------------------------------------------------------------------------------------------------------------------------
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.(3)(9) 5,000 126,250
--------------------------------------------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr., Series C, Non-Vtg.(3) 4,491 11,227
--------------------------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank, l2% Non-Cum. Exchangeable, Series A(3) 20 300
--------------------------------------------------------------------------------------------------------------------------------
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.(14) 145 126,150
--------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% Cv., Series E, Non-Vtg. 2,100 55,650
--------------------------------------------------------------------------------------------------------------------------------
International Utility Structures, Inc.:
13%, Non-Vtg.(5)(14) 12 8,670
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)(3)(13)(14) 50 44,250
--------------------------------------------------------------------------------------------------------------------------------
Nebco Evans Holdings, Inc., 11.25% Sr. Redeemable Exchangeable, Non-Vtg.(14) 6,061 758
--------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 11.125% Exchangeable, Series E, Non-Vtg.(14) 127 123,508
--------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc. 14% Cum., Non-Vtg.(14) 20,384 1,054,872
20 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Shares Note 1
================================================================================================================================
Preferred Stocks (continued)
--------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 13.25% Cum. Jr. Exchangeable, Non-Vtg.(14) 25 $ 240,625
--------------------------------------------------------------------------------------------------------------------------------
PRIMEDIA, Inc.:
8.625% Exchangeable, Series H, Non-Vtg. 8,000 690,000
9.20% Exchangeable, Series F, Non-Vtg. 1,000 90,750
--------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 11.375% Cum. Sr., Series B, Non-Vtg.(14) 505 475,963
--------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc.:
13.75% Cum. Nts., Series B, Non-Vtg.(14) 10 42,250
13.75% Exchangeable(5) 2 8,450
--------------------------------------------------------------------------------------------------------------------------------
Star Gas Partners LP 187 2,875
----------
Total Preferred Stocks (Cost $8,190,885) 5,789,906
================================================================================================================================
Common Stocks--0.9%
--------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA(5)(9) 24,390 21,341
--------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp.(3)(9) 26,119 176,315
--------------------------------------------------------------------------------------------------------------------------------
Coinstar, Inc.(9) 700 7,044
--------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc.(3)(9) 5,786 116,443
--------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc.(3)(9) 90 47,700
--------------------------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc.(9) 2,404 43,272
--------------------------------------------------------------------------------------------------------------------------------
Grant Prideco, Inc.(9) 7,581 189,525
--------------------------------------------------------------------------------------------------------------------------------
Horizon Group Properties, Inc.(9) 358 1,186
--------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(9) 362 10,770
--------------------------------------------------------------------------------------------------------------------------------
Optel, Inc.(3)(9) 210 2
--------------------------------------------------------------------------------------------------------------------------------
Premier Holdings Ltd.(3)(9) 18,514 50,913
--------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp.(9) 33,471 788,660
--------------------------------------------------------------------------------------------------------------------------------
SF Holdings Group, Inc., Cl. C(3)(9) 370 4
--------------------------------------------------------------------------------------------------------------------------------
UnitedGlobalCom, Inc., Cl. A(9) 1,814 84,805
--------------------------------------------------------------------------------------------------------------------------------
Vail Resorts, Inc.(9) 15,500 252,844
--------------------------------------------------------------------------------------------------------------------------------
Viatel, Inc.(9) 1,189 33,961
--------------------------------------------------------------------------------------------------------------------------------
Weatherford International, Inc.(9) 7,581 301,819
--------------------------------------------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc.(9) 6,273 9,409
--------------------------------------------------------------------------------------------------------------------------------
WorldCom, Inc.(9) 10,327 473,751
--------------------------------------------------------------------------------------------------------------------------------
WRC Media Corp.(3)(9) 1,082 11
----------
Total Common Stocks (Cost $1,180,894) 2,609,775
Oppenheimer Strategic Bond Fund/VA 21
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Units Note 1
================================================================================================================================
Rights, Warrants and Certificates--0.1%
--------------------------------------------------------------------------------------------------------------------------------
Adelphia Business Solutions, Inc. Wts., Exp. 4/15/01(3) 60 $ 16,507
--------------------------------------------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 6/16/07(3) 16,000 4,800
--------------------------------------------------------------------------------------------------------------------------------
Charles River Laboratories, Inc. Wts., Exp. 10/1/09(3) 350 3,500
--------------------------------------------------------------------------------------------------------------------------------
Clearnet Communications, Inc. Wts., Exp. 9/15/05 165 3,076
--------------------------------------------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/15/03(3) 200 4,025
--------------------------------------------------------------------------------------------------------------------------------
Covergent Communications, Inc. Wts., Exp. 4/1/08(3) 400 9,000
--------------------------------------------------------------------------------------------------------------------------------
Equinix, Inc. Wts., Exp. 12/1/07 200 20,000
--------------------------------------------------------------------------------------------------------------------------------
FirstWorld Communications, Inc. Wts., Exp. 4/15/08(5) 175 14,197
--------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. Wts., Exp. 7/15/05(3) 7,500 75
--------------------------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/1/01 2,404 2,704
--------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/23/03 1,668 --
Exp. 1/23/03(3) 953 10
Exp. 5/1/05(3) 2,181 --
Exp. 9/1/04(3) 2,800 --
--------------------------------------------------------------------------------------------------------------------------------
HF Holdings, Inc. Wts., Exp. 9/27/00(3) 530 53
--------------------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 825 11,636
--------------------------------------------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/31/02 200 --
--------------------------------------------------------------------------------------------------------------------------------
Insilco Corp. Wts., Exp. 8/15/07(3) 270 --
--------------------------------------------------------------------------------------------------------------------------------
KMC Telecom Holdings, Inc. Wts., Exp. 4/15/08(3) 725 2,221
--------------------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08(3) 200 20
--------------------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07(3) 150 1,781
--------------------------------------------------------------------------------------------------------------------------------
Mexico Value Rts., Exp. 6/30/03 688,000 --
--------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/1/06(5) 600 48,300
--------------------------------------------------------------------------------------------------------------------------------
Millenium Seacarriers, Inc. Wts., Exp. 7/15/05(3) 250 62
--------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., Wts., Exp. 12/15/07(3) 100 47,013
--------------------------------------------------------------------------------------------------------------------------------
Occidente y Caribe Celular SA Wts., Exp. 3/15/04(3) 800 12,100
--------------------------------------------------------------------------------------------------------------------------------
PLD Telekom, Inc. Wts.:
Exp. 3/31/03(3) 300 15
Exp. 6/1/06(3) 300 15
--------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co. Wts., Exp. 5/31/04(3) 36,431 364
--------------------------------------------------------------------------------------------------------------------------------
Republic Technologies International LLC Wts., Exp. 7/15/09(3) 200 2
--------------------------------------------------------------------------------------------------------------------------------
WAM!NET, Inc. Wts., Exp. 3/1/05(3) 1,500 17,438
--------
Total Rights, Warrants and Certificates (Cost $26,603) 218,914
22 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Investments (Unaudited) (Continued)
Principal Market Value
Amount Note 1
================================================================================================================================
Structured Instruments--2.8%
--------------------------------------------------------------------------------------------------------------------------------
Alpha Wind 2000-A Ltd. Nts.:
11.38%, 5/23/01(3)(4) $ 250,000 $ 250,000
13.82%, 5/23/01(3)(4) 400,000 400,000
--------------------------------------------------------------------------------------------------------------------------------
Citibank NA (Nassau Branch), Mexican Peso Linked Nts.:
18.70%, 3/3/03(MXN) 7,625,000 785,468
19.75%, 6/27/02(MXN) 3,900,000 402,777
20.90%, 6/23/03(MXN) 3,845,000 394,011
21.30%, 6/23/03(MXN) 1,920,000 198,173
--------------------------------------------------------------------------------------------------------------------------------
Citibank NA, Brazilian Real Linked Nts.:
24.10%, 5/26/03(BRR) 560,000 315,481
24.25%, 5/23/03(BRR) 847,081 477,821
--------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch), Russian OFZ Linked Nts.:
Series 25030, Zero Coupon, 47.09%, 12/15/01(3)(7)(RUR) 950,000 18,201
Series 27001, 24.936%, 2/6/02(3)(4)(RUR) 956,950 22,916
Series 27001, 24.936%, 2/6/02(3)(4)(RUR) 277,180 6,638
Series 27002, 24.936%, 5/22/02(3)(4)(RUR) 1,201,670 27,822
Series 27002, 24.936%, 5/22/02(3)(4)(RUR) 277,180 6,418
Series 27003, 24.936%, 6/5/02(3)(4)(RUR) 2,903,990 67,287
Series 27003, 24.936%, 6/5/02(3)(4)(RUR) 277,180 6,422
Series 27003, 24.936%, 6/5/02(3)(4)(RUR) 3,150,400 72,997
Series 27004, 24.936%, 9/1/02(3)(4)(RUR) 277,180 6,206
Series 27004, 24.936%, 9/18/02(3)(4)(RUR) 3,297,310 73,828
Series 27005, 24.936%, 10/9/02(3)(4)(RUR) 12,522,980 270,357
Series 27005, 24.936%, 10/9/02(3)(4)(RUR) 277,180 5,984
Series 27006, 24.936%, 1/22/03(3)(4)(RUR) 4,037,590 84,233
Series 27006, 24.936%, 2/6/02(3)(4)(RUR) 277,180 5,783
Series 27007, 24.936%, 2/5/03(3)(4)(RUR) 5,630,800 118,153
Series 27007, 24.936%, 2/5/03(3)(4)(RUR) 277,180 5,816
Series 27008, 24.936%, 5/21/03(3)(4)(RUR) 3,315,240 67,297
Series 27008, 24.936%, 5/21/03(3)(4)(RUR) 277,180 5,627
Series 27009, 24.936%, 6/4/03(3)(4)(RUR) 3,783,430 76,329
Series 27009, 24.936%, 6/4/03(3)(4)(RUR) 277,180 5,592
Series 27009, 24.936%, 6/4/03(3)(4)(RUR) 2,561,555 51,678
Series 27010, 24.936%, 9/17/03(3)(4)(RUR) 2,047,150 40,987
Series 27010, 24.936%, 9/17/03(3)(4)(RUR) 277,180 5,550
Series 27011, 24.936%, 10/8/03(3)(4)(RUR) 1,412,340 26,984
Series 27011, 24.936%, 10/8/03(3)(4)(RUR) 277,180 5,296
Series 28001, 24.936%, 1/21/04(3)(4)(RUR) 277,180 5,170
--------------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Turkey Treasury Bill Linked Nts.:
9.26%, 8/30/00 600,000 603,660
9.26%, 11/30/00 600,000 603,720
Zero Coupon, 16.38%, 6/20/03(7)(MXN) 9,079,070 585,207
--------------------------------------------------------------------------------------------------------------------------------
ING Barings LLC, Zero Coupon USD Russian Equity Linked Nts., 4/19/01 3,600 252,180
--------------------------------------------------------------------------------------------------------------------------------
Russia (Government of) Federal Loan Bonds, Series 27010, 24.936%, 9/17/03(3)(4)(RUR) 3,590,420 71,885
--------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc. Brazil Credit Linked Nts., Series 2, 6%, 4/2/03 310,000 269,344
--------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney, Inc. Turkey Treasury Bill Linked Nts., Zero Coupon, 10.60%, 8/11/00(7) 1,180,000 1,185,157
--------------------------------------------------------------------------------------------------------------------------------
Standard Chartered Bank, Indian Rupee Linked Nts., 14.55%, 9/20/00(INR) 8,687,250 198,901
----------
Total Structured Instruments (Cost $8,290,698) 8,083,356
Oppenheimer Strategic Bond Fund/VA 23
<PAGE>
Statement of Investments (Unaudited) (Continued)
Market Value
Date Strike Contracts Note 1
================================================================================================================================
Call Options Purchased--0.0%
--------------------------------------------------------------------------------------------------------------------------------
Australian Dollar Call 7/3/00 0.63(AUD) 666,000 $ --
--------------------------------------------------------------------------------------------------------------------------------
Mexican Nuevo Peso Call(3) 9/27/00 9.90(MXN) 1,560,000 28,080
------------
Total Call Options Purchased (Cost $18,803) 28,080
Principal
Amount
================================================================================================================================
Repurchase Agreements--3.3%
--------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Banc One Capital Markets, Inc., 6.55%, dated 6/30/00,
to be repurchased at $9,664,272 on 7/3/00, collateralized by U.S. Treasury Nts.,
5%-7.50%, 8/31/00-5/15/08, with a value of $7,286,346 and U.S. Treasury Bonds,
5.25%-12%, 8/15/03-11/15/28, with a value of $2,573,937 (Cost $9,659,000) $9,659,000 9,659,000
--------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $315,059,247) 102.4% 296,366,083
--------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (2.4) (6,910,953)
---------- ------------
Net Assets 100.0% $289,455,130
========== ============
</TABLE>
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<S> <C> <C>
ARP -- Argentine Peso FRF -- French Franc JPY -- Japanese Yen
AUD -- Australian Dollar GBP -- British Pound Sterling MXN -- Mexican Nuevo Peso
BRR -- Brazilian Real GRD -- Greek Drachma NOK -- Norwegian Krone
CAD -- Canadian Dollar HUF -- Hungarian Forint NZD -- New Zealand Dollar
DEM -- German Mark IDR -- Indonesian Rupiah RUR -- Russian Ruble
EUR -- Euro INR -- Indian Rupee SEK -- Swedish Krona
</TABLE>
1. When-issued security to be delivered and settled after June 30, 2000.
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. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
4. Represents the current interest rate for a variable or increasing rate
security.
5. 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 $17,628,251 or 6.09% of the Fund's net
assets as of June 30, 2000.
6. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
7. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
8. Issuer is in default.
9. Non-income-producing security.
10. 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 Date Price Received Note 1
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Venezuela (Republic of) Bonds,
9.25%, 9/15/27 Call 285,000 9/7/00 68.000% $4,104 $3,491
--------------------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Disc. Bonds,
Series DL, 7.875%, 12/18/07 Call 250,000 7/17/00 81.813 3,575 2,635
------ ------
$7,679 $6,126
====== ======
</TABLE>
11. Securities with an aggregate market value of $747,240 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
12. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
13. 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.
14. Interest or dividend is paid in kind.
See accompanying Notes to Financial Statements.
24 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statement of Assets and Liabilities June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
================================================================================================
Assets
Investments, at value (cost $315,059,247)--see accompanying statement $296,366,083
------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 30,786
------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 6,133,470
Interest and principal paydowns 4,956,503
Shares of beneficial interest sold 208,743
Daily variation on futures contracts 4,834
Other 2,167
------------
Total assets 307,702,586
================================================================================================
Liabilities
Bank overdraft 34,457
------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 133,598
------------------------------------------------------------------------------------------------
Options written, at value (premiums received $7,679)--see accompanying statement 6,126
------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $9,940,877 purchased on a when-issued basis) 17,116,775
Shares of beneficial interest redeemed 868,590
Closed foreign currency contracts 50,660
Trustees' compensation 240
Transfer and shareholder servicing agent fees 168
Other 36,842
------------
Total liabilities 18,247,456
================================================================================================
Net Assets $289,455,130
============
================================================================================================
Composition of Net Assets
Paid-in capital $310,658,309
------------------------------------------------------------------------------------------------
Undistributed net investment income 12,858,889
------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (15,488,306)
------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (18,573,762)
------------
Net assets--applicable to 62,234,969 shares of beneficial interest outstanding $289,455,130
============
================================================================================================
Net Asset Value, Redemption Price Per Share and Offering Price Per Share $4.65
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Strategic Bond Fund/VA 25
<PAGE>
Statement of Operations For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
======================================================================================
Investment Income
Interest (net of foreign withholding taxes of $35,116) $13,911,944
--------------------------------------------------------------------------------------
Dividends 365,830
-----------
Total income 14,277,774
======================================================================================
Expenses
Management fees 1,047,060
--------------------------------------------------------------------------------------
Custodian fees and expenses 30,665
--------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 1,034
--------------------------------------------------------------------------------------
Trustees' compensation 608
--------------------------------------------------------------------------------------
Other 31,749
-----------
Total expenses 1,111,116
Less expenses paid indirectly (7,851)
-----------
Net expenses 1,103,265
======================================================================================
Net Investment Income 13,174,509
======================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) (3,014,548)
Closing of futures contracts (111,180)
Closing and expiration of option contracts written 68,825
Foreign currency transactions (4,272,899)
-----------
Net realized loss (7,329,802)
--------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (3,220,598)
Translation of assets and liabilities denominated in foreign currencies 2,352,724
-----------
Net change (867,874)
-----------
Net realized and unrealized loss (8,197,676)
======================================================================================
Net Increase in Net Assets Resulting from Operations $ 4,976,833
===========
</TABLE>
See accompanying Notes to Financial Statements.
26 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31,
(Unaudited) 1999
================================================================================================================
<S> <C> <C>
Operations
Net investment income $ 13,174,509 $ 25,290,430
----------------------------------------------------------------------------------------------------------------
Net realized loss (7,329,802) (8,363,827)
----------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation (867,874) (8,793,283)
------------ ------------
Net increase in net assets resulting from operations 4,976,833 8,133,320
================================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income (23,001,014) (15,617,496)
================================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions 25,393,693 10,369,398
================================================================================================================
Net Assets
Total increase 7,369,512 2,885,222
----------------------------------------------------------------------------------------------------------------
Beginning of period 282,085,618 279,200,396
------------ ------------
End of period (including undistributed net investment
income of $12,858,889 and $22,685,394, respectively) $289,455,130 $282,085,618
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Strategic Bond Fund/VA 27
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
2000 (Unaudited) 1999 1998 1997 1996 1995
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $4.97 $5.12 $5.12 $5.09 $4.91 $4.60
-----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .21 .45 .39 .39 .38 .38
Net realized and unrealized gain (loss) (.12) (.31) (.24) .04 .19 .30
-----------------------------------------------------------------------------------------------------------------------------
Total income from investment operations .09 .14 .15 .43 .57 .68
-----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.41) (.29) (.09) (.39) (.39) (.37)
Distributions from net realized gain -- -- (.06) (.01) -- --
-----------------------------------------------------------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (.41) (.29) (.15) (.40) (.39) (.37)
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.65 $4.97 $5.12 $5.12 $5.09 $4.91
===== ===== ===== ===== ===== =====
=============================================================================================================================
Total Return, at Net Asset Value(1) 1.76% 2.83% 2.90% 8.71% 12.07% 15.33%
=============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $289,455 $282,086 $279,200 $207,839 $118,716 $60,098
-----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $284,154 $278,668 $250,227 $159,934 $ 82,604 $37,698
-----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 9.32% 9.08% 8.17% 8.23% 8.48% 9.32%
Expenses 0.78% 0.78% 0.80%(3) 0.83%(3) 0.85%(3) 0.85%(3)
-----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57% 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 of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
28 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited)
================================================================================
1. Significant Accounting Policies
Oppenheimer Strategic Bond Fund/VA (the Fund) is a separate series of
Oppenheimer Variable Account Funds (the Trust), an open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek a high level of current
income principally derived from interest on debt securities and seeks to enhance
that income by writing covered call options on debt securities. The Trust's
investment advisor is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value.)
--------------------------------------------------------------------------------
Structured Notes. The Fund invests in foreign currency-linked structured notes
whose market value and redemption price are linked to foreign currency exchange
rates. The structured notes are leveraged, which increases the notes' volatility
relative to the principal of the security. Fluctuations in value of these
securities are recorded as unrealized gains and losses in the accompanying
financial statements. As of June 30, 2000, the market value of these securities
comprised 2.99% of the Fund's net assets and resulted in realized and unrealized
losses in the current period of $4,958,709. 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 when-issued basis can take place a
month or more after the trade date. Normally the settlement date occurs within
six months after the trade date; however, the Fund may, from time to time,
purchase securities whose settlement date extends 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 June 30, 2000, the Fund had entered into net outstanding
when-issued or forward commitments of $9,940,877.
In connection with its ability to purchase securities on a when-issued,
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.
--------------------------------------------------------------------------------
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 June 30, 2000, securities with an
aggregate market value of $2,003,098, representing 0.69% of the Fund's net
assets, were in default.
Oppenheimer Strategic Bond Fund/VA 29
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
1. Significant Accounting Policies (continued)
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 Dividends and 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 dividends and distributions made during the
fiscal 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 dividends and 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.
--------------------------------------------------------------------------------
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
accreted 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.
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.
30 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
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>
Six Months Ended June 30, 2000 Year Ended December 31, 1999
------------------------------ -----------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 11,187,973 $ 53,197,648 13,301,419 $ 65,503,594
Dividends and/or distributions reinvested 4,957,115 23,001,014 3,226,755 15,617,496
Redeemed (10,638,175) (50,804,969) (14,369,937) (70,751,692)
----------- ------------ ----------- ------------
Net increase 5,506,913 $ 25,393,693 2,158,237 $ 10,369,398
=========== ============ =========== ============
</TABLE>
================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended June 30, 2000, were
$158,356,322 and $157,323,203, respectively.
================================================================================
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust. 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 six months ended June 30, 2000 was an annualized
rate of 0.74%, before any waiver by the Manager.
--------------------------------------------------------------------------------
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.
Oppenheimer Strategic Bond Fund/VA 31
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
5. Foreign Currency Contracts (continued)
As of June 30, 2000, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized Unrealized
Contract Description Dates Amounts (000s) June 30, 2000 Appreciation Depreciation
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Contracts to Purchase
Japanese Yen (JPY) 8/7/00 201,900,000 (JPY) $1,922,209 $30,785 $ --
------- --------
Contracts to Sell
British Pound Sterling (GBP) 7/12/00-7/24/00 2,315,000 (GBP) 3,505,953 -- 32,676
Euro (EUR) 7/28/00-10/6/00 3,315,000 (EUR) 3,186,124 -- 82,707
Japanese Yen (JPY) 9/5/00 92,600,000 (JPY) 886,069 -- 18,215
------- --------
-- 133,598
------- --------
Total Unrealized Appreciation and Depreciation $30,785 $133,598
======= ========
</TABLE>
================================================================================
6. Futures Contracts
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a particular price on a stipulated future
date at a negotiated price. Futures contracts are traded on a commodity
exchange. The Fund may buy and sell futures contracts that relate to
broadly-based securities indices "financial futures" or debt securities
"interest rate futures" in order to gain exposure to or to seek to protect
against changes in market value of stock and bonds or interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and decreases in market value of portfolio securities. The
Fund may also purchase futures contracts to gain exposure to 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 recognizes 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.
32 Oppenheimer Strategic Bond Fund/VA
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
6. Futures Contracts (continued)
As of June 30, 2000, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Date Contracts June 30, 2000 (Depreciation)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Purchase
U.S. Long Bonds 9/20/00 18 $ 1,752,188 $ 30,094
U.S. Treasury Nts., 10 yr. 9/20/00 125 12,310,547 333,008
---------
363,102
---------
Contracts to Sell
U.K. Long Gilt 9/27/00 3 516,573 (4,950)
U.S. Treasury Nts., 5 yr. 9/20/00 56 5,544,875 (143,938)
---------
(148,888)
---------
$ 214,214
=========
</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. Realized gains and losses
are reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Oppenheimer Strategic Bond Fund/VA 33
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
7. Option Activity(continued)
Written option activity for the six months ended June 30, 2000, 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, 1999 144,000,000 $ 14,910 3,347,205 $ 55,420
Options written 2,345 123,349 660,000 2,914
Options closed or expired -- -- (3,347,205) (55,420)
Options exercised (144,001,810) (130,580) (660,000) (2,914)
------------ --------- ---------- --------
Options outstanding as of
June 30, 2000 535 $ 7,679 -- $ --
============ ========= ========== ========
</TABLE>
================================================================================
8. Illiquid or Restricted Securities
As of June 30, 2000, investments in securities 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 June 30, 2000, was $16,827,026,
which represents 5.81% of the Fund's net assets, of which $1,058,509 is
considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation Per
Acquisition Cost Per Unit as of,
Security Dates Unit June 30, 2000
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds
TAGHeuer International SA, 12% Sr. Sub. Nts., 12/15/05 12/8/95 100.00% 107.64%
Stocks and Warrants
CGA Group Ltd. Wts., Exp. 6/16/07 6/17/97 $ -- $ 0.30
--------------------------------------------------------------------------------------------------------------------
CGA Group Ltd., Series A 6/17/97 25.00 25.00
--------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp. 6/27/00 5.83 6.75
--------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc. 4/18/00 15.25 20.13
--------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc. 4/6/00 530.00 530.00
--------------------------------------------------------------------------------------------------------------------
Real Time Data Wts., Exp. 5/31/04 6/30/99 0.01 0.01
</TABLE>
34 Oppenheimer Strategic Bond Fund/VA
<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, Trustee and President
William L. Armstrong, Trustee
Robert G. Avis, Trustee
William A. Baker, Trustee
George C. Bowen, 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
David P. Negri, Vice President
Arthur P. Steinmetz, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
====================================================================================================================================
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.
The financial statements included herein have been taken from the records of the Fund
without examination of those records by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer Strategic Bond Fund/VA. For
other material information concerning the Fund, see its prospectus. This report must be
preceded or accompanied by the Fund's prospectus, the separate account prospectus, and
current standardized average annual total returns for the separate account being offered.
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>
(C)Copyright 2000 OppenheimerFunds, Inc. All rights reserved.
Oppenheimer Strategic Bond Fund/VA 35
