485BPOS

Registration No. 2-93177

File No. 811-4108

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933[X]

Pre-Effective Amendment No.      [ ]
Post-Effective Amendment No. 54     [X]
 

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940     [X]

     Amendment No. 50

Oppenheimer Variable Account Funds

(Exact Name of Registrant as Specified in Charter)

6803 South Tucson Way, Centennial, Colorado 80112-3924

(Address of Principal Executive Offices)     (Zip Code)

Registrant’s Telephone Number, including Area Code: (303) 768-3200

Robert G. Zack, Esq.
OppenheimerFunds, Inc.

Two World Financial Center, 225 Liberty Street, New York, New York 10281-1008

(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):

     [X ]     immediately upon filing pursuant to paragraph (b)
     [ ]     on _______________ pursuant to paragraph (b)
     [ ]     60 days after filing pursuant to paragraph (a)(1)
     [ ]     on _______________ pursuant to paragraph (a)(1)
     [ ]     75 days after filing pursuant to paragraph (a)(2)
     [ ]     on _______________ pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

     [ ]      this post-effective amendment designates a new effective date for a previously filed
post-effective amendment.

Oppenheimer

Balanced Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Balanced Fund/VA is a mutual fund that seeks high total investment return, which includes current income and capital appreciation. The Fund allocates its investments among equity and debt securities.
 
Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus and explains how to select shares of the Fund as an investment under that insurance product and which share class you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Balanced Fund/VA

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
5	Main Risks of Investing in the Fund
8	The Fund's Past Performance
10	Fees and Expenses of the Fund
11	About the Fund's Investments
21	How the Fund is Managed
	INVESTING IN THE FUND
24	How to Buy and Sell Shares
30	Dividends, Capital Gains and Taxes
31	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks high total investment return, which includes current income and capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES.

What are "Equity Securities"? Equity securities are securities that represent an ownership interest in a company. They include common stock, preferred stock and securities convertible into common stock.           What are "Debt Securities"? Debt securities are securities representing money borrowed by the issuer that must be repaid, specifying the amount of principal, the interest or discount rate, and the time or times at which payments are due.

The Fund buys a variety of different types of securities to seek its objective. The Fund may invest in equity securities and debt securities of both domestic and foreign issuers and in issuers in different capitalization ranges.  Normally, the Fund does not expect to invest more than 35% of its total assets in foreign securities, which may include issuers in both developed and emerging markets.  The Fund may not invest more than 10% of its net assets in governments and companies in emerging markets.  The relative amounts of equity and debt securities the Fund holds may vary from time to time. The Fund's investments generally include:
• Equity securities: The Fund will normally invest in stocks and other equity securities, primarily common stocks of U.S. and foreign companies.
      • Debt securities: The Fund will normally invest in fixed-income securities, such as bonds and notes. The debt securities the Fund may buy include securities issued by U.S. and foreign companies, securities issued or guaranteed by the U.S. Government and its agencies and instrumentalities, mortgage-related securities (including private issuer mortgage-backed securities), debt obligations of foreign governments, and money market instruments.  The Fund may not invest more than 20% of its net assets in foreign debt securities. The Fund may invest without limit in lower-grade, high-yield debt securities, sometimes referred to as "junk bonds."
The Fund may also invest in derivative instruments, including: options, futures, forward contracts, swaps and "structured" notes. It may also invest in "zero-coupon" and "stripped" securities that may pay only the interest or only the principal portion of a debt obligation. These are derivative securities that have prices that may go up or down in response to interest rate changes more than other types of debt securities. The Fund may buy foreign currency but only in connection with the purchase and sale of foreign securities and not for speculation.

HOW THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL. In selecting securities to buy, the portfolio managers use different investment styles to seek broad diversification across asset classes. They normally maintain a mix of stocks, debt securities, cash and cash equivalents, although the Fund is not required to allocate its assets in any fixed proportion. The Fund's mix of equity securities, debt securities, cash and cash equivalents will change over time as the portfolio managers seek relative opportunities in different asset classes.

     In seeking diversification of the Fund's portfolio over asset classes, issuers, and economies, the portfolio managers consider overall and relative economic conditions in U.S. and foreign markets.  At times the Fund may focus more on investing for capital appreciation with less emphasis on seeking income. At other times, for example when stock markets are less stable, the Fund might have greater relative emphasis on income-seeking investments, such as government securities and money market instruments.
Equity Securities. In selecting equity securities to buy, the portfolio managers mainly look for potential capital appreciation. The portfolio managers employ both "growth" and "value" styles in selecting stocks.


What is "Value Investing"? Value investing uses fundamental analysis to seek companies whose intrinsic value is greater than the current price of their securities.

Value investing seeks stocks that are undervalued in the market by various measures such as the stock's price/earnings ratio. They employ fundamental analysis of a company's financial statements and management structure, operations and product development, as well as the industry of which the company is part. A security may be undervalued because the market is not aware of the issuer's intrinsic value, does not yet recognize its future potential, or the issuer may be temporarily out of favor. The Fund seeks to realize gains in the prices of those securities when other investors recognize their real or prospective worth.


What are "Growth Companies"? Companies whose earnings and stock prices are expected to increase at a faster rate than the overall market are considered "growth companies."

Growth investing seeks stocks that the managers believe have possibilities for increases in stock price because of strong earnings growth compared to the market, the development of new products or services or other favorable economic factors. The portfolio managers also consider the effect of worldwide trends on the growth of particular business sectors and looks for companies that may benefit from those trends.
Debt Securities. In selecting debt securities to buy, the portfolio managers look for both income and for total return. The Fund has no requirements as to the maturity of the debt securities it can buy, and may invest in securities that have short-, medium- or long-term maturities. The average maturity of the Fund's portfolio can be expected to change over time. The Fund may invest in debt securities that pay interest at fixed or floating rates. The income from debt securities, including money market investments can also help the Fund preserve principal when stock markets are volatile.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking high total return from their investment over the long term, from a fund employing different investment styles in allocating its assets among a variety of types of securities. Investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund with significant investments in stocks and foreign securities. The Fund is intended to be a long-term investment, not a short-term trading vehicle and may be appropriate for longer-term investors. Because the Fund's income will fluctuate, it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

MAIN RISKS OF INVESTING IN EQUITY SECURITIES. Stocks and other equity securities fluctuate in price in response to changes in equity markets in general. Stock markets may experience great short-term volatility and may fall sharply at times. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets. The prices of equity securities generally do not all move in the same direction at the same time; for example, "growth" stocks may perform well under circumstances in which "value" stocks in general have fallen. Other factors may affect the price of an individual company's securities. Those factors include poor earnings reports, loss of customers, litigation, or changes in regulations affecting the company or its industry.

At times, the Fund may emphasize investments in a particular industry or sector. To the extent that the Fund increases its emphasis on stocks in a particular industry, the value of its investments may fluctuate more in response to events affecting that industry, such as changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others. To the extent that the Fund emphasizes investments in securities of other particular types, for example foreign stocks or stocks of small- or mid-sized companies, its portfolio value may fluctuate more in response to events affecting the market for those types of securities.

MAIN RISKS OF INVESTING IN DEBT SECURITIES. Debt securities (also referred to as "fixed-income securities") may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or to repay principal, the Fund's income and share value will usually be reduced. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can reduce the market value of the issuer's securities. The values of debt securities are also subject to change when prevailing interest rates change. When prevailing interest rates fall, the values of already-issued debt securities generally rise. When prevailing interest rates rise, the values of already-issued debt securities generally fall, and they may sell at a discount from their face amount or from the amount the Fund paid for them. Interest rate changes generally have a greater effect on longer-term debt securities than on shorter-term debt securities. When interest rates fall, the issuers of debt securities may prepay principal more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes may have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

Although some of the securities that the Fund invests in are issued or guaranteed by the U.S. government or it agencies or instrumentalities, the Fund also invests in securities issued by private issuers, which do not have any government guarantees. While the Fund's investments in U.S. Government securities may be subject to little credit risk, the Fund's other investments in debt securities, particularly high-yield lower-grade debt securities and mortgage-backed securities, are subject to risks of default.

        Special Risks of Lower-Grade Securities. Lower-grade securities may be subject to wider market fluctuations and greater risk of loss of income and principal than investment-grade securities. While investment-grade securities are subject to risks of non-payment of interest and principal, in general those risks are greater for higher-yielding lower-grade bonds, whether rated or unrated. The market for lower-grade securities may be less liquid and therefore they may be harder to sell at an acceptable price, especially during times of market volatility or decline.

FIXED INCOME MARKET RISKS. Recent developments relating to subprime mortgages have adversely affected fixed-income securities markets in the United States, Europe and elsewhere. The values of many types of debt securities have been reduced, including debt securities that are not related to mortgage loans. These developments have reduced the willingness of some lenders to extend credit and have made it more difficult for borrowers to obtain financing on attractive terms or at all. In addition, broker-dealers and other market participants have been less willing to make a market in some types of debt instruments, which has impacted the liquidity of those instruments. These developments may also have a negative effect on the broader economy. There is a risk that the lack of liquidity or other adverse credit market conditions may hamper the Fund's ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

RISKS OF VALUE INVESTING. Value investing entails the risk that the market might not recognize that the selected securities are undervalued and the prices of those securities might not appreciate as anticipated. Value investing has gone in and out of favor during past market cycles and is likely to continue to do so. Although "value" companies may outperform "growth" companies at certain times, "growth" companies may outperform "value" companies during other periods. During those periods the Fund may underperform funds that only use a "growth" investment strategy.

RISKS OF GROWTH INVESTING. If a growth company's earnings or stock price fails to increase as anticipated, or if its business plans do not produce the expected results, its securities may decline sharply. Growth companies may be newer or smaller companies that may experience greater stock price fluctuations and risks of loss than larger, more established companies. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Therefore, they may not pay any dividends for some time. Growth investing has gone in and out of favor during past market cycles and is likely to continue to do so. During periods when growth investing is out of favor or when markets are unstable, it may be more difficult to sell growth company securities at an acceptable price. Growth stocks may also be more volatile than other securities because of investor speculation.

RISKS OF FOREIGN INVESTING. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, expropriation or nationalization of a company's assets, or other political and economic factors.

     Special Risks of Developing and Emerging Markets. Developing or emerging market countries generally have less developed securities markets or exchanges. Securities of companies in developing or emerging market countries may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of companies in countries with more mature markets. Settlements of trades may be subject to greater delays so that the proceeds of a sale of a security may not be received on a timely basis. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Developing or emerging market countries may have less developed legal and accounting systems, and investments in those countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of company assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Their governments may also be more unstable than the governments of more developed countries. The value of the currency of a developing or emerging market country may fluctuate more than the currencies of countries with more mature markets. Investments in companies in developing or emerging market countries may be considered speculative.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Fund and the Board believe to be their fair value, may help deter those activities.

ASSET ALLOCATION RISK. Because the Fund typically invests in a combination of securities, the Fund's ability to achieve its investment objective depends largely upon selecting the best mix of investments. There is the risk that the Manager's evaluations and assumptions regarding the equity and fixed-income markets' prospects may be incorrect in view of actual market conditions. During periods of rapidly rising prices the Fund might not achieve growth in its share prices to the same degree as funds focusing only on stocks. The Fund's investments in stocks may make it more difficult for the Manager to preserve principal during periods of stock market volatility. The Fund's use of a value or growth style might not be successful when the particular strategy is out of favor.

                            _________________________________

There is no assurance that the Fund will achieve its investment objective. Equity securities in domestic and foreign markets may be more volatile than other investments. The Fund's income-oriented investments may help to cushion the Fund's total return from changes in stock prices, but fixed-income securities have their own risks and changes in their values can also affect the Fund's share prices. The Fund is generally less aggressive than funds that focus only on stocks but may be more aggressive than funds that focus only on investment-grade debt securities.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 12.53% (2nd qtr 03) and the lowest return before taxes for a calendar quarter was -30.11% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to two broad-based market indices. Because the Fund's Service Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 2-9-87)	(43.47%)	(5.70%)	0.16%
Service Shares (inception 5-1-02)	(43.62%)	(5.94%)	(2.73%)
S&P 500 Index	(36.99%)	(2.19%)	(1.38%)1
(reflects no deductions for fees, expenses or taxes)			(0.73%)2
Barclays Capital Aggregate Bond Index	5.24%	4.65%	5.63%1
(reflects no deductions for fees, expenses or taxes)			5.31%2

1. Ten Years
2. From 4-30-02

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the S&P 500 Index, an unmanaged index of equity securities that is a measure of the general domestic stock market, and the Barclays Capital Aggregate Bond Index, an unmanaged index of U.S. corporate, government and mortgage-backed securities that is a measure of the domestic bond market. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes. The Fund's investments vary from those in the indices.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. Shareholders pay certain expenses directly, such as sales charges. The Fund pays other expenses for management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares
Management Fees1	0.73%	0.73%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses2	0.13%	0.12%
Total Annual OperatingExpenses3	0.86%	1.10%

1. Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive the advisory fee by 0.08% of the Fund's average daily net assets.  This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.
2.  "Other expenses" include transfer agent fees, custodial fees, and accounting and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.03% for both Non-Service and Service Shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.    
3. The Manager has voluntarily agreed to waive a portion of the advisory fee and/or reimburse certain expenses so that the total annual operating expenses of the Fund will not exceed 0.92% of average annual net assets for Service Shares and 0.67% of average annual net assets for Non-Service Shares. After all of the waivers and credits in effect during that period, the actual "Total Annual Operating Expenses," as percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008, were 0.67% for Non-Service Shares and 0.92% for Service Shares. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.59% for Non-Service Shares and 0.84% for Service Shares during the fiscal year ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$88	$276	$479	$1,065
Service Shares	$113	$352	$609	$1,347

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

EQUITY SECURITIES. Equity securities include common stock, preferred stock, rights, warrants and certain debt securities that are convertible into common stock. Equity investments may be exchange-traded or over-the-counter securities.

Common Stock.  Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy. Common stocks may be exchange-traded or over-the-counter securities. Over-the-counter securities may be less liquid than exchange-traded securities.

DEBT SECURITIES. The Fund may invest in debt securities, including securities issued or guaranteed by the U.S. Government, or its agencies and instrumentalities, or foreign sovereigns, and foreign and domestic corporate bonds, notes and debentures. The Fund may select debt securities for their income possibilities or to help cushion fluctuations in the value of its portfolio.

Debt securities may be subject to the following risks:

• Interest Rate Risk. The values of debt securities usually change when prevailing interest rates change. When interest rates rise, the values of outstanding debt securities generally fall, and those securities may sell at a discount from their face amount. When interest rates fall, the values of already-issued debt securities generally rise. However, when interest rates fall, the Fund's investments in new securities may be at lower yields and may reduce the Fund's income. The values of longer-term debt securities usually change more than the values of shorter-term debt securities when interest rates change.

       The Fund may also buy zero-coupon or "stripped" securities, which may be particularly sensitive to interest rate changes.  Interest rate changes may have different effects on the values of mortgage-related securities because of prepayment and extension risks.

• Prepayment Risk. Certain fixed-income securities are subject to the risk of unanticipated prepayment. That is the risk that when interest rates fall, borrowers will prepay the loans that underlie these securities more quickly than expected, causing the issuer of the security to repay the principal prior to the security's expected maturity. The Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If the Fund buys those securities at a premium, accelerated prepayments on those securities could cause it to lose a portion of its principal investment represented by the premium. The impact of prepayments on the price of a security may be difficult to predict and may increase the security's price volatility. Interest-only and principal-only securities are especially sensitive to interest rate changes, which can affect not only their prices but can also change the income flows and prepayment assumptions about those investments.

• Extension Risk. If interest rates rise rapidly, repayments of principal on certain debt securities may occur at a slower rate than expected and the expected maturity of those securities could lengthen as a result. Those securities generally have a greater potential for loss when prevailing interest rates rise, which could cause their value to fall sharply.

• Credit Risk. Debt securities are also subject to credit risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. Securities directly issued by the U.S. Treasury and certain agencies that are backed by the full faith and credit of the U.S. Government have little credit risk, and other U.S. Government securities generally have lower credit risks, while securities issued by private issuers or certain foreign governments generally have greater credit risks. If an issuer fails to pay interest, the Fund's income might be reduced, and if an issuer fails to repay principal, the values of the security might fall. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. A downgrade in an issuer's credit rating or other adverse news about an issuer can reduce the market value of that issuer's securities.

     Credit Quality. The Fund may invest in securities that are rated or unrated. Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner. They do not reflect any judgment of market risk. Rating agencies might not always change their credit rating of an issuer in a timely manner to reflect events that could affect the issuer's ability to make timely payments on its obligations. In selecting securities for the Fund's portfolio and evaluating their income potential and credit risk, the Fund does not rely solely on ratings by rating organizations but evaluates business and economic factors affecting issuers as well.

"Investment grade" refers to securities that are rated in one of the top four rating categories by nationally-recognized statistical rating organizations such as Moody's Investors Service or Standard & Poor's Ratings Services or that have similar ratings from other nationally-recognized statistical rating organizations. The Fund may also consider unrated securities to be "investment grade" if they are judged to be of comparable quality to securities rated investment-grade by those organizations. Lower-grade securities are those that are rated below "Baa" by Moody's, that are rated below "BBB" by Standard & Poor's, that have similar ratings from other rating organizations or that are unrated securities judged to be of similar quality. Below investment grade securities may be considered speculative. The ratings definitions of the principal ratings organizations are included in Appendix B to the Statement of Additional Information.

The Fund may invest in investment-grade securities. The Fund may also invest without limit in securities that are rated below investment-grade and at times may invest substantial amounts of its assets in those securities to seek higher income as part of its investment goal. The Fund can invest in securities rated as low as "C" or "D" or which are in default at the time the Fund buys them.

U.S. Government Securities. The Fund invests in securities issued or guaranteed by the U.S. Government or its agencies and instrumentalities. Some of those securities are directly issued by the U.S. Treasury and are backed by the full faith and credit of the U.S. Government. "Full faith and credit" means that the taxing power of the U.S. Government is pledged to the payment of interest and repayment of principal on a security.

Some securities issued by U.S. Government agencies, such as Government National Mortgage Corporation pass-through mortgage obligations ("Ginnie Maes"), are also backed by the full faith and credit of the U.S. Government. Others are supported by the right of the agency to borrow an amount from the U.S. Government (for example, "Fannie Mae" bonds issued by Federal National Mortgage Corporation and "Freddie Mac" obligations issued by Federal Home Loan Mortgage Corporation). Others are supported only by the credit of the agency (for example obligations issued by the Federal Home Loan Banks). On September 7, 2008, the Federal Housing Finance Agency, a new independent regulatory agency, placed the Federal National Mortgage Corporation and Federal Home Loan Mortgage Corporation into conservatorship and the U.S. Department of Treasury made a commitment to purchase mortgage-backed securities from the companies through December 2009. The U.S. Department of Treasury also entered into a new secured lending credit facility with those companies and a Preferred Stock Purchase Agreement. Under those agreements, the Treasury will ensure that each company maintains a positive net worth. 

     U.S. Treasury Securities. Treasury securities are backed by the full faith and credit of the United States for payment of interest and repayment of principal and have little credit risk. Some of the securities that are issued directly by the U.S. Treasury are: Treasury bills (having maturities of one year or less when issued), Treasury notes (having maturities of from one to ten years when issued), Treasury bonds (having maturities of more than ten years when issued) and Treasury Inflation-Protection Securities ("TIPS"). While U.S. Treasury securities have little credit risk, they are subject to price fluctuations from changes in interest rates prior to their maturity.

     Mortgage-Related Government Securities. The Fund can buy interests in pools of residential or commercial mortgages, in the form of "pass-through" mortgage securities. They may be issued or guaranteed by the U.S. Government, or its agencies and instrumentalities. Mortgage-related U.S. Government securities may be issued in different series, each having different interest rates and maturities.

Mortgage-related securities that are U.S. Government securities have collateral to secure payment of interest and principal. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a U.S. Government agency. The prices and yields of mortgage-related securities are determined, in part, by assumptions about the rate of payments of the underlying mortgages and are subject to prepayment and extension risks.

Private-Issuer Mortgage-Related Securities. Mortgage-related securities issued by private issuers are not U.S. Government securities, and are subject to greater credit risks than mortgage-related securities that are U.S. Government securities. Primarily these include multi-class debt or pass-through certificates secured by mortgage loans, which may be issued by banks, savings and loans, mortgage bankers and other non-governmental issuers. Private-issuer mortgage-backed securities may include loans on residential or commercial properties. 

Mortgage-related securities issued by private issuers are not U.S. Government securities, which makes them subject to greater credit risks than U.S. Government securities. Private issuer mortgage-backed securities are subject to the credit risks of the issuers, as well as to interest rate risks, although in some cases they may be supported by insurance or guarantees. The prices and yields of private issuer mortgage-related securities are also subject to prepayment and extension risk. The market for private-issuer mortgage-backed securities may be volatile at times and may be less liquid than the markets for other types of securities.

Forward Rolls. The Fund can enter into "forward roll" transactions (also referred to as "mortgage dollar rolls") with respect to mortgage-related securities. In this type of transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security at a later date at a set price. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. The Fund will bear the risk that the market value of the securities might decline below the price at which the Fund is obligated to repurchase them or that the counterparty might default in its obligations.

Asset-Backed Securities. Asset-backed securities are fractional interests in pools of loans, other assets or receivables. They are issued by trusts or other special purpose vehicles and are collateralized by the loans, other assets or receivables that make up the pool. The trust or other issuer passes the income from the underlying pool to the investor. Neither the Fund nor the Manager selects the loans or other assets that are included in the pools or the collateral backing those pools. Asset-backed securities are subject to interest rate risk and credit risk. Certain asset-backed securities are subject to prepayment and extension risk.

Risks of Small- and Mid-Sized Companies. Small- and mid-sized companies may be either established or newer companies, including "unseasoned" companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain than larger companies, they also involve greater risk of loss. They may be more sensitive to changes in a company's earnings expectations and may experience more abrupt and erratic price movements. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-sized companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since small- and mid-sized companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Smaller companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. Securities of small, unseasoned companies may be particularly volatile, especially in the short term, and may have very limited liquidity. It may take a substantial period of time to realize a gain on an investment in a small- or mid-sized company, if any gain is realized at all.

The Fund currently focuses on securities of issuers that have mid-to-large capitalizations. They may pay higher dividends than small capitalization companies and their stock prices have tended to be less volatile than securities of smaller issuers. However, the Fund can buy stocks of issuers in all capitalization ranges. At times the Manager might increase the relative emphasis of securities of issuers in a particular capitalization range if the Manager believes they offer greater opportunities for total return.

The Fund limits its investments in securities of small, unseasoned issuers to not more than 5% of its net assets.

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

     Options, futures, forward contracts, swaps, "structured" notes, and certain mortgage-related securities are some of the types of derivatives the Fund can use. The Fund may also use other types of derivatives that are consistent with its investment strategies or for hedging purposes.

      "Structured" Notes. "Structured" notes are specially-designed derivative debt investments. The terms of the instrument may be "structured" by the purchaser and the issuer of the note. Payments of principal or interest on these notes may be linked to the value of an index (such as a currency or securities index), an individual security, or a commodity. The value of these notes will normally rise or fall in response to the changes in the performance of the underlying security, index or commodity.

Structured notes are subject to interest rate risk and are also subject to credit risk with respect both to the borrower (referred to as "counter-party" risk) and to the issuer of the underlying investment. If the underlying investment or index does not perform as anticipated, the Fund might receive less interest than the stated coupon payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult for the Fund to value them or sell them at an acceptable price.

     Credit Default Swaps. A credit default swap enables an investor to buy or sell protection against a credit event, such as an issuer's failure to make timely payments of interest or principal, bankruptcy or restructuring. The terms of the instrument are generally negotiated by the Fund and the swap counterparty. A swap may be embedded within a structured note or other derivative instrument.

Generally, if the Fund buys credit protection using a credit default swap, the Fund will make fixed payments to the counterparty and if a credit event occurs, the Fund will deliver the defaulted bonds underlying the swap to the swap counterparty and the counterparty will pay the Fund par for the bonds. If the Fund sells credit protection using a credit default swap, generally the Fund will receive fixed payments from the counterparty and if a credit event occurs, the Fund will pay the swap counterparty par for the defaulted bonds underlying the swap and the swap counterparty will deliver the bonds to the Fund. If the credit default swap is on a basket of securities, the notional value of the swap is reduced by the par amount of the defaulted bonds, and the fixed payments are then made on the reduced notional value.

Credit default swaps are subject to credit risk on the underlying investment and to counterparty credit risk. If the counterparty fails to meet its obligations the Fund may lose money. Credit default swaps are also subject to the risk that the Fund will not properly assess the cost of the underlying investment. If the Fund is selling credit protection, there is a risk that a credit event will occur and that the Fund will have to pay par value on defaulted bonds. If the Fund is buying credit protection, there is a risk that no credit event will occur and the Fund will receive no benefit for the premium paid.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, however, the hedge might be unsuccessful or could reduce the Fund's return or create a loss.

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. Derivative transactions may require the payment of premiums and can increase portfolio turnover. For example, if a call option sold by the Fund were exercised on an investment that had increased in value above the call price, the Fund would be required to sell the investment at the call price and would not be able to realize any additional profit. Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Manager expects it to. As a result, the Fund could realize little or no income or lose principal from the investment, or a hedge might be unsuccessful.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

DIVERSIFICATION AND CONCENTRATION.  The Fund is a diversified fund. It attempts to reduce its exposure to the risks of individual stocks by diversifying its investments across a broad number of different companies. The Fund will not concentrate more than 25% of its total assets in issuers in any one industry.  At times, however, the Fund may emphasize investments in some industries more than others.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Other Equity Securities.  In addition to common stocks, the Fund can invest in other equity or "equity equivalents" securities such as preferred stocks or convertible securities. Preferred stocks have a set dividend rate and rank ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. A convertible security is one that can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible securities offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. The Fund considers some convertible securities to be "equity equivalents" because they are convertible into common stock. The credit ratings of those convertible securities generally have less impact on the investment decision, although they are still subject to credit and interest rate risk.

Zero-Coupon and Stripped Securities. Some of the debt securities the Fund may invest in are "zero-coupon" or "stripped" securities. Zero-coupon securities pay no interest prior to their maturity date or another specified date in the future but are issued at a discount from their face value. Stripped securities are the separate income or principal components of a debt security, such as Treasury securities whose coupons have been stripped by a Federal Reserve Bank. One component might receive all the interest and the other all the principal payments.

Interest rate changes generally cause greater price fluctuations in zero-coupon securities or the "principal-only" components of stripped securities than in interest-paying securities of the same or similar maturities. The Fund may be required to pay a dividend of the imputed income on a zero-coupon or principal-only security at a time when it has not actually received the income. The "interest-only" components of stripped securities are also especially sensitive to changes in prevailing interest rates. The market for some of these securities may be limited, making it difficult for the Fund to dispose of its holdings quickly at an acceptable price.

Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation of a borrower. They are typically purchased from banks or dealers that have made the loan, or are members of the loan syndicate, and that act as the servicing agent for the interest. The loans may be to foreign or U.S. companies. Participation interests are subject to the credit risk of the servicing agent as well as the credit risk of the borrower. If a fund purchases a participation interest, it may be only able to enforce its rights through the lender. The Fund can also buy interests in trusts and other entities that hold loan obligations. In that case the Fund will be subject to the trust's credit risks as well as the credit risks of the underlying loans.

Not more than 5% of the Fund's net assets can be invested in participation interests of any one borrower.

Repurchase Agreements. The Fund may also enter into repurchase agreements. In a repurchase transaction, the Fund buys a security and simultaneously sells it back to the vendor for delivery at a future date. Repurchase agreements must be fully collateralized. However, if the seller fails to pay the repurchase price on the delivery date, the Fund may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so. If the default on the part of the seller is due to its bankruptcy, the Fund's ability to liquidate the collateral may be delayed or limited.

There is no limit on the amount of the Fund's net assets that may be subject to repurchase agreements of seven days or less.

Money Market Instruments. The Fund may also invest in "money market instruments." Money market instruments are short-term, high-quality, dollar-denominated debt instruments issued by the U.S. Government, domestic and foreign corporations and financial institutions, and other entities that meet the quality, maturity, diversification and other standards that apply to money market funds under the Investment Company Act of 1940. Money market instruments include bank obligations, repurchase agreements, commercial paper, and other corporate and governmental debt obligations. They may have fixed, variable or floating interest rates. Money market instruments generally do not generate capital appreciation if they are held to maturity.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 15% of its net assets in illiquid securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares; however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.73% of the Fund's average annual net assets for each class of shares.

Effective September 1, 2007 the Manager has voluntarily agreed to waive a portion of the advisory fee and/or reimburse certain expenses so that the total expenses of the Fund will not exceed 0.92% of average annual net assets for Service Shares and 0.67% of average annual net assets for Non-Service Shares. This voluntary waiver and/or reimbursement may be withdrawn at any time.

Effective April 1, 2009, the Manager has agreed to voluntarily waive the advisory fee by 0.08% of the Fund's average daily net assets through March 31, 2010. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Managers. The equity component of the Fund's portfolio is managed by Emmanuel Ferreira and the fixed-income component of the Fund's portfolio is managed by Krishna Memani and Peter A. Strzalkowski. Mr. Ferreira, Mr. Memani and Mr. Strzalkowski are primarily responsible for the day-to-day management of the Fund's investments. Mr. Ferreira has been a portfolio manager and Vice President of the Fund since January 2003. Mr. Memani has been a portfolio manager and Vice President of the Fund since April 1, 2009 and Mr. Strzalkowski has been a portfolio manager of the Fund since April 27, 2009.

Mr. Ferreira has been a Vice President of the Manager since January 2003. He was a Portfolio Manager at Lashire Investments from July 1999 through December 2002. He is a portfolio manager and officer of other portfolios in the OppenheimerFunds complex.

Mr. Memani has been a Senior Vice President and Head of the Investment Grade Fixed Income Team of the Manager since March 2009. Mr. Memani was a Managing Director and Head of the U.S. and European Credit Analyst Team at Deutsche Bank Securities from June 2006 through January 2009. He was the Chief Credit Strategist at Credit Suisse Securities from August 2002 through March 2006. He was a Managing Director and Senior Portfolio Manager at Putnam Investments from September 1998 through June 2002. Mr. Memani is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

Mr. Strzalkowski, CFA, has been a Vice President of the Manager since August 2007 and a member of the Manager's Investment Grade Fixed Income Team since April 2009. Mr. Strzalkowski was a Managing Partner and Chief Investment Officer of Vector Capital Management, LLC, a structured products money management firm he founded, from July 2006 through August 2007. He was a Senior Portfolio Manager at Highland Capital Management, L.P. from June 2005 through July 2006 and a Senior Fixed Income Portfolio Manager at Microsoft Corp. from June 2003 through June 2005. He was a Vice President and Senior Fixed Income Portfolio Manager at First Citizens Bank Trust, Capital Management Group, from April 2000 through June 2003 and a Vice President and Fixed Income Portfolio Manager at Centura Banks from November 1998 through April 2000. Mr. Strzalkowski is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts they manage and their ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$16.41	$17.69	$17.07	$17.35	$15.92
Income (loss) from investment operations:
Net investment income1	.41	.43	.40	.33	.26
Net realized and unrealized gain (loss)	(7.03)	.19	1.38	.31	1.33
Total from investment operations	(6.62)	.62	1.78	.64	1.59
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.39)	(.46)	(.36)	(.30)	(.16)
Distributions from net realized gain	(.95)	(1.44)	(.80)	(.62)	--
Total dividends and/or distributions to shareholders	(1.34)	(1.90)	(1.16)	(.92)	(.16)
Net asset value, end of period	$8.45	$16.41	$17.69	$17.07	$17.35
Total Return, at Net Asset Value2	(43.47)%	3.79%	11.15%	3.89%	10.10%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$169,621	$385,948	$435,639	$503,753	$547,290
Average net assets (in thousands)	$295,669	$418,103	$456,513	$522,754	$528,655
Ratios to average net assets:3
Net investment income	3.14%	2.55%	2.42%	1.98%	1.59%
Total expenses	0.76%4	0.75%4	0.75%4	0.74%	0.74%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.67%	0.73%	0.75%	0.74%	0.74%
Portfolio turnover rate5	67%	68%	76%	67%	68%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.76%
             Year Ended December 31, 20070.75%
             Year Ended December 31, 20060.75%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-relate d securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2008$474,582,075$434,587,487
             Year Ended December 31, 2007$296,201,319$315,527,720
             Year Ended December 31, 2006$612,825,833$666,549,894
             Year Ended December 31, 2005$1,224,652,741$1,250,455,539
             Year Ended December 31, 2004$1,460,076,994$1,473,590,963

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$16.28	$17.57	$16.97	$17.26	$15.87
Income (loss) from investment operations:
Net investment income1	.37	.38	.36	.29	.23
Net realized and unrealized gain (loss)	(6.97)	.19	1.37	.31	1.31
Total from investment operations	(6.60)	.57	1.73	.60	1.54
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.35)	(.42)	(.33)	(.27)	(.15)
Distributions from net realized gain	(.95)	(1.44)	(.80)	(.62)	--
Total dividends and/or distributions to shareholders	(1.30)	(1.86)	(1.13)	(.89)	(.15)
Net asset value, end of period	$8.38	$16.28	$17.57	$16.97	$17.26
Total Return, at Net Asset Value2	(43.62)%	3.49%	10.86%	3.67%	9.79%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$68,798	$121,399	$111,363	$88,156	$59,650
Average net assets (in thousands)	$100,164	$117,012	$100,010	$72,977	$39,851
Ratios to average net assets:3
Net investment income	2.90%	2.30%	2.17%	1.74%	1.41%
Total expenses	1.01%4	1.00%4	1.01%4	1.00%	1.02%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.92%	0.98%	1.01%	1.00%	1.02%
Portfolio turnover rate5	67%	68%	76%	67%	68%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20081.01%
             Year Ended December 31, 20071.00%
             Year Ended December 31, 20061.01%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-relate d securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2008$474,582,075$434,587,487
             Year Ended December 31, 2007$296,201,319$315,527,720
             Year Ended December 31, 2006$612,825,833$666,549,894
             Year Ended December 31, 2005$1,224,652,741$1,250,455,539
             Year Ended December 31, 2004$1,460,076,994$1,473,590,963

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0670.001.0409

Oppenheimer

Capital Appreciation Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Capital Appreciation Fund/VA is a mutual fund that seeks capital appreciation by investing in securities of well-known, established companies.
 
Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus and explains how to select shares of the Fund as an investment under that insurance product and which share class you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Capital Appreciation Fund/VA

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
6	The Fund's Past Performance
7	Fees and Expenses of the Fund
8	About the Fund's Investments
14	How the Fund is Managed
	INVESTING IN THE FUND
15	How to Buy and Sell Shares
20	Dividends, Capital Gains and Taxes
21	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks capital appreciation by investing in securities of well-known, established companies.

THE FUND'S MAIN INVESTMENT STRATEGIES.

What are "Growth Companies"? Companies whose earnings and stock prices are expected to increase at a faster rate than the overall market are considered "growth companies."

The Fund mainly invests in common stocks of "growth companies." These may be newer companies or established companies of any capitalization range that the portfolio manager believes may appreciate in value over the long term.
The Fund focuses on domestic securities but may purchase foreign securities as well.
HOW THE PORTFOLIO MANAGER DECIDES WHAT SECURITIES TO BUY OR SELL. In selecting securities to buy or sell the portfolio manager looks for growth companies with stock prices that he believes are reasonable in relation to overall stock market valuations. In seeking broad diversification of the Fund's portfolio among industries and market sectors, the portfolio manager focuses on a number of factors that may vary in particular cases and over time. Currently, the portfolio manager looks for:

• companies in business areas that have above-average growth potential,

• companies with growth rates that the portfolio manager believes are sustainable over time,

• stocks with reasonable valuations relative to their growth potential.

The Fund may sell the stocks of companies that the portfolio manager believes no longer meet the above criteria.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies, for investors seeking capital appreciation in their investment over the long term, from investments in common stocks of well-known companies. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund focusing on stocks. Because of its focus on long-term growth, the Fund may be more appropriate for investors with longer-term investment goals. The Fund is not designed for investors needing an assured level of current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

RISKS OF INVESTING IN STOCK. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience significant volatility and may fall sharply at times. Adverse events in any part of the equity or fixed-income markets may have unexpected negative effects on other market segments. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

A variety of factors can affect the price of a particular company's stock and the prices of individual stocks generally do not all move in the same direction at the same time. These factors may include: poor earnings reports, a loss of customers, litigation against the company, or changes in government regulations affecting the company or its industry.

At times, the Fund may emphasize investments in a particular industry or sector. To the extent that the Fund increases its emphasis on stocks in a particular industry, the value of its investments may fluctuate more in response to events affecting that industry, such as changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others.

Because the Fund currently invests primarily in common stocks of U.S. companies, the value of the Fund's portfolio will mainly be affected by changes in the U.S. stock markets.

RISKS OF GROWTH INVESTING. If a growth company's earnings or stock price fails to increase as anticipated, or if its business plans do not produce the expected results, its securities may decline sharply. Growth companies may be newer or smaller companies that may experience greater stock price fluctuations and risks of loss than larger, more established companies. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Therefore, they may not pay any dividends for some time. Growth investing has gone in and out of favor during past market cycles and is likely to continue to do so. During periods when growth investing is out of favor or when markets are unstable, it may be more difficult to sell growth company securities at an acceptable price. Growth stocks may also be more volatile than other securities because of investor speculation.

RISKS OF SMALL- AND MID-SIZED COMPANIES. Small- and mid-sized companies may be either established or newer companies, including "unseasoned" companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain than larger companies, they also involve greater risk of loss. They may be more sensitive to changes in a company's earnings expectations and may experience more abrupt and erratic price movements. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-sized companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since small- and mid-sized companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Smaller companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. Securities of small, unseasoned companies may be particularly volatile, especially in the short term, and may have very limited liquidity. It may take a substantial period of time to realize a gain on an investment in a small- or mid-sized company, if any gain is realized at all.

                     _______________________________

There is no assurance that the Fund will achieve its investment objective. Growth stocks may be more volatile than other equity investments. The Fund generally does not use income-oriented investments to help cushion the Fund's total return from changes in stock prices. In the OppenheimerFunds spectrum, the Fund is generally more aggressive than funds that invest in both stocks and bonds or in investment-grade debt securities.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service Shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 28.49% (4th qtr 99) and the lowest return before taxes for a calendar quarter was -27.73% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to two broad-based market indices. Because the Fund's Service Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 4-3-85)	(45.52%)	(5.48%)	(1.13%)
Service Shares (inception 9-18-01)	(45.66%)	(5.72%)	(2.69%)
S&P 500 Index	(36.99%)	(2.19%)	(1.38%)1
(reflects no deduction for fees, expenses or taxes)			(0.09%)2
Russell 1000® Growth Index	(38.44%)	(3.42%)	(4.27%)1
(reflects no deduction for fees, expenses or taxes)			(1.37%)2

1. Ten Years.
2. From 09-30-01.

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the S&P 500 Index, an unmanaged index of equity securities that is a measure of the general domestic stock market, and the Russell 1000® Growth Index, an unmanaged index of 1,000 U.S. large-cap growth stocks. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. Shareholders pay certain expenses directly, such as sales charges. The Fund pays other expenses for management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares
Management Fees	0.65%	0.65%
Distribution and/or Service (12b-1) Fees	n/a	0.25%
Other Expenses1	0.11%	0.11%
Total Annual Operating Expenses2	0.76%	1.01%

1.  "Other Expenses" include transfer agent fees, custodial fees, and audit and legal expenses that the Fund pays. Effective May 1, 2009, the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008, were 0.01% for both Non-Service and Service shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.
2.  Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares.  This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. During the Fund's fiscal year ended December 31, 2008, the actual "Total Annual Operating Expenses," as percentages of average daily net assets were 0.66% for Non-Service shares and 0.91% for Service shares. It is estimated that after giving effect to all of the current fees structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.76% for Non-Service shares and 1.01% for Service shares during the fiscal year ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Service Shares	$104	$323	$561	$1,242
Non-Service Shares	$78	$244	$424	$946

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

INVESTING IN GROWTH COMPANIES. Growth companies are companies whose earnings and stock prices are expected to grow at a faster rate than the overall market. Growth companies can be new companies or established companies that may be entering a growth cycle in their business. Their anticipated growth may come from developing new products or services or from expanding into new or growing markets. Growth companies may be applying new technologies, new or improved distribution methods or new business models that could enable them to capture an important or dominant market position. They may have a special area of expertise or the ability to take advantage of changes in demographic or other factors in a more profitable way. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Although newer growth companies may not pay any dividends for some time, their stocks may be valued because of their potential for price increases. Current examples include companies in the fields of telecommunications, computer software, and new consumer products.

COMMON STOCK.  Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy. Common stocks may be exchange-traded or over-the-counter securities. Over-the-counter securities may be less liquid than exchange-traded securities.

Growth stocks may be less liquid and more volatile than other stock investments. They may lose value if the company's business plans do not produce the expected results, or if growth investing falls out of favor with investors. Growth stocks may also be more volatile because of investor speculation.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Risks of Foreign Investing. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements as U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, or other political and economic factors.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Fund and the Board believe to be their fair value, may help deter those activities.

Other Equity Securities.  In addition to common stocks, the Fund can invest in other equity or "equity equivalents" securities such as preferred stocks or convertible securities. Preferred stocks have a set dividend rate and rank ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. A convertible security is one that can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible securities offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. The Fund considers some convertible securities to be "equity equivalents" because they are convertible into common stock. The credit ratings of those convertible securities generally have less impact on the investment decision, although they are still subject to credit and interest rate risk.

Cyclical Opportunities. At times, the Fund might seek to take advantage of short-term market movements or changes in the business cycle by investing in companies or industries that are sensitive to those changes. For example, when the economy is expanding, companies in consumer durables and the technology sector might benefit. There is a risk that if a cyclical event does not have the anticipated effect, or when the issuer or industry is out of phase in the business cycle, the value of the Fund's investment could fall.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

       Options, futures, options on futures, swaps and forward contracts are some of the derivatives that the Fund may use. The Fund may also use other types of derivatives that are consistent with its investment strategies or hedging purposes.

The Fund has percentage limits on its use of hedging instruments and is not required to use hedging instruments in seeking its objective.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, however, the hedge might be unsuccessful or could reduce the Fund's return or create a loss.

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 10% of its net assets in illiquid or restricted securities.  The Board can increase that limit to 15%. The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Industry and Sector Focus. At times the Fund may increase the relative emphasis of its investments in a particular industry or sector. The prices of stocks of issuers in a particular industry or sector may go up and down in response to changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry or sector more than others. To the extent that the Fund increases the relative emphasis of its investments in a particular industry or sector, its share values may fluctuate in response to events affecting that industry or sector. To some extent that risk may be limited by the Fund's policy of not concentrating 25% or more of its total assets in investments in any one industry or group of industries.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares; however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.65% of the Fund's average annual net assets for each class of shares.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Manager. The Fund's portfolio is managed by Marc L. Baylin, CFA, who is primarily responsible for the day-to-day management of the Fund's investments. Mr. Baylin has been a Vice President and portfolio manager of the Fund since October 2005.

Mr. Baylin has been a Vice President of the Manager and a member of the Manager's Growth Equity Investment Team since September 2005. He was Managing Director and Lead Portfolio Manager at JP Morgan Fleming Investment Management from June 2002 to August 2005 and was a Vice President of T. Rowe Price, where he was an investment analyst from June 1993 and a portfolio manager from March 1999 to June 2002. Mr. Baylin is a portfolio manager and officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio manager's compensation, other accounts he manages and his ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$47.18	$41.43	$38.52	$36.99	$34.70
Income (loss) from investment operations:
Net investment income1	.10	.07	.07	.18	.352
Net realized and unrealized gain (loss)	(21.55)	5.78	2.98	1.68	2.05
Total from investment operations	(21.45)	5.85	3.05	1.86	2.40
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.06)	(.10)	(.14)	(.33)	(.11)
Net asset value, end of period	$25.67	$47.18	$41.43	$38.52	$36.99
Total Return, at Net Asset Value3	(45.52)%	14.15%	7.95%	5.10%	6.93%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$  829,931	$1,631,791	$1,598,967	$1,652,282	$1,770,273
Average net assets (in thousands)	$1,256,525	$1,631,686	$1,615,352	$1,658,910	$1,708,511
Ratios to average net assets:4
Net investment income	0.25%	0.15%	0.17%	0.47%	0.99%2
Total expenses	0.66%5,6,7	0.65%5,6,7	0.67%5,6,7	0.66%6	0.66%6
Portfolio turnover rate	67%	59%	47%	70%	44%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Net investment income per share and the net investment income ratio include $0.16 and 0.43%, respectively, resulting from a special dividend from Microsoft Corp. in November 2004.
3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 2008 0.66%
             Year Ended December 31, 2007 0.65%
             Year Ended December 31, 2006 0.67%
6. Reduction to custodian expenses less than 0.005%.
7. Waiver or reimbursement of indirect management fees less than 0.005%.

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$46.78	$41.09	$38.23	$36.73	$34.53
Income (loss) from investment operations:
Net investment income (loss)1	--2	(.05)	(.03)	.08	.293
Net realized and unrealized gain (loss)	(21.36)	5.74	2.96	1.69	1.99
Total from investment operations	(21.36)	5.69	2.93	1.77	2.28
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	--2	(.07)	(.27)	(.08)
Net asset value, end of period	$25.42	$46.78	$41.09	$38.23	$36.73
Total Return, at Net Asset Value4	(45.66)%	13.86%	7.68%	4.87%	6.62%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$313,931	$546,887	$463,140	$381,852	$248,649
Average net assets (in thousands)	$454,558	$510,874	$426,539	$301,780	$184,273
Ratios to average net assets:5
Net investment income (loss)	0.00%6	(0.10)%	(0.08)%	0.20%	0.85%3
Total expenses	0.91%7,8,9	0.91%7,8,9	0.92%7,8,9	0.91%8	0.91%8
Portfolio turnover rate	67%	59%	47%	70%	44%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. Net investment income per share and the net investment income ratio include $0.16 and 0.43%, respectively, resulting from a special dividend from Microsoft Corp. in November 2004.
4. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
5. Annualized for periods less than one full year.
6. Less than 0.005%
7. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 2008 0.91%
             Year Ended December 31, 2007 0.91%
             Year Ended December 31, 2006 0.92%
8. Reduction to custodian expenses less than 0.005%.
9. Voluntary waiver or reimbursement of indirect management fees less than 0.005%.

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No.: 811-4108

PR0610.001.0409

Oppenheimer

Core Bond Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Core Bond Fund/VA is a mutual fund that seeks a high level of current income as its primary goal. As a secondary goal, the Fund seeks capital appreciation when it is consistent with its goal of high current income. The Fund invests mainly in investment grade debt securities.
 
Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Core Bond Fund/VA 

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
7	The Fund's Past Performance
8	Fees and Expenses of the Fund
10	About the Fund's Investments
20	How the Fund is Managed
	INVESTING IN THE FUND
22	How to Buy and Sell Shares
28	Dividends, Capital Gains and Taxes
29	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund's main objective is to seek a high level of current income. As a secondary objective, the Fund seeks capital appreciation when consistent with its primary objective.

THE FUND'S MAIN INVESTMENT STRATEGIES. Under normal market conditions, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in investment grade debt securities. Those securities, generally referred to as "bonds," can include:

• Domestic and foreign corporate debt obligations.

• Domestic and foreign government bonds, including U.S. government securities

• Mortgage-related securities

• Asset-backed securities, and

• Other debt obligations.

The Fund's investments in U.S. Government securities

What is a Debt Security? A debt security is a security representing money borrowed by the issuer that must be repaid, specifying the amount of principal, the interest or discount rate, and the time or times at which payments are due.

may include securities issued or guaranteed by the U.S. Government or by its agencies or federally-chartered entities referred to as "instrumentalities." These include mortgage-related U.S. Government securities. There is no set allocation of the Fund's assets among the classes of securities, but it focuses mainly on U.S. government securities and investment-grade corporate debt securities. The Fund can also invest in money market instruments and other debt obligations. If market conditions change, the portfolio managers might change the Fund's relative asset allocation.

The Fund will attempt to maintain the overall weighted average credit quality of the portfolio equivalent to a rating of "A-" or higher from any nationally recognized credit rating organization. However, the Fund can invest up to 20% of its total assets in high-yield debt securities that are below investment-grade (commonly referred to as "junk bonds").

The Fund has no limitations on the range of maturities of the debt securities in which it can invest and therefore may hold bonds with short-, medium- or long-term maturities. To try to decrease volatility, the Fund seeks to maintain an average effective portfolio duration of three to six years, measured on a dollar-weighted basis. Because of market events and interest rate changes, the duration of the portfolio might not meet that target at all times.

The Fund may invest in foreign debt securities, including securities issued by foreign governments or companies in both developed markets and emerging markets.

The Fund may also use derivatives to seek increased returns or to try to manage investment risks. Options, futures, swaps, interest-only and principal-only securities, "structured" notes, asset-backed securities and certain mortgage-related securities are examples of the types of derivatives the Fund can use.

HOW DO THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL? In selecting securities, the Fund's portfolio managers analyze the overall investment opportunities and risks in different sectors of the debt securities markets by focusing on business cycle analysis and relative values between the corporate and government sectors. Generally, the Fund seeks "total return," which consists of income earned on the Fund's investments, plus capital appreciation, if any, which generally arises from decreases in interest rates, improving credit fundamentals for a particular sector or security, and managing pre-payment risks associated with mortgage-related securities, as well as other techniques. The portfolio managers' overall strategy is to build a diversified portfolio of corporate and government bonds. The portfolio managers currently focus on the following factors, which may vary in particular cases and may change over time:

• Debt securities in market sectors that the Fund believes offer attractive relative value; and

• Broad portfolio diversification to seek to reduce volatility.

The portfolio managers monitor individual issuers for changes in the factors above, which may trigger a decision to sell a security.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking total return from a fund that invests mainly in investment-grade debt securities but which can also hold high-yield, below investment-grade securities. Those investors should be willing to assume the credit risks of a fund that typically invests a significant amount of its assets in corporate-debt securities, and the changes in debt securities prices that can occur when interest rates change. The Fund is intended to be a long-term investment, not a short-term trading vehicle. It may be appropriate for investors with longer term investment goals. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

MAIN RISKS OF INVESTING IN DEBT SECURITIES. Debt securities (also referred to as "fixed-income securities") may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or to repay principal, the Fund's income and share value will usually be reduced. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can reduce the market value of the issuer's securities. The values of debt securities are also subject to change when prevailing interest rates change. When prevailing interest rates fall, the values of already-issued debt securities generally rise. When prevailing interest rates rise, the values of already-issued debt securities generally fall, and they may sell at a discount from their face amount or from the amount the Fund paid for them. Interest rate changes generally have a greater effect on longer-term debt securities than on shorter-term debt securities. When interest rates fall, the issuers of debt securities may prepay principal more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes may have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

     Special Risks of Lower-Grade Securities. Lower-grade debt securities, whether rated or unrated, have greater credit risks than investment-grade securities. They may be subject to greater price fluctuations and have a greater risk that the issuer might not be able to pay interest and principal when due. The market for lower-grade securities may be less liquid and therefore they may be harder to value or to sell at an acceptable price, especially during times of market volatility or decline.

Because the Fund can invest up to 20% of its assets in lower-grade securities, the Fund's credit risks are greater than those of funds that buy only investment-grade securities.

FIXED-INCOME MARKET RISKS. Recent developments relating to subprime mortgages have adversely affected fixed-income securities markets in the United States, Europe and elsewhere. The values of many types of debt securities have been reduced, including debt securities that are not related to mortgage loans. These developments have reduced the willingness of some lenders to extend credit and have made it more difficult for borrowers to obtain financing on attractive terms or at all. In addition, broker-dealers and other market participants have been less willing to make a market in some types of debt instruments, which has impacted the liquidity of those instruments. These developments may also have a negative effect on the broader economy. There is a risk that the lack of liquidity or other adverse credit market conditions may hamper the Fund's ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

RISKS OF FOREIGN INVESTING. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, expropriation or nationalization of a company's assets, or other political and economic factors.

     Special Risks of Developing and Emerging Markets. Developing or emerging market countries generally have less developed securities markets or exchanges. Securities of companies in developing or emerging market countries may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of companies in countries with more mature markets. Settlements of trades may be subject to greater delays so that the proceeds of a sale of a security may not be received on a timely basis. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Developing or emerging market countries may have less developed legal and accounting systems, and investments in those countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of company assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Their governments may also be more unstable than the governments of more developed countries. The value of the currency of a developing or emerging market country may fluctuate more than the currencies of countries with more mature markets. Investments in companies in developing or emerging market countries may be considered speculative.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Fund and the Board believe to be their fair value, may help deter those activities.

RISKS OF DERIVATIVE INVESTMENTS. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due. Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

            _________________________________________

There is no assurance that the Fund will achieve its investment objective. Debt securities are subject to credit and interest rate risks that can affect their values and the share prices of the Fund. The values of high-yield debt securities can fluctuate substantially because of interest rate changes and perceptions about the high-yield market among investors. Foreign debt securities can be volatile, particularly in emerging markets, and the price of the Fund's shares can go up and down substantially. The Fund is likely to be more volatile and have more risks than funds that focus on U.S. government securities.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 4.74% (3rd qtr 02) and the lowest return before taxes for a calendar quarter was -29.59% (4th qtr 08). For the period from January 1, 2008 through December 31, 2008 the cumulative return before taxes was -39.05%.

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to two broad-based market indices. Because the Fund's Service Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 4-3-85)	(39.05%)	(6.23%)	(0.50%)
Service Shares (inception 5-1-02)	(39.07%)	(6.45%)	(2.85%)
Barclays Capital Credit Index	(3.08%)	2.65%	4.85%
			4.51%1
Barclays Capital Aggregate Bond Index	5.24%	4.65%	5.63%
			5.31%1
Citigroup Broad Investment Grade Bond Index	7.02%	5.11%	5.86%
			5.66%1

1.  From 4-30-02

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the Citigroup Broad Investment Grade ("BIG") Index, an index of institutionally traded U.S. Treasury Bonds, government-sponsored bonds, mortgage-backed securities and corporate securities; the Barclays Capital Aggregate Bond Index (formerly known as the "Lehman Brothers Aggregate Bond Index"), a broad-based index of government agencies and corporate debt, and the Barclays Capital Credit Index (formerly known as the "Lehman Brothers Credit Index"), an index of non-convertible U.S. investment grade corporate bonds. The indices' performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes. The Fund's performance reflects the effects of the Fund's business and operating expenses.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. Shareholders pay certain expenses directly, such as sales charges. The Fund pays other expenses for management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares
Management Fees1	0.60%	0.60%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses2	0.13%	0.12%
Total Annual Operating Expenses3	0.73%	0.97%

1. Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.18% of the Fund's average daily net assets. This voluntary waiver will be applied after all other waivers and may be withdrawn at any time.
2. "Other Expenses" include transfer agent fees, custodial fees, and accounting and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.03% for both Non-Service and Service shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.
3. For the fiscal year ended December 31, 2008, the Manager voluntarily reimbursed expenses of $21,750 related to the acquisition of Oppenheimer Government Securities Portfolio. After that reimbursement and all of the waivers and credits in effect during that period, the actual "Total Annual Operating Expenses," as percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008, were 0.62% for the Non-Service Shares and 0.87% for the Service Shares. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.75% for Non-Service shares and 1.00% for Service shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.55% for Non-Service Shares and 0.79% for Service Shares during the fiscal year ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$75	$234	$407	$910
Service Shares	$99	$310	$539	$1,195

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

DEBT SECURITIES. The Fund may invest in debt securities, including securities issued or guaranteed by the U.S. Government, or its agencies and instrumentalities, or foreign sovereigns, and foreign and domestic corporate bonds, notes and debentures. The Fund may select debt securities for their income possibilities or to help cushion fluctuations in the value of its portfolio.

Debt securities may be subject to the following risks:

• Interest Rate Risk. The values of debt securities usually change when prevailing interest rates change. When interest rates rise, the values of outstanding debt securities generally fall, and those securities may sell at a discount from their face amount. When interest rates fall, the values of already-issued debt securities generally rise. However, when interest rates fall, the Fund's investments in new securities may be at lower yields and may reduce the Fund's income. The values of longer-term debt securities usually change more than the values of shorter-term debt securities when interest rates change.

• Prepayment Risk. Certain fixed-income securities are subject to the risk of unanticipated prepayment. That is the risk that when interest rates fall, borrowers will prepay the loans that underlie these securities more quickly than expected, causing the issuer of the security to repay the principal prior to the security's expected maturity. The Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If the Fund buys those securities at a premium, accelerated prepayments on those securities could cause it to lose a portion of its principal investment represented by the premium. The impact of prepayments on the price of a security may be difficult to predict and may increase the security's price volatility. Interest-only and principal-only securities are especially sensitive to interest rate changes, which can affect not only their prices but can also change the income flows and prepayment assumptions about those investments.

• Extension Risk. If interest rates rise rapidly, repayments of principal on certain debt securities may occur at a slower rate than expected and the expected maturity of those securities could lengthen as a result. Those securities generally have a greater potential for loss when prevailing interest rates rise, which could cause their value to fall sharply.

• Credit Risk. Debt securities are also subject to credit risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. Securities directly issued by the U.S. Treasury and certain agencies that are backed by the full faith and credit of the U.S. Government have little credit risk, and other U.S. Government securities generally have lower credit risks, while securities issued by private issuers or certain foreign governments generally have greater credit risks. If an issuer fails to pay interest, the Fund's income might be reduced, and if an issuer fails to repay principal, the values of the security might fall. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. A downgrade in an issuer's credit rating or other adverse news about an issuer can reduce the market value of that issuer's securities.

Credit Quality.  The Fund may invest in securities that are rated or unrated. "Investment grade" securities are rated in one of the top four rating categories by nationally-recognized statistical rating organizations such as Moody's Investors Service or Standard & Poor's Ratings Services. "Lower grade" securities are those that are rated below those categories. While securities rated "Baa" by Moody's or "BBB" by S&P are considered "investment grade," they may also have some speculative characteristics. 

        Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner. They do not reflect any judgment of market risk. Rating agencies might not always change their credit rating of an issuer in a timely manner to reflect events that could affect the issuer's ability to make timely payments on its obligations. In selecting securities for its portfolio and evaluating their income potential and credit risk, the Fund does not rely solely on ratings by rating organizations but evaluates business and economic factors affecting issuers as well. The ratings definitions of the principal ratings organizations are included in Appendix B to the Statement of Additional Information.

The Fund invests primarily in investment-grade debt securities but it is not required to dispose of debt securities that fall below investment grade after the Fund buys them.

U.S. Government Securities. The Fund invests in securities issued or guaranteed by the U.S. Government or its agencies and instrumentalities. Some of those securities are directly issued by the U.S. Treasury and are backed by the full faith and credit of the U.S. Government. "Full faith and credit" means that the taxing power of the U.S. Government is pledged to the payment of interest and repayment of principal on a security.

Some securities issued by U.S. Government agencies, such as Government National Mortgage Corporation pass-through mortgage obligations ("Ginnie Maes"), are also backed by the full faith and credit of the U.S. Government. Others are supported by the right of the agency to borrow an amount from the U.S. Government (for example, "Fannie Mae" bonds issued by Federal National Mortgage Corporation and "Freddie Mac" obligations issued by Federal Home Loan Mortgage Corporation). Others are supported only by the credit of the agency (for example obligations issued by the Federal Home Loan Banks). On September 7, 2008, the Federal Housing Finance Agency, a new independent regulatory agency, placed the Federal National Mortgage Corporation and Federal Home Loan Mortgage Corporation into conservatorship and the U.S. Department of Treasury made a commitment to purchase mortgage-backed securities from the companies through December 2009. The U.S. Department of Treasury also entered into a new secured lending credit facility with those companies and a Preferred Stock Purchase Agreement. Under those agreements, the Treasury will ensure that each company maintains a positive net worth. 

     U.S. Treasury Securities. Treasury securities are backed by the full faith and credit of the United States for payment of interest and repayment of principal and have little credit risk. Some of the securities that are issued directly by the U.S. Treasury are: Treasury bills (having maturities of one year or less when issued), Treasury notes (having maturities of from one to ten years when issued), Treasury bonds (having maturities of more than ten years when issued) and Treasury Inflation-Protection Securities ("TIPS"). While U.S. Treasury securities have little credit risk, they are subject to price fluctuations from changes in interest rates prior to their maturity.

     Mortgage-Related Government Securities. The Fund can buy interests in pools of residential or commercial mortgages, in the form of "pass-through" mortgage securities. They may be issued or guaranteed by the U.S. Government, or its agencies and instrumentalities. Mortgage-related U.S. Government securities may be issued in different series, each having different interest rates and maturities.

Mortgage-related securities that are U.S. Government securities have collateral to secure payment of interest and principal. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a U.S. Government agency. The prices and yields of mortgage-related securities are determined, in part, by assumptions about the rate of payments of the underlying mortgages and are subject to prepayment and extension risks.

Private-Issuer Securities. The Fund can also invest in securities issued by private issuers, such as banks, savings and loans, and other entities, including mortgage-related securities. Securities issued by private issuers are subject to greater credit risks than U.S. Government securities.

     Mortgage-Related Private Issuer Securities. Primarily these investments include multi-class debt or pass-through certificates secured by mortgage loans, which may be issued by banks, savings and loans, mortgage bankers and other non-governmental issuers.  Private-issuer mortgage-backed securities may include loans on residential or commercial properties.

Mortgage-related securities issued by private issuers are not U.S. Government securities, which makes them subject to greater credit risks. Private issuer securities are subject to the credit risks of the issuers as well as to interest rate risks, although in some cases they may be supported by insurance or guarantees. The prices and yields of private issuer mortgage-related securities are also subject to prepayment and extension risk. The market for private-issuer mortgage-backed securities may be volatile at times and may be less liquid than the markets for other types of securities.

DURATION. 

What is "Duration"? Duration is a measure of the expected price volatility of a debt security or portfolio. "Effective duration" means the expected percentage change in the value of a bond or portfolio resulting from a change in prevailing interest rates (measured by a 1% change in U.S. Treasury security rates). Duration and interest rates are inversely related. For example, if a bond has an effective duration of three years, a 1% increase in general interest rates would be expected to cause the bond's value to decline about 3%.

As a principal investment strategy, the Fund expects that under normal market conditions it will maintain an average effective portfolio duration of not more than three years. While the Fund seeks to maintain an average effective portfolio duration of not more than three years, the average maturity of the Fund's portfolio can differ from its duration target, and the Fund can hold securities having long, medium and short maturities.
The "maturity" of a security (the date when its principal repayment is due) differs from effective duration, which attempts to measure the expected volatility of a security's price. The Fund measures the duration of its entire portfolio of securities on a dollar-weighted basis, to try to maintain an average effective duration of its portfolio of three to six years, under normal market conditions (that is, when financial markets are not in an unstable or volatile state). However, duration cannot be relied on as an exact prediction of future volatility. There can be no assurance that the Fund will achieve its targeted portfolio duration at all times.
Duration calculations rely on a number of assumptions and variables based on the historic performance of similar securities. Therefore, duration can be affected by unexpected economic events or conditions relating to a particular security. In the case of mortgage-related securities, duration calculations are based on historic rates of prepayments of underlying mortgages. If the mortgages underlying the Fund's investments are prepaid more rapidly or more slowly than expected, the duration calculation for that security may not be correct.

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

Options, futures, forward contracts, swaps, zero-coupon and stripped securities, "structured" notes, asset-backed securities and certain mortgage-related securities are some of the types of derivatives the Fund can use. The Fund may also use other types of derivatives that are consistent with its investment strategies or for hedging purposes.

     Credit Default Swaps. A credit default swap enables an investor to buy or sell protection against a credit event, such as an issuer's failure to make timely payments of interest or principal, bankruptcy or restructuring. The terms of the instrument are generally negotiated by the Fund and the swap counterparty. A swap may be embedded within a structured note or other derivative instrument.

Generally, if the Fund buys credit protection using a credit default swap, the Fund will make fixed payments to the counterparty and if a credit event occurs, the Fund will deliver the defaulted bonds underlying the swap to the swap counterparty and the counterparty will pay the Fund par for the bonds. If the Fund sells credit protection using a credit default swap, generally the Fund will receive fixed payments from the counterparty and if a credit event occurs, the Fund will pay the swap counterparty par for the defaulted bonds underlying the swap and the swap counterparty will deliver the bonds to the Fund. If the credit default swap is on a basket of securities, the notional value of the swap is reduced by the par amount of the defaulted bonds, and the fixed payments are then made on the reduced notional value.

Credit default swaps are subject to credit risk on the underlying investment and to counterparty credit risk. If the counterparty fails to meet its obligations the Fund may lose money. Credit default swaps are also subject to the risk that the Fund will not properly assess the cost of the underlying investment. If the Fund is selling credit protection, there is a risk that a credit event will occur and that the Fund will have to pay par value on defaulted bonds. If the Fund is buying credit protection, there is a risk that no credit event will occur and the Fund will receive no benefit for the premium paid.

     Total Return Swaps. In a total return swap transaction, one party agrees to pay the other party an amount equal to the total return on a defined underlying asset or a non-asset reference during a specified period of time. The underlying asset might be a security or basket of securities or a non-asset reference might be a securities index. In return, the other party would make periodic payments based on a fixed or variable interest rate or on the total return from a different underlying asset or non-asset reference.

Total return swaps could result in losses if the underlying asset or reference does not perform as anticipated. Total return swaps can have the potential for unlimited losses. They are also subject to counterparty risk. If the counterparty fails to meet its obligations, the Fund may lose money.

     Swap Transactions. There is no central exchange or market for swap transactions and therefore they are less liquid than exchange-traded instruments. If the Fund were to sell a swap it owned to a third party, the Fund would still remain primarily liable for the obligations under the swap contract.

      "Structured" Notes. "Structured" notes are specially-designed derivative debt investments. The terms of the instrument may be "structured" by the purchaser and the issuer of the note. Payments of principal or interest on these notes may be linked to the value of an index (such as a currency or securities index), an individual security, or a commodity. The value of these notes will normally rise or fall in response to the changes in the performance of the underlying security, index or commodity.

Structured notes are subject to interest rate risk and are also subject to credit risk with respect both to the borrower (referred to as "counter-party" risk) and to the issuer of the underlying investment. If the underlying investment or index does not perform as anticipated, the Fund might receive less interest than the stated coupon payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult for the Fund to value them or sell them at an acceptable price.

     Asset-Backed Securities. Asset-backed securities are fractional interests in pools of loans, other assets or receivables. They are issued by trusts or other special purpose vehicles and are collateralized by the loans, other assets or receivables that make up the pool. The trust or other issuer passes the income from the underlying pool to the investor. Neither the Fund nor the Manager selects the loans or other assets that are included in the pools or the collateral backing those pools. Asset-backed securities are subject to interest rate risk and credit risk. Certain asset-backed securities are subject to prepayment and extension risks.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, however, the hedge might be unsuccessful or could reduce the Fund's return or create a loss.

The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Diversification and Concentration. The Fund is a diversified fund. It attempts to reduce its exposure to the risks of individual stocks by diversifying its investments across a broad number of different companies. The Fund will not concentrate more than 25% of its total assets in issuers in any one industry. At times, however, the Fund may emphasize investments in some industries more than others.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Forward Rolls. The Fund can enter into "forward roll" transactions (also referred to as "mortgage dollar rolls") with respect to mortgage-related securities. In this type of transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security at a later date at a set price. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. The Fund will bear the risk that the market value of the securities might decline below the price at which the Fund is obligated to repurchase them or that the counterparty might default in its obligations.

Zero-Coupon and Stripped Securities. Some of the debt securities the Fund may invest in are "zero-coupon" or "stripped" securities. Zero-coupon securities pay no interest prior to their maturity date or another specified date in the future but are issued at a discount from their face value. Stripped securities are the separate income or principal components of a debt security, such as Treasury securities whose coupons have been stripped by a Federal Reserve Bank. One component might receive all the interest and the other all the principal payments.

Interest rate changes generally cause greater price fluctuations in zero-coupon securities or the "principal-only" components of stripped securities than in interest-paying securities of the same or similar maturities. The Fund may be required to pay a dividend of the imputed income on a zero-coupon or principal-only security at a time when it has not actually received the income. The "interest-only" components of stripped securities are also especially sensitive to changes in prevailing interest rates. The market for some of these securities may be limited, making it difficult for the Fund to dispose of its holdings quickly at an acceptable price.

Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation of a borrower. They are typically purchased from banks or dealers that have made the loan, or are members of the loan syndicate, and that act as the servicing agent for the interest. The loans may be to foreign or U.S. companies. Participation interests are subject to the credit risk of the servicing agent as well as the credit risk of the borrower. If a fund purchases a participation interest, it may be only able to enforce its rights through the lender. The Fund can also buy interests in trusts and other entities that hold loan obligations. In that case the Fund will be subject to the trust's credit risks as well as the credit risks of the underlying loans.

The Fund does not invest more than 5% of its net assets in participation interests with respect to any one borrower.

Money Market Instruments. The Fund may also invest in "money market instruments." Money market instruments are short-term, high-quality, dollar-denominated debt instruments issued by the U.S. Government, domestic and foreign corporations and financial institutions, and other entities that meet the quality, maturity, diversification and other standards that apply to money market funds under the Investment Company Act of 1940. Money market instruments include bank obligations, repurchase agreements, commercial paper, and other corporate and governmental debt obligations. They may have fixed, variable or floating interest rates. Money market instruments generally do not generate capital appreciation if they are held to maturity.

Common Stock and Other Equity Investments. Equity securities include common stock, preferred stock, rights, warrants and certain debt securities that are convertible into common stock. Equity investments may be exchange-traded or over-the-counter securities. Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy.

Preferred stock has a set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The dividends on preferred stock may be cumulative (they remain a liability of the company until paid) or non-cumulative. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. When interest rates rise, the value of preferred stock having a fixed dividend rate tends to fall.

A convertible security can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. Convertible securities may provide more income than common stock but they generally provide less income than comparable non-convertible debt securities. Convertible securities are subject to credit and interest rate risk. The credit ratings of convertible securities generally have less impact on the value of those securities than they do on non-convertible debt securities, however.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 15% of its net assets in illiquid securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares, however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. Shareholders will receive 60 days advance notice of any change in the 80% investment policy described in "The Fund's Main Investment Strategies." The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the Fund's Investment Advisory Agreement, the Fund pays the Manager an advisory fee, calculated on the daily net assets of the Fund, at an annual rate that declines on additional assets as the Fund grows: 0.60% on the first $1 billion of the Fund's daily net assets, and 0.50% of daily net assets in excess of $1 billion. The Fund's management fee for its last fiscal year ended December 31, 2008 was 0.60% of average annual net assets for each class of shares.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.75% for Non-Service shares and 1.00% for Service shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.

Effective April 1, 2009 through March 31, 2010, the Manager has also agreed to voluntarily waive the advisory fee by 0.18% of the Fund's average daily net assets. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Managers. The Fund's portfolio is managed by Krishna Memani and Peter A. Strzalkowski, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Memani has been a portfolio manager and Vice President of the Fund since April 1, 2009 and Mr. Strzalkowski has been a portfolio manager of the Fund since April 27, 2009.

Mr. Memani has been a Senior Vice President and Head of the Investment Grade Fixed Income Team of the Manager since March 2009. Mr. Memani was a Managing Director and Head of the U.S. and European Credit Analyst Team at Deutsche Bank Securities from June 2006 through January 2009. He was the Chief Credit Strategist at Credit Suisse Securities from August 2002 through March 2006. He was a Managing Director and Senior Portfolio Manager at Putnam Investments from September 1998 through June 2002. Mr. Memani is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

Mr. Strzalkowski, CFA, has been a Vice President of the Manager since August 2007 and a member of the Manager's Investment Grade Fixed Income Team since April 2009. Mr. Strzalkowski was a Managing Partner and Chief Investment Officer of Vector Capital Management, LLC, a structured products money management firm he founded, from July 2006 through August 2007. He was a Senior Portfolio Manager at Highland Capital Management, L.P. from June 2005 through July 2006 and a Senior Fixed Income Portfolio Manager at Microsoft Corp. from June 2003 through June 2005. He was a Vice President and Senior Fixed Income Portfolio Manager at First Citizens Bank Trust, Capital Management Group, from April 2000 through June 2003 and a Vice President and Fixed Income Portfolio Manager at Centura Banks from November 1998 through April 2000. Mr. Strzalkowski is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts they manage and their ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a distribution and service plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Redemptions "In-Kind." Shares may be "redeemed in-kind" under certain circumstances (such as redemptions of substantial amounts of shares by shareholders that have consented to such in kind redemptions). That means that the redemption proceeds will be paid to the participating insurance companies in securities from the Fund's portfolio. If the Fund redeems shares in-kind, the insurance company accounts may bear transaction costs and will bear market risks until such securities are converted into cash.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$11.06	$11.16	$11.19	$11.50	$11.42
Income (loss) from investment operations:
Net investment income1	.66	.55	.53	.51	.43
Net realized and unrealized gain (loss)	(4.82)	(.08)	.03	(.23)	.18
Total from investment operations	(4.16)	.47	.56	.28	.61
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.45)	(.57)	(.59)	(.59)	(.53)
Net asset value, end of period	$6.45	$11.06	$11.16	$11.19	$11.50
Total Return, at Net Asset Value2	(39.05)%	4.39%	5.28%	2.59%	5.49%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$156,339	$325,661	$367,106	$430,642	$504,244
Average net assets (in thousands)	$271,355	$345,723	$391,750	$466,033	$552,293
Ratios to average net assets:3
Net investment income	6.76%	5.07%	4.83%	4.56%	3.82%
Total expenses	0.63%4	0.68%4	0.77%4	0.76%	0.75%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.62%	0.68%	0.77%	0.76%	0.75%
Portfolio turnover rate5	51%	89%	114%	111%	95%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 2008 0.63%
             Year Ended December 31, 2007 0.68%
             Year Ended December 31, 2006 0.77%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TB A) mortgage-related securities as follows:
Purchase Transactions Sale Transactions
             Year Ended December 31, 2008 $1,019,711,829 $ 963,377,934
             Year Ended December 31, 2007 $ 662,784,931 $ 678,316,693
             Year Ended December 31, 2006 $1,168,229,255 $1,270,329,129
             Year Ended December 31, 2005 $2,420,041,493 $2,423,498,913
             Year Ended December 31, 2004 $2,841,348,053 $2,925,500,296

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$10.98	$11.10	$11.15	$11.47	$11.39
Income from investment operations:
Net investment income1	.63	.52	.49	.47	.40
Net realized and unrealized gain (loss)	(4.77)	(.08)	.03	(.22)	.18
Total from investment operations	(4.14)	.44	.52	.25	.58
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.43)	(.56)	(.57)	(.57)	(.50)
Net asset value, end of period	$6.41	$10.98	$11.10	$11.15	$11.47
Total Return, at Net Asset Value2	(39.07)%	4.09%	4.93%	2.33%	5.22%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$63,093	$103,542	$41,191	$11,110	$3,505
Average net assets (in thousands)	$101,597	$70,116	$21,265	$7,213	$3,002
Ratios to average net assets:3
Net investment income	6.55%	4.85%	4.56%	4.29%	3.55%
Total expenses	0.88%4	0.92%4	1.06%4	1.03%	0.99%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.87%	0.92%	1.06%	1.03%	0.99%
Portfolio turnover rate5	51%	89%	114%	111%	95%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.88%
             Year Ended December 31, 20070.92%
             Year Ended December 31, 20061.06%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-relate d securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2008$1,019,711,829$ 963,377,934
             Year Ended December 31, 2007$ 662,784,931$ 678,316,693
             Year Ended December 31, 2006$1,168,229,255$1,270,329,129
             Year Ended December 31, 2005$2,420,041,493$2,423,498,913
             Year Ended December 31, 2004$2,841,348,053$2,925,500,296

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0630.001.0409

Oppenheimer

Global Securities Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Global Securities Fund/VA is a mutual fund that seeks long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. It invests mainly in common stocks of U.S. and foreign issuers.
 
Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class or classes you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Global Securities Fund/VA

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
6	The Fund's Past Performance
7	Fees and Expenses of the Fund
9	About the Fund's Investments
17	How the Fund is Managed
	INVESTING IN THE FUND
18	How to Buy and Sell Shares
24	Dividends, Capital Gains and Taxes
25	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities.

THE FUND'S MAIN INVESTMENT STRATEGIES.

What is "Market Capitalization"? A company's "market capitalization" is the value of its outstanding common stock. Relative to other companies, a company may be classified as small-cap, mid-cap or large-cap.

The Fund mainly invests mainly in common stock of U.S. and foreign companies, The Fund can invest without limit in foreign securities and can invest in any country, including countries with developed or emerging markets. However, the Fund currently emphasizes its investments in developed markets such as the United States, Western European countries and Japan. The Fund does not limit its investments to companies in a particular capitalization range, but primarily invests in mid- and large-cap companies.

As a fundamental policy, the Fund normally will invest in at least three countries (one of which may be the United States). Typically, the Fund invests in a number of different countries. The Fund is not required to allocate its investments in any set percentages in any particular countries. The Fund can also use certain derivative investments.

HOW THE PORTFOLIO MANAGER DECIDES WHAT SECURITIES TO BUY OR SELL. In selecting securities, the Fund's portfolio manager primarily looks for U.S. and foreign companies with high growth potential. This approach includes fundamental analysis of a company's financial statements and management structure and consideration of the company's operations and product development, as well as its position in its industry. The portfolio manager also evaluates factors affecting particular industries, market trends and general economic conditions.

In seeking diversification of the Fund's portfolio, the portfolio manager currently focuses on foreign companies with the following factors, which may vary in particular cases and may change over time:

• Worldwide growth-oriented companies of any market capitalization;

• Companies at attractive valuations that may benefit from global growth trends;

• Companies with strong competitive positions and high demand for their products or services;

• Cyclical opportunities in the business cycle and sectors or industries that may benefit from those opportunities.

The portfolio manager also considers the effect of worldwide trends on the growth of particular business sectors and looks for companies that may benefit from those trends. The trends currently considered include: mass affluence, new technologies, corporate restructuring and demographic changes. The portfolio manager does not invest any fixed amount of the Fund's assets according to these criteria and the trends that are considered may change over time. The portfolio manager monitors individual issuers for changes in the factors above, which may trigger a decision to sell a security.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking capital growth over the long term from a fund that invests in U.S. and foreign issuers. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund focusing on stocks and foreign securities. Because of its focus on long-term growth, the Fund may be appropriate for investors with longer term investment goals. The Fund does not seek current income and the income from its investments will likely be small, so it is not designed for investors needing current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

RISKS OF INVESTING IN STOCK. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience significant volatility and may fall sharply at times. Adverse events in any part of the equity or fixed-income markets may have unexpected negative effects on other market segments. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

A variety of factors can affect the price of a particular company's stock and the prices of individual stocks generally do not all move in the same direction at the same time. These factors may include: poor earnings reports, a loss of customers, litigation against the company, or changes in government regulations affecting the company or its industry.

At times, the Fund may emphasize investments in a particular industry or sector. To the extent that the Fund increases its emphasis on stocks in a particular industry, the value of its investments may fluctuate more in response to events affecting that industry, such as changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others.

RISKS OF GROWTH INVESTING. If a growth company's earnings or stock price fails to increase as anticipated, or if its business plans do not produce the expected results, its securities may decline sharply. Growth companies may be newer or smaller companies that may experience greater stock price fluctuations and risks of loss than larger, more established companies. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Therefore, they may not pay any dividends for some time. Growth investing has gone in and out of favor during past market cycles and is likely to continue to do so. During periods when growth investing is out of favor or when markets are unstable, it may be more difficult to sell growth company securities at an acceptable price. Growth stocks may also be more volatile than other securities because of investor speculation.

RISKS OF FOREIGN INVESTING. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, expropriation or nationalization of a company's assets, or other political and economic factors.

     Special Risks of Developing and Emerging Markets. Developing or emerging market countries generally have less developed securities markets or exchanges. Securities of companies in developing or emerging market countries may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of companies in countries with more mature markets. Settlements of trades may be subject to greater delays so that the proceeds of a sale of a security may not be received on a timely basis. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Developing or emerging market countries may have less developed legal and accounting systems, and investments in those countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of company assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Their governments may also be more unstable than the governments of more developed countries. The value of the currency of a developing or emerging market country may fluctuate more than the currencies of countries with more mature markets. Investments in companies in developing or emerging market countries may be considered speculative.

Investing in Special Situations. At times, the Fund may seek to benefit from what it considers to be "special situations," such as mergers, reorganizations, restructurings or other unusual events, that are expected to affect a particular issuer. There is a risk that the expected change or event might not occur, which could cause the price of the security to fall, perhaps sharply. In that case, the investment might not produce the expected gains or might cause a loss. This is an aggressive investment technique that may be considered speculative.

Cyclical Opportunities. At times, the Fund might seek to take advantage of short-term market movements or changes in the business cycle by investing in companies or industries that are sensitive to those changes. For example, when the economy is expanding, companies in consumer durables and the technology sector might benefit. There is a risk that if a cyclical event does not have the anticipated effect, or when the issuer or industry is out of phase in the business cycle, the value of the Fund's investment could fall.

              ______________________________

There is no assurance that the Fund will achieve its investment objective. In the short term, domestic and foreign stock markets can be volatile. The Fund is designed for investors willing to assume the risks of investing in stocks and foreign securities in the hope of achieving long-term capital appreciation. The Fund is likely to be subject to greater fluctuations in its share prices than funds that invest in both stocks and bonds, or funds that do not invest in foreign issuers.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 36.93% (4th qtr 99) and the lowest return before taxes for a calendar quarter was -21.51% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to a broad-based market index. Because the Fund's Service Shares and Class 4 Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares and Class 3 shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 11-12-90)	(40.19%)	0.39%	5.22%
Service Shares (inception 7-13-00)	(40.33%)	0.15%	(1.10%)
Class 3 Shares (inception 5-1-03)	(40.19%)	0.40%	6.96%
Class 4 Shares (inception 5-3-04)	(40.35%)	(0.30%)	N/A
MSCI World Index (reflects no	(40.33%)	0.00%	(0.19%)2
deductions for fees, expenses or taxes)		(0.14%)3	(2.57%)4
			4.62%1

1. From 4-30-03
2. Ten Years
3. From 4-30-04
4. From 6-30-00

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the Morgan Stanley Capital International (MSCI) World Index, an unmanaged index of equity securities listed on stock exchanges of 23 foreign countries and the U.S. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. The Fund pays a variety of expenses for the management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends and there are no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in either of the tables below.

Shareholder Fees (paid directly from your investment)
	Non-Service Shares	Service Shares	Class 3 Shares	Class 4 Shares
Redemption Fee (as a percentage of total redemption proceeds)1	None	None	1.00%	1.00%

Since these expenses are paid from the Fund's assets, all shareholders pay these expenses indirectly.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares	Class 3 Shares	Class 4 Shares
Management Fees	0.63%	0.63%	0.63%	0.63%
Distribution and/or Service (12b-1) Fees	None	0.25%	None	0.25%
Other Expenses2	0.12%	0.12%	0.12%	0.12%
Total Annual Operating Expenses3	0.75%	1.00%	0.75%	1.00%

1.The Fund imposes a 1% fee on the proceeds of Class 3 and Class 4 Shares that are redeemed within 60 days after their purchase.
2."Other Expenses" include transfer agent fees, custodial fees, and accounting and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.02% for Non-Service, Service and Class 3 shares and were 0.03% for Class 4 shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.
3. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 1.00% for Non-Service and Class 3 Shares and 1.25% for Service and Class 4 Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. After all of the waivers and credits in effect during that period, the actual "Total Annual Operating Expenses," as percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008, were 0.65% for Non-Service and Class 3 Shares, 0.90% for Service Shares and 0.91% for Class 4 Shares. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.75% for Non-Service and Class 3 Shares, 1.00% for Service Shares and Class 4 Shares during the fiscal year ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$77	$241	$418	$934
Service Shares	$103	$320	$555	$1,231
Class 3 Shares	$77	$241	$418	$934
Class 4 Shares	$103	$320	$555	$1,231

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

Investing in Foreign Securities. The Fund may buy stocks and other equity securities of companies that are organized under the laws of a foreign country or that have a substantial portion of their operations or assets in a foreign country or countries, or that derive a substantial portion of their revenue or profits from businesses, investments or sales outside of the United States.

The Fund may also buy debt securities issued by foreign companies. It may buy debt securities issued by foreign governments or their agencies, but debt securities are not expected to be a main investment strategy of the Fund.

• Foreign Market Risk. If there are fewer investors in a particular foreign market, securities traded in that market may be less liquid and more volatile than U.S. securities. Foreign markets may also be subject to delays in the settlement of transactions and difficulties in pricing securities. If the Fund is delayed in settling a purchase or sale transaction, it may not receive any return on the invested assets or it may lose money if the value of the security declines. It may also be more expensive for the Fund to buy or sell securities in certain foreign markets than in the United States, which may increase the Fund's expense ratio.

• Foreign Economy Risk. Foreign economies may be more vulnerable to political or economic changes than the U.S. economy. They may be more concentrated in particular industries or may rely on particular resources or trading partners to a greater extent. Certain foreign economies may be adversely affected by shortages of investment capital or by high rates of inflation. Changes in economic or monetary policy in the U.S. or abroad may also have a greater impact on the economies of certain foreign countries.

• Foreign Governmental and Regulatory Risks. Foreign companies are not subject to the same accounting and disclosure requirements as U.S. companies. As a result there may be less accurate information available regarding a foreign company's operations and financial condition. Foreign companies may be subject to capital controls, nationalization, or confiscatory taxes. Some countries also have restrictions that limit foreign ownership and may impose penalties for increases in the value of the Fund's investment. The value of the Fund's foreign investments may be affected if it experiences difficulties in enforcing legal judgments in foreign courts.

• Foreign Currency Risk. A change in the value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. If the U.S. dollar rises in value against a foreign currency, a security denominated in that currency will be worth less in U.S. dollars and if the U.S. dollar decreases in value against a foreign currency, a security denominated in that currency will be worth more in U.S. dollars. The dollar value of foreign investments may also be affected by exchange controls.

• Foreign Custody Risk. There may be very limited regulatory oversight of certain foreign banks or securities depositories that hold foreign securities and foreign currency and the laws of certain countries may limit the ability to recover such assets if a foreign bank or depository or their agents goes bankrupt.

• Time Zone Arbitrage. If the Fund invests a significant amount of its assets in foreign securities, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time zone arbitrage were successful, it might dilute the interests of other shareholders. The Fund imposes a 1% redemption fee in certain circumstance, to attempt to deter such activity. The Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Manager and the Board believe to be their fair value, may also help deter those activities.

Investing in Growth Companies. Growth companies are companies whose earnings and stock prices are expected to grow at a faster rate than the overall market. Growth companies can be new companies or established companies that may be entering a growth cycle in their business. Their anticipated growth may come from developing new products or services or from expanding into new or growing markets. Growth companies may be applying new technologies, new or improved distribution methods or new business models that could enable them to capture an important or dominant market position. They may have a special area of expertise or the ability to take advantage of changes in demographic or other factors in a more profitable way. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets.  Although newer growth companies may not pay any dividends for some time, their stocks may be valued because of their potential for price increases. Current examples include companies in the fields of telecommunications, computer software, and new consumer products.

Growth stocks may be less liquid and more volatile than other stock investments. They may lose value if the company's business plans do not produce the expected results, or if growth investing falls out of favor with investors. Growth stocks may also be more volatile because of investor speculation.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Other Equity Securities.  In addition to common stocks, the Fund can invest in other equity or "equity equivalents" securities such as preferred stocks or convertible securities. Preferred stocks have a set dividend rate and rank ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. A convertible security is one that can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible securities offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. The Fund considers some convertible securities to be "equity equivalents" because they are convertible into common stock. The credit ratings of those convertible securities generally have less impact on the investment decision, although they are still subject to credit and interest rate risk.

Risks of Small- and Mid-Sized Companies. Small- and mid-sized companies may be either established or newer companies, including "unseasoned" companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain than larger companies, they also involve greater risk of loss. They may be more sensitive to changes in a company's earnings expectations and may experience more abrupt and erratic price movements. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-sized companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since small- and mid-sized companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Smaller companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. Securities of small, unseasoned companies may be particularly volatile, especially in the short term, and may have very limited liquidity. It may take a substantial period of time to realize a gain on an investment in a small- or mid-sized company, if any gain is realized at all.

The Fund currently focuses on securities of issuers that have mid-to-large capitalizations. They may pay higher dividends than small capitalization companies and their stock prices have tended to be less volatile than securities of smaller issuers. However, the Fund can buy stocks of issuers in all capitalization ranges. At times the Manager might increase the relative emphasis of securities of issuers in a particular capitalization range if the Manager believes they offer greater opportunities for total return.

Repurchase Agreements. The Fund may also enter into repurchase agreements. In a repurchase transaction, the Fund buys a security and simultaneously sells it back to the vendor for delivery at a future date. Repurchase agreements must be fully collateralized. However, if the seller fails to pay the repurchase price on the delivery date, the Fund may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so. If the default on the part of the seller is due to its bankruptcy, the Fund's ability to liquidate the collateral may be delayed or limited.

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

Options, futures and forward contracts are some of the types of derivatives the Fund can use. The Fund may also use other types of derivatives that are consistent with its investment strategies or for hedging purposes.

The Fund has percentage limits on its use of hedging instruments and is not required to use hedging instruments in seeking its objective.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, however, the hedge might be unsuccessful or could reduce the Fund's return or create a loss.

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 15% of its net assets in illiquid securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares; however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement,the Fund pays the Manager an advisory fee at anannual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual netassets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.63% of the Fund's average annual net assets for each class of shares.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 1.00% for Non-Service Shares and Class 3 Shares and 1.25% for Service Shares and Class 4 Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.

A discussion regarding the basis for the Board of Trustees'approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders fort he year ended December 31, 2008.

Portfolio Manager. The Fund's portfolio is managed by Rajeev Bhaman, who is primarily responsible for the day-to-day management of the Fund's investments. Mr. Bhaman has been portfolio manager and Vice President of the Fund since August 2004.

Mr. Bhaman, CFA, has been a Senior Vice President of the Manager since May 2006 and was a Vice President of the Manager from January 1997 to May 2006. He is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio manager's compensation, other accounts he manages and his ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers four different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares and Class 4 Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares and Class 3 Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form, less any applicable redemption fee. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 am Eastern Time on the next regular business day.

The Fund does not impose any sales charge on purchases of its shares. However, the Fund imposes a 1% redemption fee on the proceeds of Class 3 and Class 4 shares that are redeemed within 60 days of their purchase. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Redemption Fee. The Fund imposes a 1% redemption fee on Class 3 and Class 4 shares that are redeemed within 60 days of their purchase. The redemption fee is collected by the participating insurance company and paid to the Fund. It is intended to help offset the trading, market impact, and administrative costs associated with short-term transactions in Fund shares, and to help deter excessive short term trading. The redemption fee will only be imposed on the Class 3 or Class 4 shares you redeem that are more than the number of Class 3 or Class 4 shares you have held for more than 60 days. Shares held the longest will be redeemed first.

Redemptions "In-Kind." Shares may be "redeemed in-kind" under certain circumstances (such as redemptions of substantial amounts of shares by shareholders that have consented to such in kind redemptions). That means that the redemption proceeds will be paid to the participating insurance companies in securities from the Fund's portfolio. If the Fund redeems shares in-kind, the insurance company accounts may bear transaction costs and will bear market risks until such securities are converted into cash.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares and Class 4 Shares. The Fund has adopted a Distribution and Service Plan for Service Shares and Class 4 Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares and Class 4 Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and Class 4 Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares and Class 4 Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate
sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares and Class 4 Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares and Class 4 shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$36.60	$36.79	$33.38	$29.51	$25.08
Income (loss) from investment operations:
Net investment income1	.55	.45	.43	.32	.26
Net realized and unrealized gain (loss)	(14.46)	1.69	5.20	3.85	4.49
Total from investment operations	(13.91)	2.14	5.63	4.17	4.75
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.46)	(.50)	(.36)	(.30)	(.32)
Distributions from net realized gain	(2.02)	(1.83)	(1.86)	--	--
Total dividends and/or distributions to shareholders	(2.48)	(2.33)	(2.22)	(.30)	(.32)
Net asset value, end of period	$20.21	$36.60	$36.79	$33.38	$29.51
Total Return, at Net Asset Value2	(40.19)%	6.32%	17.69%	14.31%	19.16%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$1,150,113	$2,193,638	$2,297,315	$2,124,413	$2,518,867
Average net assets (in thousands)	$1,679,720	$2,302,726	$2,189,511	$2,123,523	$2,451,188
Ratios to average net assets:3
Net investment income	1.95%	1.21%	1.27%	1.08%	1.01%
Total expenses	0.65%4,5,6	0.65%4,5,6	0.66%4,5,6	0.67%5	0.66%5
Portfolio turnover rate	19%	18%	21%	35%	30%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.65%
             Year Ended December 31, 20070.65%
             Year Ended December 31, 20060.66%
5. Reduction to custodian expenses less than 0.005%.
6. Waiver or reimbu rsement of indirect management fees less than 0.005%.

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$36.27	$36.49	$33.16	$29.33	$24.96
Income (loss) from investment operations:
Net investment income1	.47	.33	.33	.24	.20
Net realized and unrealized gain (loss)	(14.32)	1.72	5.16	3.84	4.46
Total from investment operations	(13.85)	2.05	5.49	4.08	4.66
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.38)	(.44)	(.30)	(.25)	(.29)
Distributions from net realized gain	(2.02)	(1.83)	(1.86)	--	--
Total dividends and/or distributions to shareholders	(2.40)	(2.27)	(2.16)	(.25)	(.29)
Net asset value, end of period	$20.02	$36.27	$36.49	$33.16	$29.33
Total Return, at Net Asset Value2	(40.33)%	6.08%	17.36%	14.06%	18.88%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$  772,107	$1,300,989	$983,558	$557,284	$346,403
Average net assets (in thousands)	$1,051,239	$1,180,656	$750,499	$413,849	$247,490
Ratios to average net assets:3
Net investment income	1.70%	0.91%	0.98%	0.79%	0.77%
Total expenses	0.90%4,5,6	0.89%4,5,6	0.91%4,5,6	0.92%5	0.91%5
Portfolio turnover rate	19%	18%	21%	35%	30%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.90%
             Year Ended December 31, 20070.89%
             Year Ended December 31, 20060.91%
5. Reduction to custodian expenses less than 0.005%.
6. Waiver or reimbu rsement of indirect management fees less than 0.005%.

Class 3 Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$36.82	$36.99	$33.55	$29.65	$25.19
Income (loss) from investment operations:
Net investment income1	.56	.45	.43	.32	.26
Net realized and unrealized gain (loss)	(14.56)	1.71	5.23	3.88	4.52
Total from investment operations	(14.00)	2.16	5.66	4.20	4.78
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.46)	(.50)	(.36)	(.30)	(.32)
Distributions from net realized gain	(2.02)	(1.83)	(1.86)	--	--
Total dividends and/or distributions to shareholders	(2.48)	(2.33)	(2.22)	(.30)	(.32)
Net asset value, end of period	$20.34	$36.82	$36.99	$33.55	$29.65
Total Return, at Net Asset Value2	(40.19)%	6.34%	17.69%	14.34%	19.19%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$175,971	$361,621	$395,901	$346,064	$265,044
Average net assets (in thousands)	$269,650	$391,270	$369,406	$296,252	$199,388
Ratios to average net assets:3
Net investment income	1.95%	1.22%	1.26%	1.06%	1.00%
Total expenses	0.65%4,5,6	0.65%4,5,6	0.66%4,5,6	0.67%5	0.66%5
Portfolio turnover rate	19%	18%	21%	35%	30%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.65%
             Year Ended December 31, 20070.65%
             Year Ended December 31, 20060.66%
5. Reduction to custodian expenses less than 0.005%.
6. Waiver or reimbu rsement of indirect management fees less than 0.005%.

Class 4 Shares      Year Ended December 31,	2008	2007	2006	2005	20041
Per Share Operating Data
Net asset value, beginning of period	$36.28	$36.49	$33.15	$29.35	$25.21
Income (loss) from investment operations:
Net investment income2	.47	.34	.34	.24	.09
Net realized and unrealized gain (loss)	(14.34)	1.70	5.16	3.84	4.05
Total from investment operations	(13.87)	2.04	5.50	4.08	4.14
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.36)	(.42)	(.30)	(.28)	--
Distributions from net realized gain	(2.02)	(1.83)	(1.86)	--	--
Total dividends and/or distributions to shareholders	(2.38)	(2.25)	(2.16)	(.28)	--
Net asset value, end of period	$20.03	$36.28	$36.49	$33.15	$29.35
Total Return, at Net Asset Value3	(40.35)%	6.06%	17.40%	14.05%	16.42%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$63,099	$123,542	$114,232	$90,604	$37,384
Average net assets (in thousands)	$93,909	$122,385	$100,973	$61,380	$19,774
Ratios to average net assets:4
Net investment income	1.69%	0.93%	1.00%	0.79%	0.53%
Total expenses	0.91%5,6,7	0.90%5,6,7	0.91%5,6,7	0.93%6	0.94%6
Portfolio turnover rate	19%	18%	21%	35%	30%

1. For the period from May 3, 2004 (inception of offering) to December 31, 2004.
2. Per share amounts calculated based on the average shares outstanding during the period.
3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.91%
             Year Ended December 31, 20070.90%
             Year Ended December 31, 20060.91%
6. Reduction to custodian expenses less than 0.005%.
7. Waiver or reimbu rsement of indirect management fees less than 0.005%.

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No.: 811-4108

PR0485.001.0409

Oppenheimer

High Income Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer High Income Fund/VA is a mutual fund that seeks high current income by investing mainly in high-yield, lower-rated fixed-income securities.
 
Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus and explains how to select shares of the Fund as an investment under that insurance product, and which share class or classes you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer High Income Fund/VA 

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
7	The Fund's Past Performance
8	Fees and Expenses of the Fund
10	About the Fund's Investments
21	How the Fund is Managed
	INVESTING IN THE FUND
23	How to Buy and Sell Shares
29	Dividends, Capital Gains and Taxes
30	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT ARE THE FUND'S INVESTMENT OBJECTIVES? The Fund seeks a high level of current income by investing mainly in a diversified portfolio of high-yield, lower-grade, fixed-income securities that the Fund's investment manager, OppenheimerFunds, Inc., believes does not involve undue risk.

THE FUND'S MAIN INVESTMENT STRATEGIES. The Fund invests in a variety of high-yield debt securities and related instruments. Those investments include primarily:

• Lower-grade corporate bonds.

• Foreign corporate and government bonds.

• Swaps, including single name and index-linked credit default swaps.

Under normal market conditions,

What is a Debt Security? A debt security is a security representing money borrowed by the issuer that must be repaid, specifying the amount of principal, the interest or discount rate, and the time or times at which payments are due.

the Fund invests at least 65% of its total assets in high-yield, lower-grade, fixed-income securities, also referred to as "junk" bonds. The remainder of the Fund's assets may be invested in other debt securities, common stocks (and other equity securities), cash or cash equivalents, when the Manager believes these investments are consistent with the Fund's objectives. The Fund has no requirements as to the range of maturities of the debt securities it can buy or as to the market capitalization of the issuers of those securities.

The Fund's debt securities may be rated by nationally recognized statistical rating organizations such as Moody's Investors Service or Standard & Poor's Ratings Services or may be unrated. Lower-grade debt securities are those rated below "Baa" by Moody's Investors Service ("Moody's") or below "BBB" by Standard & Poor's Ratings Services ("S&P") or that have comparable ratings from other nationally-recognized rating organizations. Additionally, unrated debt securities may be determined to be comparable to securities rated below investment grade by the Manager.

The Fund may invest in securities of U.S. or foreign issuers. The Fund currently focuses on securities of foreign issuers in developed markets. The Fund may also use certain types of derivative investments to try to enhance income or to try to manage ("hedge") investment risks, including: options, futures contracts, swaps, "structured" notes, and certain mortgage-related securities.

HOW THE PORTFOLIO MANAGER DECIDES WHAT SECURITIES TO BUY OR SELL. In selecting securities, the Fund's portfolio manager seeks to build a broadly diversified portfolio to try to moderate the special risks of investing in high-yield debt instruments. The portfolio manager currently uses an approach that evaluates the performance of individual securities as well as industry trends. He evaluates an issuer's liquidity, financial strength and earnings power. The Fund's portfolio manager also analyzes the overall investment opportunities and risks in different market sectors and industries. The portfolio manager currently focuses on the following factors, which may vary in particular cases and may change over time:

• Issuers with earnings growth rates that are faster than the growth rate of the overall economy,

• Issuers with improvements in relative cash flows and liquidity to help them meet their obligations,

• Corporate sectors that in the portfolio managers' views are currently undervalued in the marketplace,

• Changes in the business cycle that might affect corporate profits, and

• Securities or sectors that will help the overall diversification of the portfolio.

The Fund may sell securities that the portfolio managers believe no longer meet the above criteria.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking high current income from a fund that invests mainly in lower grade U.S. and foreign debt securities. Those investors should be willing to assume the greater risks of short-term share price fluctuations and the special credit risks that are typical for a fund that invests mainly in lower grade fixed-income securities. The Fund is intended to be a long-term investment, not a short-term trading vehicle. Because the Fund's income will fluctuate, it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

MAIN RISKS OF INVESTING IN DEBT SECURITIES. Debt securities (also referred to as "fixed-income securities") may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or to repay principal, the Fund's income and share value will usually be reduced. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can reduce the market value of the issuer's securities. The values of debt securities are also subject to change when prevailing interest rates change. When prevailing interest rates fall, the values of already-issued debt securities generally rise. When prevailing interest rates rise, the values of already-issued debt securities generally fall, and they may sell at a discount from their face amount or from the amount the Fund paid for them. Interest rate changes generally have a greater effect on longer-term debt securities than on shorter-term debt securities. When interest rates fall, the issuers of debt securities may prepay principal more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes may have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

     Special Risks of Lower-Grade Securities. Lower-grade debt securities, whether rated or unrated, have greater credit risks than investment-grade securities. They may be subject to greater price fluctuations and have a greater risk that the issuer might not be able to pay interest and principal when due. The market for lower-grade securities may be less liquid and therefore they may be harder to value or to sell at an acceptable price, especially during times of market volatility or decline.

Because the Fund can invest without limit in lower-grade securities, the Fund's credit risks are greater than those of funds that buy only investment-grade securities.

FIXED-INCOME MARKET RISKS. Recent developments relating to subprime mortgages have adversely affected fixed-income securities markets in the United States, Europe and elsewhere. The values of many types of debt securities have been reduced, including debt securities that are not related to mortgage loans. These developments have reduced the willingness of some lenders to extend credit and have made it more difficult for borrowers to obtain financing on attractive terms or at all. In addition, broker-dealers and other market participants have been less willing to make a market in some types of debt instruments, which has impacted the liquidity of those instruments. These developments may also have a negative effect on the broader economy. There is a risk that the lack of liquidity or other adverse credit market conditions may hamper the Fund's ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

RISKS OF FOREIGN INVESTING. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, expropriation or nationalization of a company's assets, or other political and economic factors.

     Special Risks of Developing and Emerging Markets. Developing or emerging market countries generally have less developed securities markets or exchanges. Securities of companies in developing or emerging market countries may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of companies in countries with more mature markets. Settlements of trades may be subject to greater delays so that the proceeds of a sale of a security may not be received on a timely basis. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Developing or emerging market countries may have less developed legal and accounting systems, and investments in those countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of company assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Their governments may also be more unstable than the governments of more developed countries. The value of the currency of a developing or emerging market country may fluctuate more than the currencies of countries with more mature markets. Investments in companies in developing or emerging market countries may be considered speculative.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. The Fund imposes a 1% redemption fee in certain circumstances, to attempt to deter such activity.  The Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Fund and the Board believe to be their fair value, may also help deter those activities.

RISKS OF DERIVATIVE INVESTMENTS. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due. Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

                     __________________________________

There is no assurance that the Fund will achieve its investment objective. Debt securities are subject to credit and interest rate risks that can affect their values and the share prices of the Fund. In the short term, the values of high-yield debt securities can fluctuate substantially because of interest rate changes and perceptions about the high-yield market among investors. Defaults by issuers of lower-grade securities could reduce the Fund's income and share prices. Derivative securities can also entail significant risks. Foreign debt securities can be volatile, and the price of the Fund's shares can go up and down substantially because of events affecting foreign markets or issuers. The Fund is likely to be more volatile and has more risks than funds that focus only on investing in U.S. government securities and investment-grade bonds.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service Shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 8.88% (2nd qtr 03) and the lowest return before taxes for a calendar quarter was -71.27% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to a broad-based market index. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 04-30-86)	(78.67%)	(23.62%)	(10.72%)
Service Shares (inception 09-18-01)	(78.57%)	(23.71%)	(14.61%)
Class 3 Shares (inception 05-01-07)	(78.89%)	(61.48%)	N/A
Class 4 Shares (inception 05-01-07)	(78.63%)	(61.22%)	N/A
Merrill Lynch High Yield Master Index	(26.21%)	(0.84%)	2.27%
(reflects no deductions for fees, expenses or taxes)		(17.57%)1	3.39%2

1.  From 4-30-07
2.  From 9-30-01

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the Merrill Lynch High Yield Master Index, an unmanaged index of U.S. corporate and government bonds that is a measure of the performance of the high-yield corporate bond market. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes. The Funds investments vary from those in the index.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. The Fund pays a variety of expenses for the management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends and there are no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in either of the tables below.

Shareholder Fees (paid directly from your investment)
	Non-Service Shares	Service Shares	Class 3 Shares	Class 4 Shares
Redemption Fee (as a percentage of total redemption proceeds)1	None	None	1.00%	1.00%

Since these expenses are paid from the Fund's assets, all shareholders pay these expenses indirectly.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares	Class 3 Shares	Class 4 Shares
Management Fees2	0.73%	0.73%	0.73%	0.73%
Distribution and/or Service (12b-1) Fees	N/A	0.25%	N/A	0.23%
Other Expenses3	0.17%	0.16%	0.17%	0.16%
Total Annual Operating Expenses4	0.90%	1.14%	0.90%	1.12%

1. The Fund imposes a 1% fee on the proceeds of Class 3 and Class 4 Shares that are redeemed within 60 days after their purchase.
2. Effective September 1, 2008 through August 31, 2009, the Manager has voluntarily agreed to reduce its advisory fee rate as further described in the section "How the Fund is Managed - Advisory Fees" of this prospectus. After that waiver, the actual Management Fees during the Fund's fiscal year ended December 31, 2008 was 0.71% for all share classes. That advisory fee reduction is a voluntary undertaking and may be terminated by the Manager at any time. Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.26% of the Fund's average daily net assets. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.
3. "Other expenses" include transfer agent fees, custodial fees, and audit and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed.  The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes.  For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.07% for Non-Service Shares, Service Shares and Class 3 Shares and 0.11% for Class 4 Shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.
4.  Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.75% for Non-Service and Class 3 Shares and 1.00% for Service and Class 4 Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. After all of the expense limitations and waivers/reimbursements in effect during that period, the actual "Total Annual Operating Expenses," as percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008,  were 0.78% for Non-Service Shares; 1.03% for Service Shares; 0.78% for Class 3 Shares; and 1.05% for Class 4 Shares. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.49% for Non-Service Shares and Class 3 Shares and 0.74% for Service Shares and Class 4 Shares, during the fiscal yeear ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Service Shares	$117	$364	$631	$1,394
Non-Service Shares	$92	$288	$501	$1,113
Class 3 Shares	$92	$288	$501	$1,113
Class 4 Shares	$115	$358	$620	$1,371

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

DEBT SECURITIES. The Fund may invest in debt securities, including securities issued or guaranteed by the U.S. government or its agencies and instrumentalities, or by foreign governments, or by foreign or domestic corporations. The Fund may select debt securities for their income possibilities or to help cushion fluctuations in the value of its portfolio.

Debt securities may be subject to the following risks:

• Interest Rate Risk. The values of debt securities usually change when prevailing interest rates change. When interest rates rise, the values of outstanding debt securities generally fall, and those securities may sell at a discount from their face amount. When interest rates fall, the values of already-issued debt securities generally rise. However, when interest rates fall, the Fund's investments in new securities may be at lower yields and may reduce the Fund's income. The values of longer-term debt securities usually change more than the values of shorter-term debt securities when interest rates change.

       The Fund may also buy zero-coupon or "stripped" securities, which may be particularly sensitive to interest rate changes.  Interest rate changes may have different effects on the values of mortgage-related securities because of prepayment and extension risks.

• Prepayment Risk. Certain fixed-income securities are subject to the risk of unanticipated prepayment. That is the risk that when interest rates fall, borrowers will prepay the loans that underlie these securities more quickly than expected, causing the issuer of the security to repay the principal prior to the security's expected maturity. The Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If the Fund buys those securities at a premium, accelerated prepayments on those securities could cause it to lose a portion of its principal investment represented by the premium. The impact of prepayments on the price of a security may be difficult to predict and may increase the security's price volatility. Interest-only and principal-only securities are especially sensitive to interest rate changes, which can affect not only their prices but can also change the income flows and prepayment assumptions about those investments.

• Extension Risk. If interest rates rise rapidly, repayments of principal on certain debt securities may occur at a slower rate than expected and the expected maturity of those securities could lengthen as a result. Those securities generally have a greater potential for loss when prevailing interest rates rise, which could cause their value to fall sharply.

• Credit Risk. Debt securities are also subject to credit risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. Securities directly issued by the U.S. Treasury and certain agencies that are backed by the full faith and credit of the U.S. Government have little credit risk, and other U.S. Government securities generally have lower credit risks, while securities issued by private issuers or certain foreign governments generally have greater credit risks. If an issuer fails to pay interest, the Fund's income might be reduced, and if an issuer fails to repay principal, the values of the security might fall. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. A downgrade in an issuer's credit rating or other adverse news about an issuer can reduce the market value of that issuer's securities.

Credit Quality.  The Fund may invest in securities that are rated or unrated. "Investment grade" securities are rated in one of the top four rating categories by nationally-recognized statistical rating organizations such as Moody's Investors Service or Standard & Poor's Ratings Services. "Lower grade" securities are those that are rated below those categories. While securities rated "Baa" by Moody's or "BBB" by S&P are considered "investment grade," they may also have some speculative characteristics. 

        Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner. They do not reflect any judgment of market risk. Rating agencies might not always change their credit rating of an issuer in a timely manner to reflect events that could affect the issuer's ability to make timely payments on its obligations. In selecting securities for its portfolio and evaluating their income potential and credit risk, the Fund does not rely solely on ratings by rating organizations but evaluates business and economic factors affecting issuers as well. The ratings definitions of the principal ratings organizations are included in Appendix B to the Statement of Additional Information.

High-Yield, Lower-Grade Debt Securities. To seek high current income, under normal market conditions the Fund invests at least 65% of its total assets in high-yield, lower-grade, fixed-income securities of U.S. and foreign issuers. Those securities may include, among others: bonds, debentures, notes, preferred stock, loan participation interests, "structured" notes, commercial mortgage-backed securities, and asset-backed securities. There are no limits on the amount of the Fund's assets that can be invested in securities rated below investment grade. The Fund may invest in securities rated as low as "C" or "D" or that are in default at the time the Fund buys them. Those securities are generally considered speculative.

     Price Arbitrage. Because the Fund may invest in high yield bonds that may trade infrequently, investors might seek to trade fund shares based on their knowledge or understanding of the value of those securities (this is sometimes referred to as "price arbitrage"). The Fund imposes a 1% redemption fee in certain circumstances, to attempt to deter such activity. If such price arbitrage were successful, it might interfere with the efficient management of the Fund's portfolio and the Fund may be required to sell securities at disadvantageous times or prices to satisfy the liquidity requirements created by that activity. Successful price arbitrage might also dilute the value of fund shares held by other shareholders.

Foreign Investments. The Fund can invest its assets without limit in foreign debt securities and can buy securities of governments and companies in both developed markets and emerging markets. The Fund can buy a variety of securities issued by foreign governments and companies, as well as "supra-national" entities, such as the World Bank. The Fund's foreign investments primarily include bonds, debentures and notes. The Fund's foreign investments can be denominated in U.S. dollars or in foreign currencies. While foreign securities may offer special investment opportunities, they are also subject to special risks.

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

        Options, futures, swaps, "structured" notes, and certain mortgage-related securities are some of the types of derivatives the Fund can use. The Fund may also use other types of derivatives for investment or hedging purposes that are consistent with its investment strategies.

      "Structured" Notes. "Structured" notes are specially-designed derivative debt investments. The terms of the instrument may be "structured" by the purchaser and the issuer of the note. Payments of principal or interest on these notes may be linked to the value of an index (such as a currency or securities index), an individual security, or a commodity. The value of these notes will normally rise or fall in response to the changes in the performance of the underlying security, index or commodity.

Structured notes are subject to interest rate risk and are also subject to credit risk with respect both to the borrower (referred to as "counter-party" risk) and to the issuer of the underlying investment. If the underlying investment or index does not perform as anticipated, the Fund might receive less interest than the stated coupon payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult for the Fund to value them or sell them at an acceptable price.

     Credit Default Swaps. A credit default swap enables an investor to buy or sell protection against a credit event, such as an issuer's failure to make timely payments of interest or principal, bankruptcy or restructuring. The terms of the instrument are generally negotiated by the Fund and the swap counterparty. A swap may be embedded within a structured note or other derivative instrument.

Generally, if the Fund buys credit protection using a credit default swap, the Fund will make fixed payments to the counterparty and if a credit event occurs, the Fund will deliver the defaulted bonds underlying the swap to the swap counterparty and the counterparty will pay the Fund par for the bonds. If the Fund sells credit protection using a credit default swap, generally the Fund will receive fixed payments from the counterparty and if a credit event occurs, the Fund will pay the swap counterparty par for the defaulted bonds underlying the swap and the swap counterparty will deliver the bonds to the Fund. If the credit default swap is on a basket of securities, the notional value of the swap is reduced by the par amount of the defaulted bonds, and the fixed payments are then made on the reduced notional value.

Credit default swaps are subject to credit risk on the underlying investment and to counterparty credit risk. If the counterparty fails to meet its obligations the Fund may lose money. Credit default swaps are also subject to the risk that the Fund will not properly assess the cost of the underlying investment. If the Fund is selling credit protection, there is a risk that a credit event will occur and that the Fund will have to pay par value on defaulted bonds. If the Fund is buying credit protection, there is a risk that no credit event will occur and the Fund will receive no benefit for the premium paid.

     Interest Rate Swaps.  In an interest rate swap, the Fund and another party exchange the right to receive interest payments on a security or other reference rate. For example, they might swap the right to receive floating rate payments for the right to receive fixed rate payments. The terms of the instrument are generally negotiated by the Fund and the swap counterparty. An interest rate swap may be embedded within a structured note or other derivative instrument.

Interest rate swaps are subject to interest rate risk and credit risk. An interest rate swap transaction could result in losses if the underlying asset or reference does not perform as anticipated. Interest rate swaps are also subject to counterparty risk. If the counterparty fails to meet its obligations, the Fund may lose money.

     Total Return Swaps. In a total return swap transaction, one party agrees to pay the other party an amount equal to the total return on a defined underlying asset or a non-asset reference during a specified period of time. The underlying asset might be a security or basket of securities or a non-asset reference such as a securities index. In return, the other party would make periodic payments based on a fixed or variable interest rate or on the total return from a different underlying asset or non-asset reference.

Total return swaps could result in losses if the underlying asset or reference does not perform as anticipated. Total return swaps can have the potential for unlimited losses. They are also subject to counterparty risk. If the counterparty fails to meet its obligations, the Fund may lose money.

     Swap Transactions. There is no central exchange or market for swap transactions and therefore they are less liquid than exchange-traded instruments. If the Fund were to sell a swap it owned to a third party, the Fund would still remain primarily liable for the obligations under the swap contract.

DIVERSIFICATION AND CONCENTRATION.  The Fund is a diversified fund. It attempts to reduce its exposure to the risks of individual securities by diversifying its investments across a broad number of different companies. The Fund will not concentrate more than 25% of its total assets in issuers in any one industry.  At times, however, the Fund may emphasize investments in some industries more than others.

The Fund will not concentrate more than 25% of its total assets in the securities of any one foreign government.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Common Stock and Other Equity Investments. Equity securities include common stock, preferred stock, rights, warrants and certain debt securities that are convertible into common stock. Equity investments may be exchange-traded or over-the-counter securities. Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy.

Preferred stock has a set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The dividends on preferred stock may be cumulative (they remain a liability of the company until paid) or non-cumulative. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. When interest rates rise, the value of preferred stock having a fixed dividend rate tends to fall.

A convertible security is one that can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. Convertible securities may provide more income than common stock but they generally provide less income than comparable non-convertible debt securities. Convertible securities are subject to credit and interest rate risk. The credit ratings of convertible securities generally have less impact on the value of the securities than they do for non-convertible debt securities, however.

Risks of Investing in Equity Securities. Stocks and other equity securities fluctuate in price in response to changes in equity markets in general. Equity markets may experience great short-term volatility and may fall sharply at times. Different markets may behave differently from each other and U.S. equity markets may move in the opposite direction from one or more foreign markets.

The prices of equity securities generally do not all move in the same direction at the same time and a variety of factors can affect the price of a particular company's securities. These factors may include: poor earnings reports, a loss of customers, litigation, or changes in government regulations affecting the company or its industry.

At times, the Fund may emphasize investments in a particular industry or sector. To the extent that the Fund increases its emphasis on stocks in a particular industry, the value of its investments may fluctuate more in response to events affecting that industry, such as changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others.

Preferred stock is considered a debt security for purposes of the Fund's policy of investing 65% or more of its assets in lower-grade debt securities.

Mortgage-Related Securities. The Fund can buy interests in pools of residential or commercial mortgages in the form of  "pass-through" mortgage securities. They may be issued or guaranteed by the U.S. Government, or its agencies and instrumentalities, or by private issuers. Mortgage-related securities may be issued in different series, each having different interest rates and maturities. The prices and yields of mortgage-related securities are determined, in part, by assumptions about the rate of payments of the underlying mortgages and are subject to the risks of unanticipated prepayment.

U.S. Government Securities. The Fund invests in securities issued or guaranteed by the U.S. Government or its agencies and instrumentalities. Some of those securities are directly issued by the U.S. Treasury and are backed by the full faith and credit of the U.S. Government. "Full faith and credit" means that the taxing power of the U.S. Government is pledged to the payment of interest and repayment of principal on a security.

Some securities issued by U.S. Government agencies, such as Government National Mortgage Corporation pass-through mortgage obligations ("Ginnie Maes"), are also backed by the full faith and credit of the U.S. Government. Others are supported by the right of the agency to borrow an amount from the U.S. Government (for example, "Fannie Mae" bonds issued by Federal National Mortgage Corporation and "Freddie Mac" obligations issued by Federal Home Loan Mortgage Corporation). Others are supported only by the credit of the agency (for example obligations issued by the Federal Home Loan Banks). On September 7, 2008, the Federal Housing Finance Agency, a new independent regulatory agency, placed the Federal National Mortgage Corporation and Federal Home Loan Mortgage Corporation into conservatorship and the U.S. Department of Treasury made a commitment to purchase mortgage-backed securities from the companies through December 2009. The U.S. Department of Treasury also entered into a new secured lending credit facility with those companies and a Preferred Stock Purchase Agreement. Under those agreements, the Treasury will ensure that each company maintains a positive net worth. 

     U.S. Treasury Securities. Treasury securities are backed by the full faith and credit of the United States for payment of interest and repayment of principal and have little credit risk. Some of the securities that are issued directly by the U.S. Treasury are: Treasury bills (having maturities of one year or less when issued), Treasury notes (having maturities of from one to ten years when issued), Treasury bonds (having maturities of more than ten years when issued) and Treasury Inflation-Protection Securities ("TIPS"). While U.S. Treasury securities have little credit risk, they are subject to price fluctuations from changes in interest rates prior to their maturity.

     Mortgage-Related Government Securities. The Fund can buy interests in pools of residential or commercial mortgages, in the form of "pass-through" mortgage securities. They may be issued or guaranteed by the U.S. Government, or its agencies and instrumentalities. Mortgage-related U.S. Government securities may be issued in different series, each having different interest rates and maturities.

Mortgage-related securities that are U.S. Government securities have collateral to secure payment of interest and principal. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a U.S. Government agency. The prices and yields of mortgage-related securities are determined, in part, by assumptions about the rate of payments of the underlying mortgages and are subject to prepayment and extension risks.

Private-Issuer Securities. The Fund can also invest in securities issued by private issuers, such as banks, savings and loans, and other entities, including mortgage-related securities. Securities issued by private issuers are subject to greater credit risks than U.S. Government securities.

     Mortgage-Related Private Issuer Securities. Primarily these investments include multi-class debt or pass-through certificates secured by mortgage loans, which may be issued by banks, savings and loans, mortgage bankers and other non-governmental issuers.  Private-issuer mortgage-backed securities may include loans on residential or commercial properties.

Mortgage-related securities issued by private issuers are not U.S. Government securities, which makes them subject to greater credit risks. Private issuer securities are subject to the credit risks of the issuers as well as to interest rate risks, although in some cases they may be supported by insurance or guarantees. The prices and yields of private issuer mortgage-related securities are also subject to prepayment and extension risk. The market for private-issuer mortgage-backed securities may be volatile at times and may be less liquid than the markets for other types of securities.

Asset-Backed Securities. Asset-backed securities are fractional interests in pools of loans, other assets or receivables. They are issued by trusts or other special purpose vehicles and are collateralized by the loans, other assets or receivables that make up the pool. The trust or other issuer passes the income from the underlying pool to the investor. Neither the Fund nor the Manager selects the loans or other assets that are included in the pools or the collateral backing those pools. Asset-backed securities are subject to interest rate risk and credit risk. Certain asset-backed securities are subject to prepayment and extension risk.

Zero-Coupon and Stripped Securities. Some of the debt securities the Fund may invest in are "zero-coupon" or "stripped" securities. Zero-coupon securities pay no interest prior to their maturity date or another specified date in the future but are issued at a discount from their face value. Stripped securities are the separate income or principal components of a debt security, such as Treasury securities whose coupons have been stripped by a Federal Reserve Bank. One component might receive all the interest and the other all the principal payments.

Interest rate changes generally cause greater price fluctuations in zero-coupon securities or the "principal-only" components of stripped securities than in interest-paying securities of the same or similar maturities. The Fund may be required to pay a dividend of the imputed income on a zero-coupon or principal-only security at a time when it has not actually received the income. The "interest-only" components of stripped securities are also especially sensitive to changes in prevailing interest rates. The market for some of these securities may be limited, making it difficult for the Fund to dispose of its holdings quickly at an acceptable price.

The Fund can invest up to 50% of its total assets in zero-coupon securities issued by either the U.S. Treasury or by private issuers.

Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation of a borrower. They are typically purchased from banks or dealers that have made the loan, or are members of the loan syndicate, and that act as the servicing agent for the interest. The loans may be to foreign or U.S. companies. Participation interests are subject to the credit risk of the servicing agent as well as the credit risk of the borrower. If a fund purchases a participation interest, it may be only able to enforce its rights through the lender. The Fund can also buy interests in trusts and other entities that hold loan obligations. In that case the Fund will be subject to the trust's credit risks as well as the credit risks of the underlying loans.

The Fund does not invest more than 5% of its net assets in participation interests with respect to any one borrower.

When-Issued and Delayed-Delivery Transactions. The Fund may purchase securities on a "when-issued" basis and may purchase or sell such securities on a "delayed-delivery" basis. When-issued and delayed-delivery securities are purchased at a price that is fixed at the time of the transaction, with payment and delivery of the security made at a later date. During the period between purchase and settlement, the Fund makes no payment to the issuer and no interest accrues to the Fund from the investment.

The securities are subject to changes in value from market fluctuations during the period until settlement and the value of the security on the delivery date may be more or less than the Fund paid. The Fund may lose money if the value of the security declines below the purchase price.

Repurchase Agreements. The Fund may also enter into repurchase agreements. In a repurchase transaction, the Fund buys a security and simultaneously sells it back to the vendor for delivery at a future date. Repurchase agreements must be fully collateralized. However, if the seller fails to pay the repurchase price on the delivery date, the Fund may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so. If the default on the part of the seller is due to its bankruptcy, the Fund's ability to liquidate the collateral may be delayed or limited.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. At times, however, a hedging instrument's value might not be correlated with the investment it is intended to hedge, and the hedge might be unsuccessful. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, the strategy could reduce its return or create a loss.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 15% of its net assets in illiquid securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares; however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.73% of the Fund's average annual net assets for each class of shares.

Effective September 1, 2008 through August 31, 2009 (the "waiver period"), the Manager has voluntarily agreed to reduce its advisory fee rate by 0.10% of the Fund's average daily net assets if the Fund's trailing one-year total return performance is in the fifth quintile of the Fund's Lipper peer group and by 0.05% of the Fund's average daily net assets if the Fund's trailing one-year total return performance is in the fourth quintile of the Fund's Lipper peer group as of August 31, 2008. However, if the Fund's trailing one-year total return performance, as measured at the end of any calendar quarter during the waiver period, improves from the fifth quintile to the fourth quintile, the advisory fee waiver for subsequent quarters during the waiver period will be reduced only by an annualized rate of 0.05% of the Fund's average daily net assets, and if the Fund's trailing one-year total return performance at the end of any calendar quarter during the waiver period improves to the third or higher quintile of the Fund's Lipper peer group, the advisory fee reduction will be terminated effective the following business day. The advisory fee reduction is a voluntary undertaking and may be terminated by the Manager at any time.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.75% for Non-Service and Class 3 Shares and 1.00% for Service and Class 4 Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.

Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.26% of the Fund's average daily net assets.  This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.   

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Managers. The Fund's portfolio is managed by Joseph Welsh, who is primarily responsible for the day-to-day management of the Fund's investments. Mr. Welsh is a portfolio manager and Vice President of the Fund beginning April 1, 2009.

Mr. Welsh, CFA, has been the Head of the Manager's High Yield Corporate Debt Team since April 2009 and a Vice President of the Manager since December 2000. He was an Assistant Vice President of the Manager from December 1996 to November 2000 and a high yield bond analyst of the Manager from January 1995 to December 1996. He was a senior bond analyst with W.R. Huff Asset Management from November 1991 to December 1994. Mr. Welsh is a portfolio manager and officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio manager's compensation, other accounts he manages and his ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers four different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares and Class 4 Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares and Class 3 Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form, less any applicable redemption fee. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 am Eastern Time on the next regular business day.

The Fund does not impose any sales charge on purchases of its shares. However, the Fund imposes a 1% redemption fee on the proceeds of Class 3 and Class 4 shares that are redeemed within 60 days of their purchase. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Redemption Fee. The Fund imposes a 1% redemption fee on Class 3 and Class 4 shares that are redeemed within 60 days of their purchase. The redemption fee is collected by the participating insurance company and paid to the Fund. It is intended to help offset the trading, market impact, and administrative costs associated with short-term transactions in Fund shares, and to help deter excessive short term trading. The redemption fee will only be imposed on the Class 3 or Class 4 shares you redeem that are more than the number of Class 3 or Class 4 shares you have held for more than 60 days. Shares held the longest will be redeemed first.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares and Class 4 Shares. The Fund has adopted a Distribution and Service Plan for Service Shares and Class 4 Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares and Class 4 Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and Class 4 Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares and Class 4 Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate
sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares and Class 4 Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares and Class 4 shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$7.95	$8.55	$8.44	$8.80	$8.61
Income (loss) from investment operations:
Net investment income1	.54	.57	.58	.57	.58
Net realized and unrealized gain (loss)	(6.44)	(.56)	.17	(.37)	.15
Total from investment operations	(5.90)	.01	.75	.20	.73
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.47)	(.61)	(.64)	(.56)	(.54)
Net asset value, end of period	$1.58	$7.95	$8.55	$8.44	$8.80
Total Return, at Net Asset Value2	(78.67)%	(0.10)%	9.42%	2.31%	8.97%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$111,040	$294,819	$361,445	$384,726	$479,405
Average net assets (in thousands)	$211,186	$335,702	$365,154	$444,477	$460,877
Ratios to average net assets:3
Net investment income	9.30%	6.96%	7.05%	6.79%	6.91%
Total expenses	0.80%4	0.75%4	0.74%4	0.75%	0.75%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.78%	0.74%	0.74%	0.75%	0.75%
Portfolio turnover rate	53%5	67%5	57%	64%	51%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.80%
             Year Ended December 31, 20070.76%
             Year Ended December 31, 20060.74%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-relate d securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2008$40,240,084$41,196,921
             Year Ended December 31, 2007$30,798,147$24,096,458

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$7.89	$8.50	$8.39	$8.76	$8.58
Income (loss) from investment operations:
Net investment income1	.54	.55	.56	.55	.56
Net realized and unrealized gain (loss)	(6.40)	(.57)	.17	(.38)	.15
Total from investment operations	(5.86)	(.02)	.73	.17	.71
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.45)	(.59)	(.62)	(.54)	(.53)
Net asset value, end of period	$1.58	$7.89	$8.50	$8.39	$8.76
Total Return, at Net Asset Value2	(78.57)%	(0.47)%	9.23%	2.01%	8.73%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$  43,375	$157,333	$173,299	$155,617	$134,013
Average net assets (in thousands)	$116,236	$169,569	$160,703	$141,287	$101,464
Ratios to average net assets:3
Net investment income	9.13%	6.71%	6.80%	6.54%	6.63%
Total expenses	1.05%4	1.01%4	1.00%4	1.00%	1.01%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.03%	1.00%	1.00%	1.00%	1.01%
Portfolio turnover rate	53%5	67%5	57%	64%	51%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20081.05%
             Year Ended December 31, 20071.02%
             Year Ended December 31, 20061.00%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-relate d securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2008$40,240,084$41,196,921
             Year Ended December 31, 2007$30,798,147$24,096,458

Class 3 Shares      Year Ended December 31,	2008	20071
Per Share Operating Data
Net asset value, beginning of period	$7.98	$8.26
Income (loss) from investment operations:
Net investment income2	.56	.37
Net realized and unrealized loss	(6.50)	(.65)
Total from investment operations	(5.94)	(.28)
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.47)	--
Net asset value, end of period	$1.57	$7.98
Total Return, at Net Asset Value3	(78.89%)	(3.39%)
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$1,582	$4,921
Average net assets (in thousands)	$5,292	$3,750
Ratios to average net assets:4
Net investment income	9.29%	6.90%
Total expenses5	0.80%	0.76%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.78%	0.75%
Portfolio turnover rate6	53%	67%

1. For the period from May 1, 2007 (inception of offering) to December 31, 2007.
2. Per share amounts calculated based on the average shares outstanding during the period.
3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as follows:
        Year Ended December 31, 2008 0.80%
        Period Ended December 31, 2007 0.77%
6. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase Transactions Sale Transactions
       Year Ended December 31, 2008 $40,240,084 $41,196,921
       Period Ended December 31, 2007 $30,798,147 $24,096,458

Class 4 Shares      Year Ended December 31,	2008	20071
Per Share Operating Data
Net asset value, beginning of period	$7.97	$8.26
Income (loss) from investment operations:
Net investment income2	.54	.36
Net realized and unrealized loss	(6.46)	(.65)
Total from investment operations	(5.92)	(.29)
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.46)	--
Net asset value, end of period	$1.59	$7.97
Total Return, at Net Asset Value3	(78.63)%	(3.51)%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$  4,167	$9,476
Average net assets (in thousands)	$10,658	$7,201
Ratios to average net assets:4
Net investment income	9.00%	6.61%
Total expenses5	1.07%	1.05%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.05%	1.04%
Portfolio turnover rate6	53%	67%

1. For the period from May 1, 2007 (inception of offering) to December 31, 2007.
2. Per share amounts calculated based on the average shares outstanding during the period.
3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as follows:
        Year Ended December 31, 2008 1.07%
        Period Ended December 31, 2007 1.06%
6. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase Transactions Sale Transactions
        Year Ended December 31, 2008 $40,240,084 $41,196,921
        Period Ended December 31, 2007 $30,798,147 $24,096,458

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0640.001.0409

Oppenheimer

Main Street Fund®/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Main Street Fund/VA is a mutual fund that seeks high total return. It emphasizes investments in common stock based on analysis using multi-factor quantitative models.
 
Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under the insurance product, and which share class you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Main Street Fund/VA

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
5	The Fund's Past Performance
6	Fees and Expenses of the Fund
7	About the Fund's Investments
13	How the Fund is Managed
	INVESTING IN THE FUND
15	How to Buy and Sell Shares
21	Dividends, Capital Gains and Taxes
22	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks high total return from equity and debt securities.

THE FUND'S MAIN INVESTMENT STRATEGIES.

What are "Larger Capitalization" Issuers? The Fund considers companies with assets in the top 70% of U.S. companies to be "larger-capitalization" (or "larger-cap") issuers.

The Fund mainly invests in common stocks of U.S. companies of different capitalization ranges based on analysis using multi-factor quantitative models. The Fund currently focuses on larger capitalization issuers.

HOW THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL. In selecting securities to buy or sell for the Fund, the Fund's portfolio managers use an investment process that uses multi-factor quantitative models to rank approximately 3,000 stocks on a daily basis. While the process may change over time or vary in particular cases, in general the selection process currently uses:
Multi-factor quantitative models: The Fund uses both "top down" and "bottom up" quantitative models.

• The "top down" market capitalization model seeks to predict the future market direction of the capitalization environment. The portfolio managers divide the domestic equity market into several market-capitalization segments and market capitalization exposure is managed using proprietary modeling that incorporates factors such as relative price momentum and reversals, relative valuations and measures of investors' risk tolerance.

• The "bottom up" stock selection models seek to rank securities within each capitalization range in order of attractiveness. More than a hundred company-specific factors are analyzed in constructing the "bottom up" models, including valuation, profitability, quality, momentum, volatility and special effects. Different models may be used for each of the different market capitalization segments. These models incorporate both macro-economic conditions and seasonal effects to attempt to predict the performance of the company-specific factors. 

Portfolio Construction: The portfolio is then constructed and continuously monitored based on the quantitative investment models. Security weightings are determined according to capitalization outlook, stock ranking and benchmark weighting. The Fund aims to maintain a broadly diversified portfolio that limits idiosyncratic company-specific risks and is scalable, efficient and adaptable.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking high total return. Those investors should be willing to assume the risks described below. Because of its focus on long-term growth, the Fund may be more appropriate for investors with longer term investment goals. The Fund is not designed for investors needing an assured level of current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

RISKS OF INVESTING IN STOCK. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience significant volatility and may fall sharply at times. Adverse events in any part of the equity or fixed-income markets may have unexpected negative effects on other market segments. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

A variety of factors can affect the price of a particular company's stock and the prices of individual stocks generally do not all move in the same direction at the same time. These factors may include: poor earnings reports, a loss of customers, litigation against the company, or changes in government regulations affecting the company or its industry.

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There is no assurance that the Fund will achieve its investment objective. In the OppenheimerFunds spectrum, the Fund is generally more aggressive than funds that invest in both stocks and bonds or in investment grade debt securities but may be less volatile than aggressive growth, small-cap or emerging markets stock funds.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service Shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 14.13% (2nd qtr 03) and the lowest return before taxes for a calendar quarter was -22.18% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to a broad-based market index. Because the Fund's Service Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 7-5-95)	(38.47%)	(3.03%)	(1.27%)
Service Shares (inception 7-13-00)	(38.63%)	(3.28%)	(4.33%)
S&P 500 Index	(36.99%)	(2.19%)	(1.38%)1
(reflects no deduction for fees, expenses or taxes)			(3.76%)2

1. Ten Years
2. 6-30-00

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the S&P 500 Index, an unmanaged index of U.S. equity securities. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. The Fund pays a variety of expenses for the management of its assets, administration and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares
Management Fees	0.64%	0.64%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses1	0.12%	0.12%
Total Annual Operating Expenses2	0.76%	1.01%

1. "Other expenses" include transfer agent fees, custodial fees, and accounting and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.02% for both Non-Service and Service Shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.
2. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. After all of the waivers and credits in effect during that period, the actual "Total Annual Operating Expenses," as a percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008, were 0.66% for Non-Service Shares and 0.91% for Service Shares. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.76% for Non-Service Shares and 1.01% for Service Shares during the fiscal year ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$78	$244	$424	$946
Service Shares	$104	$323	$561	$1,242

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

QUANTITATIVE MODELS. The portfolio managers use quantitative stock selection models that are based upon many factors that measure individual securities relative to each other. The portfolio managers typically use these models to rank more than 3,000 stocks on a daily basis and select those that they deem most attractive. The portfolio is continuously monitored by the portfolio managers based on their analysis of the quantitative tools and other qualitative factors.

COMMON STOCK.  Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy. Common stocks may be exchange-traded or over-the-counter securities. Over-the-counter securities may be less liquid than exchange-traded securities.

DIVERSIFICATION AND CONCENTRATION.  The Fund is a diversified fund. It attempts to reduce its exposure to the risks of individual stocks by diversifying its investments across a broad number of different companies. The Fund will not concentrate more than 25% of its total assets in issuers in any one industry.  At times, however, the Fund may emphasize investments in some industries more than others.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Other Equity Securities.  In addition to common stocks, the Fund can invest in other equity or "equity equivalents" securities such as preferred stocks or convertible securities. Preferred stocks have a set dividend rate and rank ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. A convertible security is one that can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible securities offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. The Fund considers some convertible securities to be "equity equivalents" because they are convertible into common stock. The credit ratings of those convertible securities generally have less impact on the investment decision, although they are still subject to credit and interest rate risk.

Debt Securities.

What is a Debt Security? A debt security is a security representing money borrowed by the issuer that must be repaid, specifying the amount of principal, the interest or discount rate, and the time or times at which payments are due.

The Fund does not focus on debt securities as a principal investment strategy, however debt securities are one of the other investments that the Fund may use. The Fund may invest in debt securities to seek income, for liquidity or for hedging purposes.
     The debt securities the Fund buys may be of any maturity. The Fund's debt securities may be rated by nationally recognized statistical rating organizations such as Moody's Investors Service or Standard Poor's Ratings Services or may be unrated. "Investment grade" refers to securities that are rated in one of the top four rating categories.

• Interest Rate Risk. The values of debt securities usually change when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall. The values of longer-term debt securities usually change more when interest rates change than the values of shorter-term debt securities.

• Credit Risk. Debt securities are also subject to credit risk, which is the risk that the issuer of a security might not make principal or interest payments on the security when they are due. If the issuer fails to pay interest, the Fund's income might be reduced, and if the issuer fails to pay interest or repay principal, the value of the security might fall.

• Special Risks of Lower-Grade Securities. Lower-grade debt securities, whether rated or unrated, have greater risks than investment-grade securities. They may be subject to greater price fluctuations and have a greater risk that the issuer might not be able to pay interest and principal when due. The market for lower-grade securities may be less liquid and therefore they may be harder to value or to sell at an acceptable price, especially during times of market volatility or decline.

• U.S. Government Securities. The Fund can invest in securities issued or guaranteed by the U.S. Treasury or other U.S. government agencies or federally-chartered corporate entities referred to as "instrumentalities." These are referred to as "U.S. government securities" in this prospectus. Although not rated, Treasury obligations have little credit risk but prior to their maturity are subject to interest rate risk.
  

Foreign Investing. The Fund can buy securities issued by companies or governments in any country, including in developing or emerging market countries. While there is no limit on the Fund's foreign investments, the Fund does not currently plan to invest a significant amount of its assets in securities of foreign issuers.

       While foreign securities may offer special investment opportunities, there are also special risks. A change in the value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of the Fund's securities that are denominated in that foreign currency. Additionally, foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in economic or monetary policy in the United States or abroad, or other political and economic factors.

The Fund may invest in securities of foreign issuers that are traded on U.S. or foreign exchanges. If the Fund invests a significant amount of its assets in securities that trade on foreign exchanges, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Manager and the Board believe to be their fair value, may help deter those activities.

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

       Options, futures, options on futures, indices, and forward contracts are some of the derivatives that the Fund may use. The Fund may also use other types of derivatives that are consistent with its investment strategies or hedging purposes.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, however, the hedge might be unsuccessful or could reduce the Fund's return or create a loss.

The Fund has percentage limits on its use of hedging instruments and is not required to use hedging instruments in seeking its objective.

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 15% of its net assets in illiquid securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may, at times, have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares; however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Directors, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and its subsidiaries and controlled affiliates managed more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fee. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: the Fund pays 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.64% of the Fund's average annual net assets for each class of shares.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Managers. The Fund's portfolio is managed by Marc Reinganum, Mark Zavanelli, and Wentong Alex Zhou, who are primarily responsible for the day-to-day management of the Fund's investments. Dr. Reinganum has been a Vice President and co-portfolio manager of the Fund since October 2003 and Mr. Zavanelli and Dr. Zhou are co-portfolio managers of the Fund since June 2008. 

Dr. Reinganum has been a Vice President of the Manager and Director of Quantitative Research and Portfolio Strategist for Equities since September 2002. He has been on the Board of Directors of The Quantitative Institute for Research in Finance since October 2008. He was the Mary Jo Vaughn Rauscher Chair in Financial Investments at Southern Methodist University from 1995 to 2002. At Southern Methodist University he also served as the Director of the Finance Institute, the Chairman of the Finance Department, the President of the Faculty at the Cox School of Business and a member of the Board of Trustees Investment Committee. He is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

Mr. Zavanelli has been a Vice President of the Manager since November 2000. He is an officer of 3 portfolios in the OppenheimerFunds complex. Prior to joining the Manager in May 1998, Mr. Zavanelli was President of Waterside Capital Management, a registered investment advisor from August 1995 through April 1998. He is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

Dr. Zhou, CFA, has been a senior quantitative analyst of the Manager since June 1999, assisting in the management and maintenance of the quantitative models for the Main Street Funds. He has been a portfolio manager of the Manager since January 2007 and an Assistant Vice President of the Manager since 2001.  He is a portfolio manager of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts they manage and their ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Redemptions "In-Kind." Shares may be "redeemed in-kind" under certain circumstances (such as redemptions of substantial amounts of shares by shareholders that have consented to such in kind redemptions). That means that the redemption proceeds will be paid to the participating insurance companies in securities from the Fund's portfolio. If the Fund redeems shares in-kind, the insurance company accounts may bear transaction costs and will bear market risks until such securities are converted into cash.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$25.61	$24.78	$21.79	$20.84	$19.20
Income (loss) from investment operations:
Net investment income1	.29	.33	.27	.26	.27
Net realized and unrealized gain (loss)	(9.64)	.75	2.98	.97	1.53
Total from investment operations	(9.35)	1.08	3.25	1.23	1.80
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.32)	(.25)	(.26)	(.28)	(.16)
Distributions from net realized gain	(1.38)	--	--	--	--
Total dividends and/or distributions to shareholders	(1.70)	(.25)	(.26)	(.28)	(.16)
Net asset value, end of period	$14.56	$25.61	$24.78	$21.79	$20.84
Total Return, at Net Asset Value2	(38.47)%	4.43%	15.03%	5.98%	9.46%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$432,360	$  907,727	$1,046,146	$1,121,476	$1,238,948
Average net assets (in thousands)	$670,994	$1,006,655	$1,054,522	$1,156,299	$1,216,081
Ratios to average net assets:3
Net investment income	1.42%	1.28%	1.19%	1.26%	1.39%
Total expenses	0.66%4,5,6	0.65%4,5,6	0.66%4,5	0.67%6	0.67%6
Portfolio turnover rate	132%	111%	100%	88%	82%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.66%
             Year Ended December 31, 20070.65%
             Year Ended December 31, 20060.66%
5. Waiver or reimbursement of indirect management fees less than 0.005%.
6. Reduction to custodian expenses less than 0.005%.

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$25.38	$24.58	$21.63	$20.70	$19.10
Income (loss) from investment operations:
Net investment income1	.24	.26	.22	.21	.25
Net realized and unrealized gain (loss)	(9.56)	.75	2.95	.96	1.49
Total from investment operations	(9.32)	1.01	3.17	1.17	1.74
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.26)	(.21)	(.22)	(.24)	(.14)
Distributions from net realized gain	(1.38)	--	--	--	--
Total dividends and/or distributions to shareholders	(1.64)	(.21)	(.22)	(.24)	(.14)
Net asset value, end of period	$14.42	$25.38	$24.58	$21.63	$20.70
Total Return, at Net Asset Value2	(38.63)%	4.15%	14.76%	5.74%	9.15%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$1,020,103	$1,464,690	$1,099,293	$598,348	$372,845
Average net assets (in thousands)	$1,268,430	$1,315,488	$  810,181	$462,272	$262,660
Ratios to average net assets:3
Net investment income	1.20%	1.03%	0.95%	1.02%	1.30%
Total expenses	0.91%4,5,6	0.90%4,5,6	0.91%4,5	0.91%6	0.92%6
Portfolio turnover rate	132%	111%	100%	88%	82%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.91%
             Year Ended December 31, 20070.90%
             Year Ended December 31, 20060.91%
5. Waiver or reimbursement of indirect management fees less than 0.005%.
6. Reduction to custodian expenses less than 0.005%.

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0650.001.0409

Oppenheimer

Main Street Small Cap Fund®/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Main Street Small Cap Fund/VA is a mutual fund that seeks capital appreciation. The Fund invests mainly in common stocks of "small-cap" companies.
 
Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under the insurance product and which share class you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Main Street Small Cap Fund/VA

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
6	The Fund's Past Performance
7	Fees and Expenses of the Fund
8	About the Fund's Investments
14	How the Fund is Managed
	INVESTING IN THE FUND
16	How to Buy and Sell Shares
22	Dividends, Capital Gains and Taxes
22	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES.

What is "Market Capitalization"? A company's "market capitalization" is the value of its outstanding common stock. Relative to other companies, a company may be classified as small-cap, mid-cap or large-cap.

The Fund mainly invests in common stocks of small-capitalization U.S. companies based on analysis using multi-factor quantitative models. Under normal market conditions, the Fund will invest at least 80% of its net assets, including any borrowings for investment purposes, in securities of companies having a small market capitalization.
The Fund defines small capitalization or "small-cap" issuers as companies with market capitalizations less than or equal to the largest company in the Russell 2000 ("Russell 2000") or the S&P Small Cap 600 ("S&P 600") index. The capitalization of the largest company in the Russell 2000 or S&P 600 index is currently $3.5 billion but that is subject to change due to market activity or changes in the composition of the indices.

The Fund measures a company's capitalization at the time the Fund buys a security and is not required to sell a security if the company's capitalization exceeds the Fund's definition of a small cap issuer.

HOW THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL. In selecting securities to buy or sell for the Fund, the Fund's portfolio managers use an investment process that uses multi-factor quantitative models to rank approximately 3,000 stocks on a daily basis. While the process may change over time or vary in particular cases, in general the selection process currently uses:
Multi-factor quantitative models: The Fund uses both "top down" and "bottom up" quantitative models.

• The "top down" market capitalization model seeks to predict the future market direction of the capitalization environment. The portfolio managers divide the domestic equity market into several market-capitalization segments and market capitalization exposure is managed using proprietary modeling that incorporates factors such as relative price momentum and reversals, relative valuations and measures of investors' risk tolerance.

• The "bottom up" stock selection models seek to rank securities within each capitalization range in order of attractiveness. More than a hundred company-specific factors are analyzed in constructing the "bottom up" models, including valuation, profitability, quality, momentum, volatility and special effects. Different models may be used for each of the different market capitalization segments. These models incorporate both macro-economic conditions and seasonal effects to attempt to predict the performance of the company-specific factors. 

Portfolio Construction: The portfolio is then constructed and continuously monitored based on the quantitative investment models. Security weightings are determined according to capitalization outlook, stock ranking and benchmark weighting. The Fund aims to maintain a broadly diversified portfolio that limits idiosyncratic company-specific risks and is scalable, efficient and adaptable.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking capital appreciation over the long term. Those investors should be willing to assume the greater risks of short-term share price fluctuations that are typical for a fund focusing on small-cap stocks. Because of its focus on long-term growth, the Fund may be more appropriate for investors with longer term investment goals. The Fund it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

RISKS OF INVESTING IN STOCK. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience significant volatility and may fall sharply at times. Adverse events in any part of the equity or fixed-income markets may have unexpected negative effects on other market segments. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

A variety of factors can affect the price of a particular company's stock and the prices of individual stocks generally do not all move in the same direction at the same time. These factors may include: poor earnings reports, a loss of customers, litigation against the company, or changes in government regulations affecting the company or its industry.

At times, the Fund may emphasize investments in a particular industry or sector. To the extent that the Fund increases its emphasis on stocks in a particular industry, the value of its investments may fluctuate more in response to events affecting that industry, such as changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others.

RISKS OF SMALL-CAP COMPANIES. Small-cap companies may be either established or newer companies, including "unseasoned" companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain than larger companies, they also involve greater risk of loss. They may be more sensitive to changes in a company's earnings expectations and may experience more abrupt and erratic price movements than larger companies. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small-cap companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since smaller companies typically reinvest a high proportion of their earnings in their business, they may lack liquidity in a declining market, particularly if they are newer companies. Small-cap companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. It may take a substantial period of time before the Fund realizes a gain on an investment in a small- or mid-sized company, if it realizes any gain at all.

Investing in Small, Unseasoned Companies. The Fund may invest in the securities of small, unseasoned companies that have been in operation for less than three years. In addition to the risks of other small-sized issuers, the price of the securities of these companies may be particularly volatile, especially in the short term, and may have very limited liquidity. Securities of smaller, newer companies are also subject to greater risks of default than those of larger, more established issuers.

     Price Arbitrage. Because the Fund may invest in smaller company stocks that might trade infrequently, investors might seek to trade fund shares based on their knowledge or understanding of the value of those securities (this is sometimes referred to as "price arbitrage"). If such price arbitrage were successful, it might interfere with the efficient management of the Fund's portfolio and the Fund may be required to sell securities at disadvantageous times or prices to satisfy the liquidity requirements created by that activity. Successful price arbitrage might also dilute the value of fund shares held by other shareholders.

                              ____________________________________

There is no assurance that the Fund will achieve its investment objective. In the OppenheimerFunds spectrum, the Fund is an aggressive investment vehicle, designed for investors willing to assume the risks of investing in small-cap companies in the hope of achieving greater gains. In the short term, the stock market and small-cap stocks can be volatile. The Fund may be subject to greater fluctuations in its share prices than funds that emphasize large capitalization stocks or funds that focus on both stocks and fixed-income securities.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service Shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was  49.05% (4th qtr 99) and the lowest return before taxes for a calendar quarter was -27.25% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to a broad-based market index. Because the Fund's Service Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 5-1-98)	(37.83%)	(1.50%)	3.01%
Service Shares (inception 7-16-01)	(38.00%)	(1.73%)	1.98%
Russell 2000 Index	(33.79%)	(0.93%)	(1.38%)1
(reflects no deduction for fees, expenses or taxes)			1.70%2

1. Ten Years
2. From 7/31/01

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the Russell 2000 Index, an unmanaged index of equity securities of small capitalization companies that is a measure of the small company market. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. The Fund pays a variety of expenses for the management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares
Management Fees	0.69%	0.69%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses1	0.15%	0.15%
Total Annual Operating Expenses2	0.84%	1.09%

1.  "Other expenses" include transfer agent fees, custodial fees, and accounting and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.06% for Non-Service Shares and 0.05% for Service Shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.
2.  Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. After all of the waivers and credits in effect during that period, the actual "Total Annual Operating Expenses," as a percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008, were 0.75% for Non-Service Shares and 0.99% for Service Shares. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.80% for Non-Service Shares and 1.05% for Service Shares during the fiscal year ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$86	$269	$468	$1,041
Service Shares	$112	$348	$604	$1,336

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

QUANTITATIVE MODELS. The portfolio managers use quantitative stock selection models that are based upon many factors that measure individual securities relative to each other. The portfolio managers typically use these models to rank more than 3,000 stocks on a daily basis and select those that they deem most attractive. The portfolio is continuously monitored by the portfolio managers based on their analysis of the quantitative tools and other qualitative factors.

COMMON STOCK.  Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy. Common stocks may be exchange-traded or over-the-counter securities. Over-the-counter securities may be less liquid than exchange-traded securities.

SMALL-CAP COMPANIES. The Fund invests mainly in the common stock of small cap companies. The small-cap companies in which the Fund invests may include companies that are developing new products or services with relatively favorable prospects, or that are expanding into new and growing markets. That may enable them to capture a dominant or important market position. Some small-cap companies may have a special area of expertise or the ability to take advantage of changes in market or demographic factors in a more profitable way than larger, more established companies.

DIVERSIFICATION AND CONCENTRATION.  The Fund is a diversified fund. It attempts to reduce its exposure to the risks of individual stocks by diversifying its investments across a broad number of different companies. The Fund will not concentrate more than 25% of its total assets in issuers in any one industry.  At times, however, the Fund may emphasize investments in some industries more than others.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Other Capitalization Ranges. If the Manager believes they offer opportunities for growth, up to 20% of the Fund's assets may be invested in securities of mid-cap and large-cap companies.

Other Equity Securities.  In addition to common stocks, the Fund can invest in other equity or "equity equivalents" securities such as preferred stocks or convertible securities. Preferred stocks have a set dividend rate and rank ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. A convertible security is one that can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible securities offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. The Fund considers some convertible securities to be "equity equivalents" because they are convertible into common stock. The credit ratings of those convertible securities generally have less impact on the investment decision, although they are still subject to credit and interest rate risk.

Risks of Foreign Investing. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements as U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, or other political and economic factors.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Fund and the Board believe to be their fair value, may help deter those activities.

Special Risks of Initial Public Offerings (IPOs). The Fund has no limit on the amount of its assets that can be invested in IPOs. By definition, securities issued in IPOs have not traded publicly until the time of their offerings. Special risks associated with IPOs may include, among others, the fact that there may be only a limited number of shares available for trading. The market for those securities may be unseasoned. The issuer may have a limited operating history. These factors may contribute to price volatility. The limited number of shares available for trading in some IPOs may also make it more difficult for the Fund to buy or sell significant amounts of shares without an unfavorable impact on prevailing prices. In addition, some companies initially offering their shares publicly are involved in relatively new industries or lines of business, which may not be widely understood by investors. Some of the companies involved in new industries may be regarded as developmental stage companies, without revenues or operating income, or the near-term prospects of them. Many IPOs are by small- or micro-cap companies that are undercapitalized.

Typically the Fund invests less than 5% of its assets in unseasoned companies.

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

       Options, futures, options on futures and forward contracts are some of the derivatives that the Fund may use. The Fund may also use other types of derivatives that are consistent with its investment strategies or hedging purposes.

The Fund has percentage limits on its use of hedging instruments and is not required to use hedging instruments in seeking its objective.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, however, the hedge might be unsuccessful or could reduce the Fund's return or create a loss.

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 10% of its net assets in illiquid or restricted securities.  The Board can increase that limit to 15%. The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

Loans of portfolio securities are limited to not more than 25% of the value of the Fund's net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may, at times, have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares, however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. Shareholders will receive 60 days advance notice of any change in the 80% investment policy described in "The Fund's Main Investment Strategies." The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fee. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: the Fund pays 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.69% of the Fund's average annual net assets for each class of shares.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Managers. The Fund's portfolio is managed by Mark Zavanelli and Marc Reinganum, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Zavanelli has been a Vice President and co-portfolio manager of the Fund since August 1999 and Dr. Reinganum is co-portfolio manager of the Fund effective June 30, 2008.

Mr. Zavanelli has been a Vice President of the Manager since November 2000. He is an officer of 3 portfolios in the OppenheimerFunds complex. Prior to joining the Manager in May 1998, Mr. Zavanelli was President of Waterside Capital Management, a registered investment advisor from August 1995 through April 1998. He is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

Dr. Reinganum has been a Vice President of the Manager and Director of Quantitative Research and Portfolio Strategist for Equities since September 2002. He has been on the Board of Directors of The Quantitative Institute for Research in Finance since October 2008. He was the Mary Jo Vaughn Rauscher Chair in Financial Investments at Southern Methodist University from 1995 to 2002. At Southern Methodist University he also served as the Director of the Finance Institute, the Chairman of the Finance Department, the President of the Faculty at the Cox School of Business and a member of the Board of Trustees Investment Committee. He is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts they manage and their ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$18.20	$19.15	$17.18	$16.05	$13.44
Income (loss) from investment operations:
Net investment income1	.12	.09	.08	.04	.01
Net realized and unrealized gain (loss)	(6.73)	(.30)	2.46	1.51	2.60
Total from investment operations	(6.61)	(.21)	2.54	1.55	2.61
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.08)	(.06)	(.03)	--	--
Distributions from net realized gain	(.86)	(.68)	(.54)	(.42)	--
Total dividends and/or distributions to shareholders	(.94)	(.74)	(.57)	(.42)	--
Net asset value, end of period	$10.65	$18.20	$19.15	$17.18	$16.05
Total Return, at Net Asset Value2	(37.83)%	(1.21)%	15.00%	9.92%	19.42%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$58,478	$93,939	$81,405	$44,820	$38,636
Average net assets (in thousands)	$80,406	$94,815	$62,659	$39,708	$30,871
Ratios to average net assets:3
Net investment income	0.80%	0.48%	0.46%	0.23%	0.06%
Total expenses	0.75%4,5,6	0.73%4,5,6	0.77%4,5	0.81%6	0.83%6
Portfolio turnover rate	130%	115%	110%	110%	147%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total Expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.75%
             Year Ended December 31, 20070.73%
             Year Ended December 31, 20060.77%
5. Waiver or reimbursement of indirect management fees less than 0.005%.
6. Reduction to custodian expenses less than 0.005%.

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$18.03	$18.98	$17.06	$15.97	$13.40
Income (loss) from investment operations:
Net investment income (loss)1	.08	.05	.04	--2	(.02)
Net realized and unrealized gain (loss)	(6.67)	(.29)	2.42	1.51	2.59
Total from investment operations	(6.59)	(.24)	2.46	1.51	2.57
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.04)	(.03)	--2	--	--
Distributions from net realized gain	(.86)	(.68)	(.54)	(.42)	--
Total dividends and/or distributions to shareholders	(.90)	(.71)	(.54)	(.42)	--
Net asset value, end of period	$10.54	$18.03	$18.98	$17.06	$15.97
Total Return, at Net Asset Value3	(38.00)%	(1.39)%	14.66%	9.71%	19.18%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$551,644	$821,642	$636,430	$314,868	$173,612
Average net assets (in thousands)	$769,150	$766,102	$479,456	$221,324	$112,279
Ratios to average net assets:4
Net investment income (loss)	0.52%	0.23%	0.23%	0.02%	(0.14)%
Total expenses	0.99%5,6,7	0.97%5,6,7	1.00%5,6	1.04%7	1.06%7
Portfolio turnover rate	130%	115%	110%	110%	147%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.99%
             Year Ended December 31, 20070.97%
             Year Ended December 31, 20061.00%
6. Waiver or reimbursement of indirect management fees less than 0.005%.
7. Reduction to custodian expenses less than 0.005%.

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0297.001.0409

Oppenheimer

MidCap Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer MidCap Fund/VA is a mutual fund that seeks capital appreciation by investing in "growth type" companies. It currently emphasizes investments in common stocks of companies having a market capitalization between $2 billion and $11.5 billion.
 
Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus and explains how to select shares of the Fund as an investment under that insurance product, and whether you are eligible to purchase Service Shares of the Fund.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer MidCap Fund/VA

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
6	The Fund's Past Performance
7	Fees and Expenses of the Fund
9	About the Fund's Investments
15	How the Fund is Managed
	INVESTING IN THE FUND
17	How to Buy and Sell Shares
23	Dividends, Capital Gains and Taxes
24	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks capital appreciation by investing in "growth type" companies.

THE FUND'S MAIN INVESTMENT STRATEGIES.

What is "Market Capitalization"? A company's "market capitalization" is the value of its outstanding common stock. Relative to other companies, a company may be classified as small-cap, mid-cap or large-cap.

The Fund mainly invests in equity securities, such as common stocks, preferred stocks, and convertible securities that the portfolio manager expects to have above-average growth rates. Under normal market conditions, the Fund invests at least 80% of its net assets, plus borrowings for investment purposes, in equity securities of "mid-cap" companies. Under normal market conditions the Fund can invest up to 20% of its net assets, plus borrowings for investment purposes, in stocks of companies in other market capitalizations, if the Manager believes they offer opportunities for growth.

The Fund primarily invests in U.S. companies

What are "Mid-Cap" Companies? The Fund considers companies with market capitalizations between $2 billion and $11.5 billion to be mid-cap companies.


but may also purchase securities of issuers in any country, including developed countries and emerging markets. The Fund has no limits on the amount of its assets that can be invested in foreign securities, but has adopted an operating policy limiting its investments in foreign securities to 25% of its total assets.

HOW THE PORTFOLIO MANAGER DECIDES WHAT SECURITIES TO BUY OR SELL. In selecting securities, the Fund's portfolio manager looks for companies with high growth potential using a "bottom-up" stock selection process. The "bottom-up" approach focuses on fundamental analysis of individual issuers before considering the impact of overall economic, market or industry trends. This approach includes analysis of a company's financial statements and management structure and consideration of the company's operations and product development, as well as its position in its industry. The portfolio manager looks for companies with revenues growing at above-average rates that might support and sustain above-average earnings. The portfolio manager also evaluates other business and economic factors, including cyclical factors, that might contribute to the company's stock appreciation.

The Fund's portfolio manager currently focuses on companies with the following characteristics, which may vary in particular cases and may change over time:

• Companies with market capitalization between $2 billion and $11.5 billion;

• An above-average rate of high quality growth that the portfolio manager believes is sustainable;

• Experienced management teams with proven records;

• Industry leaders with competitive advantages;

• Companies with strong financials including low debt.

The portfolio manager monitors individual issuers for changes in business fundamentals and valuation. If the portfolio manager notes a slowdown in the company's internal revenue growth or earnings growth or a negative movement in the company's fundamental economic condition, and if there are other investment alternatives that offer what he believes to be better appreciation possibilities, he will consider selling that stock.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking capital appreciation over the long term. Those investors should be willing to assume the risks of short-term share price fluctuations and losses that are typical for a growth fund focusing on mid-cap stock investments. Because of its focus on long-term growth, the Fund may be appropriate for investors with longer term investment goals. The Fund does not seek current income and the income from its investments will likely be small, so it is not designed for investors needing current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

RISKS OF INVESTING IN STOCK. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience significant volatility and may fall sharply at times. Adverse events in any part of the equity or fixed-income markets may have unexpected negative effects on other market segments. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

A variety of factors can affect the price of a particular company's stock and the prices of individual stocks generally do not all move in the same direction at the same time. These factors may include: poor earnings reports, a loss of customers, litigation against the company, or changes in government regulations affecting the company or its industry.

At times, the Fund may emphasize investments in a particular industry or sector. To the extent that the Fund increases its emphasis on stocks in a particular industry, the value of its investments may fluctuate more in response to events affecting that industry, such as changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others.

SPECIAL RISKS OF MID-CAP COMPANIES. Mid-cap companies are generally companies that have completed their initial start-up cycle. While mid-cap companies might offer greater opportunities for gain than larger companies, they also involve greater risk of loss. They may be more sensitive to changes in a company's earnings expectations and may experience more abrupt and erratic price movements than larger companies. Mid-cap companies' securities are often traded in over-the-counter markets and therefore may be less liquid than stocks of larger exchange-traded issuers, meaning it might be harder for the Fund to dispose of those holdings at an acceptable price when it wants to sell them. Mid-cap companies may have less established markets for their products or services and may have fewer customers and product lines than larger companies. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since mid-cap companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Mid-cap companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. Securities of unseasoned companies may be particularly volatile, especially in the short term and in periods of market instability. It may take a substantial period of time to realize a gain on an investment in a mid-cap company, if any gain is realized at all.

RISKS OF GROWTH INVESTING. If a growth company's earnings or stock price fails to increase as anticipated, or if its business plans do not produce the expected results, its securities may decline sharply. Growth companies may be newer or smaller companies that may experience greater stock price fluctuations and risks of loss than larger, more established companies. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Therefore, they may not pay any dividends for some time. Growth investing has gone in and out of favor during past market cycles and is likely to continue to do so. During periods when growth investing is out of favor or when markets are unstable, it may be more difficult to sell growth company securities at an acceptable price. Growth stocks may also be more volatile than other securities because of investor speculation.

RISKS OF TECHNOLOGY STOCKS. Technology companies and companies having significant investments in technology are particularly vulnerable to the risks of technology markets and economic events that affect those markets. The technology sector has historically exhibited great fluctuation in valuations. The stock prices of technology companies have been highly volatile, largely due to the rapid pace of product changes and developments within the sector. That price volatility may be expected to continue into the future.

Some technological developments may never become commercially successful or may rapidly become obsolete. Technologies that are dependent on consumer demand may also be more sensitive to changes in consumer spending patterns. Technology companies focusing on the information and telecommunications sectors may be adversely affected by international, federal and state regulations.

     __________________________________________________

There is no assurance that the Fund will achieve its investment objective. The Fund is an aggressive investment vehicle, and in the short term, its share prices can be expected to be volatile. The Fund is designed for investors willing to assume greater risks of investments in the equity securities of mid-cap companies in the hope of achieving long-term capital appreciation. The Fund generally does not use income-oriented investments to help cushion the Fund's return from changes in stock prices. The Fund is likely to be subject to greater fluctuations in its share prices than funds that emphasize large capitalization stocks or that invest in both stocks and bonds.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service Shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 45.84% (4th qtr 99) and the lowest return before taxes for a calendar quarter was -32.43% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to two broad-based market indices. Because the Fund's Service Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 8-15-86)	(49.07%)	(5.59%)	(2.68%)
Service Shares (inception 10-16-00)	(49.21%)	(5.85%)	(12.57%)
S&P 500 Index	(36.99%)	(2.19%)	(1.38%)1
(reflects no deduction for fees, expenses or taxes)			(3.75%)2
Russell Midcap® Growth Index	(44.32%)	(2.33%)	(0.19%)1
(reflects no deduction for fees, expenses or taxes)			(5.95%)2

1. Ten Years
2. From 10-31-00

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the S&P 500 Index, an unmanaged index of equity securities that is a measure of the general domestic stock market and the Russell Midcap® Growth Index, an unmanaged index of medium-capitalization domestic growth stocks. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes. The Fund's investments vary from those in the indices.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. The Fund pays a variety of expenses for the management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares
Management Fees1	0.70%	0.70%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses2	0.11%	0.10%
Total Annual Operating Expenses3	0.81%	1.05%

1.  Effective September 1, 2008 through August 31, 2009, the Manager has voluntarily agreed to reduce its advisory fee rate by 0.10% of the Fund's average daily net assets if the Fund's trailing one-year total return performance is in the fourth or fifth quintile of the Fund's Lipper peer group as of August 31, 2008. However, if the Fund's trailing one-year total return performance, as measured at the end of any subsequent calendar quarter during this waiver period, improves to the third or higher quintile of the Fund's Lipper peer group, the advisory fee reduction will be terminated effective the following business day. In addition, effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.09% of the Fund's average daily net assets. This voluntary waiver will be applied after all other waivers. These advisory fee reductions are voluntary undertakings and may be terminated by the Manager at any time.
2. "Other expenses" include transfer agent fees, custodial fees, and audit and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.01% for Non-Service Shares and 0.03% for Service Shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.      
3.  Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% of Non-Service Shares and 1.05% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. After all of the waivers and credits in effect during that period, the actual "Total Annual Operating Expenses", as percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.68% for Non-Service Shares and 0.95% for Service Shares. It is estimated that after giving effect to all of the current fees, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.71% for Non-Service Shares and 0.96% for Service Shares during the fiscal year ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$83	$260	$451	$1,006
Service Shares	$108	$336	$582	$1,289

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

MID-CAP INVESTMENTS. Mid-cap companies are generally companies that have completed their initial start-up cycle, and in many cases have established markets and developed seasoned management teams. The portfolio manager searches for stocks of mid-cap companies that have the financial stability approximating that of larger companies and the high growth potential associated with smaller companies. The portfolio manager will not normally invest in stocks of companies in "turnaround" situations until the company's operating characteristics have improved.

The Fund measures the market capitalization of an issuer at the time of investment. Because the relative sizes of companies change over time as the stock market changes, the Fund's definition of what is a "mid-cap" company may change over time as well. After the Fund buys their stock, individual companies may grow and no longer fall within the Fund's definition of a "mid-cap" issuer. Although the Fund is not required to sell the stock of companies whose market capitalizations have grown beyond the Fund's mid-cap definition, it might sell some of those holdings to try to lower the dollar-weighted median capitalization of its portfolio. That might cause the Fund to realize capital gains on the investment and could increase taxable distributions to shareholders.

INVESTING IN GROWTH COMPANIES. Growth companies are companies whose earnings and stock prices are expected to grow at a faster rate than the overall market. Growth companies can be new companies or established companies that may be entering a growth cycle in their business. Their anticipated growth may come from developing new products or services or from expanding into new or growing markets. Growth companies may be applying new technologies, new or improved distribution methods or new business models that could enable them to capture an important or dominant market position. They may have a special area of expertise or the ability to take advantage of changes in demographic or other factors in a more profitable way. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Although newer growth companies may not pay any dividends for some time, their stocks may be valued because of their potential for price increases. Current examples include companies in the fields of telecommunications, computer software, and new consumer products.

OTHER EQUITY SECURITIES. In addition to common stocks, the Fund can invest in other equity or "equity equivalents" securities such as preferred stocks or convertible securities. Preferred stocks have a set dividend rate and rank ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. A convertible security is one that can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible securities offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. The Fund considers some convertible securities to be "equity equivalents" because they are convertible into common stock. The credit ratings of those convertible securities generally have less impact on the investment decision, although they are still subject to credit and interest rate risk.

The Fund will not invest more than 5% of its net assets in convertible securities that are rated below investment-grade by a nationally recognized rating organization.

INVESTING IN SMALL, UNSEASONED COMPANIES. The Fund can invest in the securities of small, unseasoned companies. These are companies that have been in operation for less than three years, including the operations of any predecessors. In addition to the other risks of small and mid-sized issuers, these securities may have a very limited trading market, making it harder for the Fund to sell them at an acceptable price. The price of these securities may be very volatile, especially in the short term.

CYCLICAL OPPORTUNITIES. At times, the Fund might seek to take advantage of short-term market movements or changes in the business cycle by investing in companies or industries that are sensitive to those changes. For example, when the economy is expanding, companies in consumer durables and the technology sector might benefit. There is a risk that if a cyclical event does not have the anticipated effect, or when the issuer or industry is out of phase in the business cycle, the value of the Fund's investment could fall.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Diversification and Concentration. The Fund is a diversified fund. It attempts to reduce its exposure to the risks of individual stocks by diversifying its investments across a broad number of different companies. The Fund will not concentrate more than 25% of its total assets in issuers in any one industry. At times, however, the Fund may emphasize investments in some industries more than others.

Risks of Foreign Investing. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements as U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, or other political and economic factors.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Manager and the Board believe to be their fair value, may help deter those activities.

The Fund has no limits on the amount of its assets that can be invested in foreign securities but has adopted an operating policy limiting its investments in foreign securities to 25% of its total assets.

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

Options, futures and forward contracts are some of the types of derivatives the Fund can use. The Fund may also use other types of derivatives that are consistent with its investment strategies or for hedging purposes.

The Fund has percentage limits on its use of hedging instruments and is not required to use hedging instruments in seeking its objective.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, however, the hedge might be unsuccessful or could reduce the Fund's return or create a loss.

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 15% of its net assets in illiquid securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares, however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. Shareholders will receive 60 days advance notice of any change in the 80% investment policy described in "The Fund's Main Investment Strategies." The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 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 $700 million, and 0.58% of average annual net assets over $1.5 billion. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.70% of the Fund's average annual net assets for each class of shares.

Effective September 1, 2008 through August 31, 2009, the Manager has voluntarily agreed to reduce its advisory fee rate by 0.10% of the Fund's average daily net assets if the Fund's trailing one-year total return performance is in the fourth or fifth quintile of the Fund's Lipper peer group as of August 31, 2008. However, if the Fund's trailing one-year total return performance, as measured at the end of any subsequent calendar quarter during this waiver period, improves to the third or higher quintile of the Fund's Lipper peer group, the advisory fee reduction will be terminated effective the following business day. This advisory fee reduction is a voluntary undertaking and may be terminated by the Manager at any time.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% of Non-Service Shares and 1.05% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.

Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.09% of the Fund's average daily net assets. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Manager. The Fund's portfolio is managed by Ronald J. Zibelli, Jr. who is primarily responsible for the day-to-day management of the Fund's investments. Mr. Zibelli has been a portfolio manager and Vice President of the Fund since November 2008. 

Mr. Zibelli has been a Vice President of the Manager since May 2006. Prior to joining the Manager, he spent six years at Merrill Lynch Investment Managers, during which time he was a Managing Director and Small Cap Growth Team Leader, responsible for managing 11 portfolios. Prior to joining Merrill Lynch Investment Managers, Mr. Zibelli spent 12 years with Chase Manhattan Bank, including two years as Senior Portfolio Manager (U.S. Small Cap Equity) at Chase Asset Management. Mr. Zibelli is a portfolio manager and officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio manager's compensation, other accounts he manages and his ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$54.07	$50.85	$49.39	$43.97	$36.71
Income (loss) from investment operations:
Net investment loss1	(.13)	(.02)	(.02)	(.12)	(.15)
Net realized and unrealized gain (loss)	(26.40)	3.24	1.48	5.54	7.41
Total from investment operations	(26.53)	3.22	1.46	5.42	7.26
Net asset value, end of period	$27.54	$54.07	$50.85	$49.39	$43.97
Total Return, at Net Asset Value2	(49.07)%	6.33%	2.96%	12.33%	19.78%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$461,684	$1,002,442	$1,054,809	$1,227,881	$1,209,459
Average net assets (in thousands)	$754,170	$1,045,592	$1,135,831	$1,177,979	$1,124,874
Ratios to average net assets:3
Net investment loss	(0.30)%	(0.04)%	(0.04)%	(0.26)%	(0.39)%
Total expenses	0.71%4	0.69%4	0.69%4	0.69%	0.69%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.68%	0.69%	0.69%	0.69%	0.69%
Portfolio turnover rate	78%	112%	56%	32%	53%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.71%
             Year Ended December 31, 20070.69%
             Year Ended December 31, 20060.69%

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$53.22	$50.19	$48.87	$43.64	$36.54
Income (loss) from investment operations:
Net investment loss1	(.24)	(.17)	(.16)	(.25)	(.27)
Net realized and unrealized gain (loss)	(25.95)	3.20	1.48	5.48	7.37
Total from investment operations	(26.19)	3.03	1.32	5.23	7.10
Net asset value, end of period	$27.03	$53.22	$50.19	$48.87	$43.64
Total Return, at Net Asset Value2	(49.21)%	6.04%	2.70%	11.99%	19.43%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$21,952	$47,270	$47,131	$36,551	$24,151
Average net assets (in thousands)	$35,815	$49,421	$44,273	$28,798	$17,579
Ratios to average net assets:3
Net investment loss	(0.57)%	(0.31)%	(0.33)%	(0.54)%	(0.68)%
Total expenses	0.98%4	0.96%4	0.97%4	0.97%	0.99%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.95%	0.96%	0.97%	0.97%	0.99%
Portfolio turnover rate	78%	112%	56%	32%	53%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20080.98%
             Year Ended December 31, 20070.96%
             Year Ended December 31, 20060.97%

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0620.001.0409

Oppenheimer

Money Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Money Fund/VA is a money market mutual fund. Its goal is to seek the maximum current income from investments in money market securities that is consistent with low capital risk and maintenance of liquidity.
 
Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under the insurance product, and which share class you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Money Fund/VA 

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
3	Main Risks of Investing in the Fund
5	The Fund's Past Performance
6	Fees and Expenses of the Fund
7	About the Fund's Investments
12	How the Fund is Managed
	INVESTING IN THE FUND
14	How to Buy and Sell Shares
19	Dividends, Capital Gains and Taxes
20	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks maximum current income from investments in "money market" securities consistent with low capital risk and the maintenance of liquidity.

THE FUND'S MAIN INVESTMENT STRATEGIES.

What are "Money Market Instruments"? Money market instruments are short-term, high-quality, dollar-denominated debt instruments issued by the U.S. government, domestic and foreign corporations and financial institutions, and other entities.

The Fund is a money market fund that invests in a variety of money market instruments to seek current income. Money market instruments include bank obligations, repurchase agreements, commercial paper, and other short-term corporate and governmental debt obligations.
To be considered "high-quality," a debt instrument must be rated in one of the two highest credit-quality categories for short-term securities by nationally-recognized rating services or, if a security is unrated, it must be determined by the Fund's investment manager, OppenheimerFunds, Inc. (the "Manager"), under the supervision of the Fund's Board, to be of comparable quality to rated securities in one of those two categories.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed for investors who want to earn income at money market rates while maintaining easy access to their investment and seeking to preserve its value. The Fund will invest in a variety of money market instruments to seek current income and stability of principal and to try to maintain a stable share price of $1.00. Since income on short-term securities tends to be lower than income on longer term debt securities, the Fund's yield will likely be lower than the yield on longer-term fixed income funds. The Fund does not invest for the purpose of seeking capital appreciation or gains and is not a complete investment program.

Main Risks of Investing in the Fund

All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. However, the Fund's investments must meet strict standards set by its Board and special rules under Federal law for money market funds. Those requirements include maintaining high credit quality, a short average maturity and diversification of the Fund's investments among issuers. Those provisions are designed to minimize credit risks, to reduce the effects of changes in prevailing interest rates and to reduce the effect on the Fund's portfolio of a default by any one issuer.

Even so, there are risks that an issuer of an obligation that the Fund holds might have its credit rating downgraded or might default on its obligations, or that interest rates might rise sharply, causing the value of the Fund's investments to fall. If there is an unexpectedly high demand for the redemption of Fund shares, the Fund might need to sell portfolio securities prior to their maturity, possibly at a loss. As a result, there is a risk that the Fund's shares could fall below $1.00 per share. Also, there is the risk that the value of your investment could be eroded over time by the effects of inflation, or that poor security selection could cause the Fund to underperform other funds that have a similar objective. The rate of the Fund's income will vary from day-to-day, generally reflecting changes in short-term interest rates and in the fixed-income securities market. There is no assurance that the Fund will achieve its investment objective.

INTEREST RATE RISK. The values of debt securities usually change when prevailing interest rates change. When interest rates rise, the values of already-issued debt securities generally fall. When interest rates fall, the values of already-issued debt securities generally rise. However, when interest rates fall, the Fund's investments in new securities may be at lower yields and may reduce the Fund's income. The values of longer-term debt securities usually change more than the values of shorter-term debt securities when interest rates change.

CREDIT RISK. Debt securities are also subject to credit risk, which is the risk that the issuer of a security might not make principal or interest payments on the security when they are due. If the issuer fails to pay interest, the Fund's income might be reduced, and if the issuer fails to pay interest or repay principal, the value of the security might fall.

FIXED INCOME MARKET RISKS. Recent developments relating to subprime mortgages have adversely affected fixed-income securities markets in the United States, Europe and elsewhere. The values of many types of debt securities have been reduced, including debt securities that are not related to mortgage loans. These developments have reduced the willingness of some lenders to extend credit and have made it more difficult for borrowers to obtain financing on attractive terms or at all. In addition, broker-dealers and other market participants have been less willing to make a market in some types of debt instruments, which has impacted the liquidity of those instruments. These developments may also have a negative effect on the broader economy. There is a risk that the lack of liquidity or other adverse credit market conditions may hamper the Fund's ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

               ____________________________________________

The rate of the Fund's income will vary from day to day, generally reflecting changes in short-term interest rates and in the fixed-income securities market. There is no assurance that the Fund will achieve its investment objective.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 1.59% (2nd qtr 00) and the lowest return before taxes for a calendar quarter was 0.17% (3rd & 4th qtrs 03; 2nd qtr 04).

The following table shows the average annual total returns of the Fund's shares . The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years	10 Years
Oppenheimer Money Fund/VA
Non-Service Shares (inception 4-3-85)	2.78%	3.25%	3.35%

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

The total returns are not the Fund's current yield. The Fund's yield more closely reflects the Fund's current earnings. To obtain the Fund's current 7-day yield information, please call the Transfer Agent toll-free at 1.800.CALL OPP (225.5677).

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. The Fund pays expenses for management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
Management Fees1	0.45%
Distribution and/or Service (12b-1) Fees	None
Other Expenses2	0.14%
Total Annual Operating Expenses3	0.59%

1.  The Manager has voluntarily undertaken to waive fees and/or reimburse expenses to the extent necessary to assist the Fund in attempting to maintain a positive yield. There is no guarantee that the Fund will maintain a positive yield. That undertaking may be amended or withdrawn at any time.
2.  "Other expenses" include transfer agent fees, custodial fees, and accounting and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.05%.
3.  Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.50%. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. After all of the waivers and credits in effect during that period, the actual "Total Annual Operating Expenses," as a percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008, were 0.50%. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," would not have changed as percentages of average daily net assets.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

If shares are redeemed or not redeemed	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$60	$190	$330	$740

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

MONEY MARKET INSTRUMENTS. The Fund invests in securities meeting the quality, maturity, diversification and other standards that apply to money market funds under the Investment Company Act of 1940, as amended (the "Investment Company Act"). Money market instruments are high-quality, short-term, dollar-denominated debt instruments. They may have fixed, variable or floating interest rates. All of the Fund's money market investments must meet the requirements of the Investment Company Act and the special standards set by the Fund's Board. The following is a brief description of the types of money market instruments the Fund may invest in.

• U.S. Government Securities. These include obligations issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. Some are direct obligations of the U.S. Treasury and are supported by the full faith and credit of the United States. Securities issued by some agencies and instrumentalities of the Government are also supported by the full faith and credit of the U.S. Government. Securities issued by certain other U.S. Government agencies or instrumentalities are supported only by the right of the issuer to borrow from the U.S. Treasury and some are supported only by the credit of the particular instrumentality.

• Bank Obligations. The Fund can buy bank obligations including time deposits, certificates of deposit and bankers' acceptances, including dollar denominated obligations of foreign banks, U.S. branches of foreign banks or foreign branches of U.S. banks. These obligations must be denominated in U.S. dollars, even if issued by a foreign bank or branch.

• Obligations of Foreign Banks and Foreign Branches of U.S. Banks. These securities have investment risks different from obligations of domestic branches of U.S. banks. Risks that may affect a foreign bank's or branch's ability to pay its debt include:
  •political and economic developments in the country in which the bank or
  branch is located,
  •imposition of withholding taxes on interest income payable on the securities,
  •seizure or nationalization of foreign deposits,
  •the establishment of exchange control regulations, or
  •the adoption of other governmental restrictions that might affect the payment of principal and interest on those securities.
  Additionally, not all of the U.S. and state banking laws and regulations that apply to domestic banks and branches apply to foreign branches of U.S. banks. Those U.S. and state regulations also generally do not apply to foreign banks.

• Commercial Paper. Commercial paper is a short-term, unsecured promissory note of a domestic or foreign company or other financial firm. The Fund may buy commercial paper.

• Corporate Debt Obligations. The Fund can invest in other short-term corporate debt obligations, besides commercial paper.

• Floating Rate and Variable Rate Notes. The Fund can purchase notes with floating or variable interest rates. Variable interest rates are adjustable at stated periodic intervals. Floating interest rates are adjusted automatically according to a specified market rate or benchmark, such as the prime rate of a bank. If the maturity of a note is greater than 397 days, it may be purchased only if it has a demand feature. That feature must permit the Fund to recover the principal amount of the note on not more than thirty days' notice at any time, or at specified times not exceeding 397 days from purchase.

• Asset-Backed Securities. The Fund can invest in asset-backed investments. These are fractional interests in pools of consumer loans and other trade receivables, which are the obligations of a number of different parties. The income from the underlying pool is passed through to investors, such as the Fund. These investments might be supported by a credit enhancement, such as a letter of credit, a guarantee or a preference right. However, the credit enhancement typically applies only to a fraction of the security's value. If the issuer of the security has no security interest in the related collateral, there is the risk that the Fund could lose money if the issuer defaults.

• Guaranteed Obligations. The Fund may invest in obligations other than those listed above if they are guaranteed as to their principal and interest by a corporation whose commercial paper may be purchased by the Fund or by a domestic bank. The bank must meet credit criteria set by the Fund's Board of Trustees.

• Other Money Market Instruments. The Fund may also buy other money market instruments that its Board approves from time to time. They must be U.S. dollar-denominated short-term investments that the Manager must determine to have minimal credit risks.

CREDIT QUALITY, MATURITY AND DIVERSIFICATION STANDARDS. The Fund's investments must meet standards set by the Board and the standards prescribed for money market funds under the Investment Company Act.

     Credit Quality. In general, the Fund buys only "high-quality" investments that the Manager believes present minimal credit risk at the time of purchase. Those investments must be:

• rated in one of the two highest short-term rating categories by two nationally-recognized rating organizations, or

• if only one rating organization has rated the investment, rated in one of that rating organization's two highest rating categories, or

• unrated investments that the Manager, subject to the supervision of the Fund's Board, determines are comparable in quality to instruments rated in the two highest rating categories. The Manager may consider certain guarantees, letters of credit or other credit enhancements when making this determination.

Instruments rated in the second highest rating category may not represent more than 5% of the Fund's total assets.

     Maturity. A security's maturity must not exceed 397 days (13 months) at the time of purchase, unless if they are subject to repurchase agreements or demand features that permit the Fund to recover the principal amount of the security on not more than thirty days' notice at any time, or at specified times not exceeding 397 days from purchase. The Fund must maintain a dollar-weighted average portfolio maturity of not more than 90 days.

     Diversification. The Fund generally may not invest more than 5% of its total assets in the securities of any one issuer in the highest short-term credit rating category or more than 1% of its total assets in the securities of any one issuer in the second highest short-term credit rating category. This limitation does not apply to securities issued by the U.S. government or its agencies or instrumentalities.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Repurchase Agreements. The Fund may also enter into repurchase agreements. In a repurchase transaction, the Fund buys a security and simultaneously sells it back to the vendor for delivery at a future date. Repurchase agreements must be fully collateralized. However, if the vendor fails to pay the repurchase price on the delivery date, the Fund may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so.

The Fund will not enter into a repurchase agreement that will cause more than 10% of its net assets to be subject to repurchase agreements maturing in more than 7 days. There is no limit on the amount of the Fund's net assets that may be subject to repurchase agreements of 7 days or less.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Risks of Foreign Investing. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult for the Fund to evaluate a foreign issuer's operations or financial condition. Additionally, the value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, or other political and economic factors.

Illiquid Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 10% of its net assets in illiquid or restricted securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Share Reduction Risk. Share reduction risk is the risk that, under certain circumstances, the Fund may need to reduce the number of shares held by each shareholder in order to maintain a $1.00 net asset value per share.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares; however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary manage funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: the Fund pays 0.450% of the first $500 million of average annual net assets, 0.425% of the next $500 million, 0.400% of the next $500 million, and 0.375% of average annual net assets in excess of $1.5 billion. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.45% of the Fund's average annual net assets.
The Manager has voluntarily undertaken to waive fees and/or reimburse expenses to the extent necessary to assist the Fund in attempting to maintain a positive yield.  There is no guarantee that the Fund will maintain a positive yield.  That undertaking may be amended or withdrawn at any time.
Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.50%. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.
A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Manager. The Fund's portfolio is managed by Carol E. Wolf who is primarily responsible for the day-to-day management of the Fund's investments. She has been a Vice President and a portfolio manager of the Fund since July 1998.

Ms. Wolf has been a Senior Vice President of the Manager since September 2000 and of HarbourView Asset Management Corporation since June 2003. She was Vice President of the Manager from June 1990 through June 2000. Ms. Wolf is an officer and portfolio manager of other funds for which the Manager or an affiliate serves as investment adviser.

The Statement of Additional Information provides additional information about the portfolio manager's compensation, other accounts she manages and her ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER?  The Fund currently offers only one class of shares. That class of shares has no class "name" designation, but is referred to in this prospectus as "Non-Service" shares. The Fund has three additional classes of shares authorized which are not currently offered for sale. There are no outstanding shares of any of those share classes.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value per share will normally remain fixed at $1.00 per share. However, there is no guarantee that the Fund will maintain a stable net asset value of $1.00 per share. Shares are also redeemed at their net asset value per share. The net asset value that applies to a purchase or redemption order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

Net Asset Value. The Fund calculates the net asset value per share as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern time, but may close earlier on some days.

Under a policy adopted by the Fund's Board of Trustees, the Fund uses the amortized cost method to value its securities to determine net asset value, subject to the Board's review. A security's valuation may differ depending on the method used for determining value.

The net asset value per share is determined by dividing the Fund's net assets by the number of outstanding shares.

Fair Value Pricing. If after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security, that seucrity may be valued by another method that the Board believes would more accurately reflect the security's fair value. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security.

Foreign Securities. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan. The Fund has not adopted a Distribution and Service Plan for the Non-Service shares offered in this prospectus.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare dividends from net investment income each regular business day and to pay those dividends monthly. To maintain a net asset value of $1.00 per share, the Fund might withhold dividends or make distributions from capital or capital gains. Daily dividends will not be declared or paid on newly purchased shares until Federal Funds are available to the Fund from the purchase payment for such shares.
The Fund normally holds its securities to maturity and therefore will not usually pay capital gains distributions. The Fund may realize capital gains on the sale of portfolio securities, however, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$1.00	$1.00	$1.00	$1.00	$1.00
Income from investment operations-net investment income and net realized gain1	.03	.05	.05	.03	.01
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.03)	(.05)	(.05)	(.03)	(.01)
Distributions from net realized gain	--	--2	--2	--	--
Total dividends and/or distributions to shareholders	(.03)	(.05)	(.05)	(.03)	(.01)
Net asset value, end of period	$1.00	$1.00	$1.00	$1.00	$1.00
Total Return3	2.78%	4.98%	4.71%	2.86%	0.98%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$243,356	$189,749	$171,521	$173,162	$196,503
Average net assets (in thousands)	$212,564	$181,271	$171,118	$186,453	$218,243
Ratios to average net assets:4
Net investment income	2.72%	4.86%	4.61%	2.80%	0.97%
Total expenses	0.50%	0.50%5	0.49%	0.48%5	0.48%5

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Reduction to custodian expenses less than 0.005%.

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0660.001.0409

Oppenheimer

Strategic Bond Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Strategic Bond Fund/VA is a mutual fund that seeks a high level of current income principally derived from interest on debt securities in three market sectors: debt securities of foreign governments and companies, U.S. government securities, and lower-rated high-yield securities of U.S. and foreign companies.
 
Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class or classes you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Strategic Bond Fund/VA 

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
8	The Fund's Past Performance
9	Fees and Expenses of the Fund
11	About the Fund's Investments
22	How the Fund is Managed
	INVESTING IN THE FUND
24	How to Buy and Sell Shares
30	Dividends, Capital Gains and Taxes
31	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks a high level of current income principally derived from interest on debt securities.

THE FUND'S MAIN INVESTMENT STRATEGIES. Under normal market conditions, the Fund invests at least 80% of its net assets, including any borrowings for investment purposes, in debt securities. The Fund invests mainly in debt securities of issuers in three market sectors:

• Foreign governments and companies,

• U.S. Government securities, and

• Lower rated high-yield securities of U.S. and foreign companies (commonly referred to as "junk bonds").

What is a Debt Security? A debt security is a security representing money borrowed by the issuer that must be repaid, specifying the amount of principal, the interest or discount rate, and the time or times at which payments are due.

Under normal market conditions, the Fund invests in each of the three market sectors. However, the Fund is not required to invest in all three sectors at all times, and the amount of its assets in each of the three sectors will vary over time. The Fund can invest up to 100% of its assets in any one sector at any time, if the Fund's portfolio managers believe that the Fund can achieve its objective without undue risk. The Fund's foreign investments may include debt securities of issuers in both developed or emerging markets. The Fund has no requirements regarding the range of maturities of the debt securities it can buy or the market capitalization of the issuers of those securities.

The Fund's investments typically include:

• Foreign and U.S. Government bonds and notes,

• Collateralized mortgage obligations (CMOs),

• Other mortgage-related securities,

• Lower-grade, high-yield domestic and foreign corporate debt obligations,

• "Structured" notes,

• Participation interests in loans and investments in loan pools,

• Asset-backed securities.

The Fund's debt securities may be rated by nationally recognized statistical rating organizations such as Moody's Investors Service ("Moody's") or Standard & Poor's Ratings Services ("Standard &Poor's") or may be unrated. Lower-grade debt securities are those rated below "Baa" by  Moody's or below "BBB" by Standard & Poor's or that have comparable ratings from other nationally-recognized rating organizations. Additionally, unrated debt securities may be determined to be comparable to securities rated below investment grade by the Manager. The Fund can buy investment-grade securities, although it normally invests a substantial part of its assets in debt securities below investment-grade, and can do so without limit.

The Fund also uses certain types of derivative instruments for investment purposes or hedging including: options, futures, forward contracts, swaps, certain mortgage-related securities and "structured" notes.

HOW THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL. In selecting securities, the Fund's portfolio managers analyze the overall investment opportunities and risks among the three sectors in which the Fund invests. The portfolio managers seek to build a broadly diversified portfolio to try to moderate the special risks of investing in high-yield debt instruments and foreign securities. The Fund's diversification strategies, with respect to securities in different sectors and securities issued by different companies or governments, are intended to help reduce the volatility of the Fund's share prices while seeking current income. The Fund may try to take advantage of any lack of correlation in the movement of securities prices among the three sectors. The portfolio managers currently focus on the following factors, which may vary in particular cases and may change over time:

• Securities offering high current income,

• Securities whose market prices tend to move in different directions (to seek overall portfolio diversification), and

• Relative values among the three major market sectors in which the Fund invests.

The Fund may sell securities that the portfolio managers believe are no longer favorable with regard to the above factors.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking high current income from a fund that invests in a variety of domestic and foreign debt securities, including government securities and lower-grade debt securities. Those investors should be willing to assume the greater risks of short-term share price fluctuations and the special credit risks that are typical for a fund that invests mainly in lower grade fixed-income securities and foreign securities. The Fund does not seek capital appreciation. Because the Fund's income will fluctuate, it is not designed for investors needing an assured level of current income. The Fund is intended to be a long-term investment, not a short-term trading vehicle. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

MAIN RISKS OF INVESTING IN DEBT SECURITIES. Debt securities (also referred to as "fixed-income securities") may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or to repay principal, the Fund's income and share value will usually be reduced. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can reduce the market value of the issuer's securities. The values of debt securities are also subject to change when prevailing interest rates change. When prevailing interest rates fall, the values of already-issued debt securities generally rise. When prevailing interest rates rise, the values of already-issued debt securities generally fall, and they may sell at a discount from their face amount or from the amount the Fund paid for them. Interest rate changes generally have a greater effect on longer-term debt securities than on shorter-term debt securities. When interest rates fall, the issuers of debt securities may prepay principal more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes may have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

        Special Risks of Lower-Grade Securities. Lower-grade securities may be subject to wider market fluctuations and greater risk of loss of income and principal than investment-grade securities. While investment-grade securities are subject to risks of non-payment of interest and principal, in general those risks are greater for higher-yielding lower-grade bonds, whether rated or unrated. The market for lower-grade securities may be less liquid and therefore they may be harder to sell at an acceptable price, especially during times of market volatility or decline.

Because the Fund can invest without limit in lower-grade securities, the Fund's credit risks are greater than those of funds that buy only investment-grade securities.

FIXED-INCOME MARKET RISKS. Recent developments relating to subprime mortgages have adversely affected fixed-income securities markets in the United States, Europe and elsewhere. The values of many types of debt securities have been reduced, including debt securities that are not related to mortgage loans. These developments have reduced the willingness of some lenders to extend credit and have made it more difficult for borrowers to obtain financing on attractive terms or at all. In addition, broker-dealers and other market participants have been less willing to make a market in some types of debt instruments, which has impacted the liquidity of those instruments. These developments may also have a negative effect on the broader economy. There is a risk that the lack of liquidity or other adverse credit market conditions may hamper the Fund's ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

SECTOR ALLOCATION RISK. In allocating investments among its three principal market sectors, the Fund seeks to take advantage of the potential lack of performance correlation between those sectors. There is the risk that the Manager's evaluations regarding the sectors' relative performance may be incorrect and those sectors may all perform in a similar manner under certain market conditions.

RISKS OF FOREIGN INVESTING. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, expropriation or nationalization of a company's assets, or other political and economic factors.

     Foreign Currency Risk. A change in the value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency. If the U.S. dollar rises in value against a foreign currency, a security denominated in that currency will be worth less in U.S. dollars and if the U.S. dollar decreases in value against a foreign currency, a security denominated in that currency will be worth more in U.S. dollars. The dollar value of foreign investments may also be affected by exchange controls.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Fund and the Board believe to be their fair value, may help deter those activities.

     Special Risks of Developing and Emerging Markets. Developing or emerging market countries generally have less developed securities markets or exchanges. Securities of companies in developing or emerging market countries may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of companies in countries with more mature markets. Settlements of trades may be subject to greater delays so that the proceeds of a sale of a security may not be received on a timely basis. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Developing or emerging market countries may have less developed legal and accounting systems, and investments in those countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of company assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Their governments may also be more unstable than the governments of more developed countries. The value of the currency of a developing or emerging market country may fluctuate more than the currencies of countries with more mature markets. Investments in companies in developing or emerging market countries may be considered speculative.

RISKS OF DERIVATIVE INVESTMENTS. Derivatives may be volatile and may involve significant risks. Derivative transactions may require the payment of premiums and can increase portfolio turnover. For example, if a call option sold by the Fund were exercised on an investment that had increased in value above the call price, the Fund would be required to sell the investment at the call price and would not be able to realize any additional profit.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Manager expects it to. As a result, the Fund could realize little or no income or lose principal from the investment, or a hedge might be unsuccessful. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

For some derivatives, it is possible for the Fund to lose more than the amount invested in the derivative instrument.

                                 _____________________________

There is no assurance that the Fund will achieve its investment objective. Debt securities are subject to credit and interest rate risks that can affect their values and the share prices of the Fund. The values of high-yield debt securities can fluctuate substantially because of interest rate changes and perceptions about the high-yield market among investors. Foreign debt securities can be volatile, and the price of the Fund's shares can go up and down substantially, particularly in emerging markets. The Fund is likely to be more volatile and have more risks than funds that focus on U.S. government securities and investment-grade bonds, but its sector diversification strategy may help make it less volatile than funds that focus solely on investments in high-yield bonds or a single foreign sector, such as emerging markets.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service shares for the last 10 calendar years.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 6.10% (2nd qtr 03) and the lowest return before taxes for a calendar quarter was -9.84% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to two broad-based market indices. Because the Fund's Service Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 05-03-1993)	(14.21%)	2.45%	4.71%
Service Shares (inception 03-19-2001)	(14.49%)	2.23%	4.67%
Barclays Capital Aggregate Bond Index	5.24%	4.65%	5.63%
(reflects no deductions for fees, expenses or taxes)			5.52%1
Citigroup World Government Bond Index	10.89%	6.05%	5.90%
(reflects no deductions for fees, expenses or taxes)			8.50%1

1. From 3-31-01

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the Barclays Capital Aggregate Bond Index, an unmanaged index of U.S. corporate and government bonds, and to the Citigroup World Government Bond Index, an unmanaged index of debt securities of major foreign governments. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes. The Fund's investments vary from those in the indices.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. The Fund pays a variety of expenses for the management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares
Management Fees	0.55%	0.55%
Distribution and/or Service (12b-1) Fees	n/a	0.25%
Acquired Fund Fees and Expenses1	0.02%	0.02%
Other Expenses2	0.13%	0.13%
Total Annual Operating Expenses3	0.70%	0.95%

1. "Acquired Fund Fees and Expenses" includes fees and expenses incurred indirectly by the Fund with respect to the Fund's investments in Oppenheimer Institutional Money Market Fund, Oppenheimer Master Loan Fund, LLC and Oppenheimer Master Event-Linked Bond Fund, LLC. The calculation of the "Acquired Fund Fees and Expenses" is based on the total annual expense ratios of those funds, without giving effect to any fee waivers or reimbursements. Any material change in the Fund's allocations to Acquired Funds might increase or decrease those expenses. The Manager will voluntarily waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund, Oppenheimer Master Loan Fund, LLC and Oppenheimer Master Event-Linked Bond Fund, LLC.
2. "Other Expenses" include transfer agent fees, custodial fees, and accounting and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.03% for both Non-Service and Service Shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets.
3. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.75% for Non-Service Shares and 1.00% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. After all of the waivers and credits in effect during that period, the actual "Total Annual Operating Expenses," as a percentages of average daily net assets for the Fund's fiscal year ended December 31, 2008, were 0.58 % for Non-Service Shares and 0.83 % for Service Shares. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.68% for Non-Service Shares and 0.93% for Service Shares during the fiscal year ended December 31, 2008.

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$72	$225	$391	$874
Service Shares	$97	$304	$528	$1,172

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

DEBT SECURITIES. The Fund may invest in debt securities, including: U.S. and foreign government bonds and notes, collateralized mortgage obligations and other mortgage-related securities, asset-backed securities, participation interests in loans, investments in loan pools, "structured" notes, lower-grade, high-yield domestic and foreign corporate debt obligations, and "zero-coupon" and "stripped" securities.

Debt securities may be subject to the following risks:

• Interest Rate Risk. The values of debt securities usually change when prevailing interest rates change. When interest rates rise, the values of outstanding debt securities generally fall, and those securities may sell at a discount from their face amount. When interest rates fall, the values of already-issued debt securities generally rise. However, when interest rates fall, the Fund's investments in new securities may be at lower yields and may reduce the Fund's income. The values of longer-term debt securities usually change more than the values of shorter-term debt securities when interest rates change.

       The Fund may also buy zero-coupon or "stripped" securities, which may be particularly sensitive to interest rate changes.  Interest rate changes may have different effects on the values of mortgage-related securities because of prepayment and extension risks.

• Prepayment Risk. Certain fixed-income securities are subject to the risk of unanticipated prepayment. That is the risk that when interest rates fall, borrowers will prepay the loans that underlie these securities more quickly than expected, causing the issuer of the security to repay the principal prior to the security's expected maturity. The Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If the Fund buys those securities at a premium, accelerated prepayments on those securities could cause it to lose a portion of its principal investment represented by the premium. The impact of prepayments on the price of a security may be difficult to predict and may increase the security's price volatility. Interest-only and principal-only securities are especially sensitive to interest rate changes, which can affect not only their prices but can also change the income flows and prepayment assumptions about those investments.

• Extension Risk. If interest rates rise rapidly, repayments of principal on certain debt securities may occur at a slower rate than expected and the expected maturity of those securities could lengthen as a result. Those securities generally have a greater potential for loss when prevailing interest rates rise, which could cause their value to fall sharply.

• Credit Risk. Debt securities are also subject to credit risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. Securities directly issued by the U.S. Treasury and certain agencies that are backed by the full faith and credit of the U.S. Government have little credit risk, and other U.S. Government securities generally have lower credit risks, while securities issued by private issuers or certain foreign governments generally have greater credit risks. If an issuer fails to pay interest, the Fund's income might be reduced, and if an issuer fails to repay principal, the values of the security might fall. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. A downgrade in an issuer's credit rating or other adverse news about an issuer can reduce the market value of that issuer's securities.

Credit Quality.  The Fund may invest in securities that are rated or unrated. "Investment grade" securities are rated in one of the top four rating categories by nationally-recognized statistical rating organizations such as Moody's Investors Service or Standard & Poor's Ratings Services. "Lower grade" securities are those that are rated below those categories. While securities rated "Baa" by Moody's or "BBB" by S&P are considered "investment grade," they may also have some speculative characteristics. 

        Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner. They do not reflect any judgment of market risk. Rating agencies might not always change their credit rating of an issuer in a timely manner to reflect events that could affect the issuer's ability to make timely payments on its obligations. In selecting securities for its portfolio and evaluating their income potential and credit risk, the Fund does not rely solely on ratings by rating organizations but evaluates business and economic factors affecting issuers as well. The ratings definitions of the principal ratings organizations are included in Appendix B to the Statement of Additional Information.

U.S. Government Securities. The Fund invests in securities issued or guaranteed by the U.S. Government or its agencies and instrumentalities. Some of those securities are directly issued by the U.S. Treasury and are backed by the full faith and credit of the U.S. Government. "Full faith and credit" means that the taxing power of the U.S. Government is pledged to the payment of interest and repayment of principal on a security.

Some securities issued by U.S. Government agencies, such as Government National Mortgage Corporation pass-through mortgage obligations ("Ginnie Maes"), are also backed by the full faith and credit of the U.S. Government. Others are supported by the right of the agency to borrow an amount from the U.S. Government (for example, "Fannie Mae" bonds issued by Federal National Mortgage Corporation and "Freddie Mac" obligations issued by Federal Home Loan Mortgage Corporation). Others are supported only by the credit of the agency (for example obligations issued by the Federal Home Loan Banks). On September 7, 2008, the Federal Housing Finance Agency, a new independent regulatory agency, placed the Federal National Mortgage Corporation and Federal Home Loan Mortgage Corporation into conservatorship and the U.S. Department of Treasury made a commitment to purchase mortgage-backed securities from the companies through December 2009. The U.S. Department of Treasury also entered into a new secured lending credit facility with those companies and a Preferred Stock Purchase Agreement. Under those agreements, the Treasury will ensure that each company maintains a positive net worth. 

     U.S. Treasury Securities. Treasury securities are backed by the full faith and credit of the United States for payment of interest and repayment of principal and have little credit risk. Some of the securities that are issued directly by the U.S. Treasury are: Treasury bills (having maturities of one year or less when issued), Treasury notes (having maturities of from one to ten years when issued), Treasury bonds (having maturities of more than ten years when issued) and Treasury Inflation-Protection Securities ("TIPS"). While U.S. Treasury securities have little credit risk, they are subject to price fluctuations from changes in interest rates prior to their maturity.

     Mortgage-Related Government Securities. The Fund can buy interests in pools of residential or commercial mortgages, in the form of "pass-through" mortgage securities. They may be issued or guaranteed by the U.S. Government, or its agencies and instrumentalities. Mortgage-related U.S. Government securities may be issued in different series, each having different interest rates and maturities.

Mortgage-related securities that are U.S. Government securities have collateral to secure payment of interest and principal. The collateral is either in the form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans insured by a U.S. Government agency. The prices and yields of mortgage-related securities are determined, in part, by assumptions about the rate of payments of the underlying mortgages and are subject to prepayment and extension risks.

Private-Issuer Securities. The Fund can also invest in securities issued by private issuers, such as banks, savings and loans, and other entities, including mortgage-related securities. Securities issued by private issuers are subject to greater credit risks than U.S. Government securities.

     Mortgage-Related Private Issuer Securities. Primarily these investments include multi-class debt or pass-through certificates secured by mortgage loans, which may be issued by banks, savings and loans, mortgage bankers and other non-governmental issuers.  Private-issuer mortgage-backed securities may include loans on residential or commercial properties.

Mortgage-related securities issued by private issuers are not U.S. Government securities, which makes them subject to greater credit risks. Private issuer securities are subject to the credit risks of the issuers as well as to interest rate risks, although in some cases they may be supported by insurance or guarantees. The prices and yields of private issuer mortgage-related securities are also subject to prepayment and extension risk. The market for private-issuer mortgage-backed securities may be volatile at times and may be less liquid than the markets for other types of securities.

Asset-Backed Securities. Asset-backed securities are fractional interests in pools of loans, other assets or receivables. They are issued by trusts or other special purpose vehicles and are collateralized by the loans, other assets or receivables that make up the pool. The trust or other issuer passes the income from the underlying pool to the investor. Neither the Fund nor the Manager selects the loans or other assets that are included in the pools or the collateral backing those pools. Asset-backed securities are subject to interest rate risk and credit risk. Certain asset-backed securities are subject to prepayment and extension risks.

Forward Rolls. The Fund can enter into "forward roll" transactions (also referred to as "mortgage dollar rolls") with respect to mortgage-related securities. In this type of transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security at a later date at a set price. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. The Fund will bear the risk that the market value of the securities might decline below the price at which the Fund is obligated to repurchase them or that the counterparty might default in its obligations.

Zero-Coupon and Stripped Securities. Some of the debt securities the Fund may invest in are "zero-coupon" or "stripped" securities. Zero-coupon securities pay no interest prior to their maturity date or another specified date in the future but are issued at a discount from their face value. Stripped securities are the separate income or principal components of a debt security, such as Treasury securities whose coupons have been stripped by a Federal Reserve Bank. One component might receive all the interest and the other all the principal payments.

Interest rate changes generally cause greater price fluctuations in zero-coupon securities or the "principal-only" components of stripped securities than in interest-paying securities of the same or similar maturities. The Fund may be required to pay a dividend of the imputed income on a zero-coupon or principal-only security at a time when it has not actually received the income. The "interest-only" components of stripped securities are also especially sensitive to changes in prevailing interest rates. The market for some of these securities may be limited, making it difficult for the Fund to dispose of its holdings quickly at an acceptable price.

The Fund can invest up to 50% of its total assets in zero-coupon securities issued by either the U.S. Treasury or U.S. companies.

Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation of a borrower. They are typically purchased from banks or dealers that have made the loan, or are members of the loan syndicate, and that act as the servicing agent for the interest. The loans may be to foreign or U.S. companies. Participation interests are subject to the credit risk of the servicing agent as well as the credit risk of the borrower. If a fund purchases a participation interest, it may be only able to enforce its rights through the lender. The Fund can also buy interests in trusts and other entities that hold loan obligations. In that case the Fund will be subject to the trust's credit risks as well as the credit risks of the underlying loans.

Investments in Loan Investment Pools. The Fund can also buy interests in trusts and other pooled entities that invest primarily or exclusively in loan obligations, including entities sponsored or advised by the Manager or an affiliate. The loans underlying these investments may include loans to foreign or U.S. borrowers, may be collateralized or uncollateralized and may be rated above or below investment grade or may be unrated. The Manager expects that from time to time investments in loan investment pools may exceed 15% of the Fund's net assets.

These investments are subject to the risk of default by the borrower, interest rate and prepayment risk, as well as credit risks of the pooled entity that holds the loan obligations.

High-Yield, Lower-Grade Debt Securities. The Fund may invest in high-yield, lower-grade, fixed-income securities of U.S. and foreign issuers. Those securities may include, among others: bonds, debentures, notes, preferred stock, loan participation interests, "structured" notes, commercial mortgage-backed securities, and asset-backed securities. There are no limits on the amount of the Fund's assets that can be invested in securities rated below investment grade. The Fund may invest in securities rated as low as "C" or "D" or that are in default at the time the Fund buys them. Those securities are generally considered speculative.

     Price Arbitrage. Because the Fund may invest in high yield bonds that may trade infrequently, investors might seek to trade fund shares based on their knowledge or understanding of the value of those securities (this is sometimes referred to as "price arbitrage"). If such price arbitrage were successful, it might interfere with the efficient management of the Fund's portfolio and the Fund may be required to sell securities at disadvantageous times or prices to satisfy the liquidity requirements created by that activity. Successful price arbitrage might also dilute the value of fund shares held by other shareholders.

Foreign Investments. The Fund can buy a variety of securities issued by foreign governments and companies, as well as "supra-national" entities, such as the World Bank. The Fund's foreign investments primarily include bonds, debentures and notes. The Fund's foreign investments can be denominated in U.S. dollars or in foreign currencies. While foreign securities may offer special investment opportunities, they are also subject to special risks.

DERIVATIVE INVESTMENTS. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

       Options, futures, forward contracts, swaps, "structured" notes, and certain mortgage-related securities are some of the derivatives that the Fund may use. The Fund may also use other types of derivatives that are consistent with its investment strategies or hedging purposes.

      "Structured" Notes. "Structured" notes are specially-designed derivative debt investments. The terms of the instrument may be "structured" by the purchaser and the issuer of the note. Payments of principal or interest on these notes may be linked to the value of an index (such as a currency or securities index), an individual security, or a commodity. The value of these notes will normally rise or fall in response to the changes in the performance of the underlying security, index or commodity.

Structured notes are subject to interest rate risk and are also subject to credit risk with respect both to the borrower (referred to as "counter-party" risk) and to the issuer of the underlying investment. If the underlying investment or index does not perform as anticipated, the Fund might receive less interest than the stated coupon payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult for the Fund to value them or sell them at an acceptable price.

In some cases, the Fund may invest in structured notes that pay an amount based on a multiple of the relative change in value of the asset or reference. This type of note increases the potential for income but at a greater risk of loss than a typical debt security of the same maturity and credit quality.

     Credit Default Swaps. A credit default swap enables an investor to buy or sell protection against a credit event, such as an issuer's failure to make timely payments of interest or principal, bankruptcy or restructuring. The terms of the instrument are generally negotiated by the Fund and the swap counterparty. A swap may be embedded within a structured note or other derivative instrument.

Generally, if the Fund buys credit protection using a credit default swap, the Fund will make fixed payments to the counterparty and if a credit event occurs, the Fund will deliver the defaulted bonds underlying the swap to the swap counterparty and the counterparty will pay the Fund par for the bonds. If the Fund sells credit protection using a credit default swap, generally the Fund will receive fixed payments from the counterparty and if a credit event occurs, the Fund will pay the swap counterparty par for the defaulted bonds underlying the swap and the swap counterparty will deliver the bonds to the Fund. If the credit default swap is on a basket of securities, the notional value of the swap is reduced by the par amount of the defaulted bonds, and the fixed payments are then made on the reduced notional value.

Credit default swaps are subject to credit risk on the underlying investment and to counterparty credit risk. If the counterparty fails to meet its obligations the Fund may lose money. Credit default swaps are also subject to the risk that the Fund will not properly assess the cost of the underlying investment. If the Fund is selling credit protection, there is a risk that a credit event will occur and that the Fund will have to pay par value on defaulted bonds. If the Fund is buying credit protection, there is a risk that no credit event will occur and the Fund will receive no benefit for the premium paid.

     Interest Rate Swaps.  In an interest rate swap, the Fund and another party exchange the right to receive interest payments on a security or other reference rate. For example, they might swap the right to receive floating rate payments for the right to receive fixed rate payments. The terms of the instrument are generally negotiated by the Fund and the swap counterparty. An interest rate swap may be embedded within a structured note or other derivative instrument.

Interest rate swaps are subject to interest rate risk and credit risk. An interest rate swap transaction could result in losses if the underlying asset or reference does not perform as anticipated. Interest rate swaps are also subject to counterparty risk. If the counterparty fails to meet its obligations, the Fund may lose money.

     Total Return Swaps. In a total return swap transaction, one party agrees to pay the other party an amount equal to the total return on a defined underlying asset or a non-asset reference during a specified period of time. The underlying asset might be a security or basket of securities or a non-asset reference such as a securities index. In return, the other party would make periodic payments based on a fixed or variable interest rate or on the total return from a different underlying asset or non-asset reference.

Total return swaps could result in losses if the underlying asset or reference does not perform as anticipated. Total return swaps can have the potential for unlimited losses. They are also subject to counterparty risk. If the counterparty fails to meet its obligations, the Fund may lose money.

     Swap Transactions. There is no central exchange or market for swap transactions and therefore they are less liquid than exchange-traded instruments. If the Fund were to sell a swap it owned to a third party, the Fund would still remain primarily liable for the obligations under the swap contract.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. At times, however, a hedging instrument's value might not be correlated with the investment it is intended to hedge, and the hedge might be unsuccessful. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, the strategy could reduce its return or create a loss.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Diversification and Concentration.  The Fund is a diversified fund. It attempts to reduce its exposure to the risks of individual securities by diversifying its investments across a broad number of different companies. The Fund will not concentrate more than 25% of its total assets in issuers in any one industry.  At times, however, the Fund may emphasize investments in some industries more than others.

The Fund will not concentrate more than 25% of its total assets in the securities of any one foreign government.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Common Stock and Other Equity Investments. Equity securities include common stock, preferred stock, rights, warrants and certain debt securities that are convertible into common stock. Equity investments may be exchange-traded or over-the-counter securities. Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy.

Preferred stock has a set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The dividends on preferred stock may be cumulative (they remain a liability of the company until paid) or non-cumulative. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. When interest rates rise, the value of preferred stock having a fixed dividend rate tends to fall.

A convertible security can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. Convertible securities may provide more income than common stock but they generally provide less income than comparable non-convertible debt securities. Convertible securities are subject to credit and interest rate risk. The credit ratings of convertible securities generally have less impact on the value of those securities than they do on non-convertible debt securities, however.

Risks of Investing in Equity Securities. Stocks and other equity securities fluctuate in price in response to changes in equity markets in general. Equity markets may experience great short-term volatility and may fall sharply at times. Different markets may behave differently from each other and U.S. equity markets may move in the opposite direction from one or more foreign markets.

The prices of equity securities generally do not all move in the same direction at the same time and a variety of factors can affect the price of a particular company's securities. These factors may include: poor earnings reports, a loss of customers, litigation, or changes in government regulations affecting the company or its industry.

When-Issued and Delayed-Delivery Transactions. The Fund may purchase securities on a "when-issued" basis and may purchase or sell such securities on a "delayed-delivery" basis. When-issued and delayed-delivery securities are purchased at a price that is fixed at the time of the transaction, with payment and delivery of the security made at a later date. During the period between purchase and settlement, the Fund makes no payment to the issuer and no interest accrues to the Fund from the investment.

The securities are subject to changes in value from market fluctuations during the period until settlement and the value of the security on the delivery date may be more or less than the Fund paid. The Fund may lose money if the value of the security declines below the purchase price.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 15% of its net assets in illiquid securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares, however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. Shareholders will receive 60 days advance notice of any change in the 80% investment policy described in "The Fund's Main Investment Strategies." The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for its fiscal year ended December 31, 2008, was 0.55% of the Fund's average annual net assets for each class of shares.

Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.75% for Non-Service Shares and 1.00% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Managers. The Fund's portfolio is managed by Arthur P. Steinmetz, the lead portfolio manager, Krishna Memani, Joseph Welsh and Caleb Wong, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Steinmetz has been the portfolio manager and Vice President of the Fund since May 1993. Messrs. Memani, Welsh and Wong have been portfolio managers and Vice Presidents of the Fund since April 1, 2009.

Mr. Steinmetz has been the Director of Fixed Income of the Manager since January 2009 and a Senior Vice President of the Manager since March 1993. He is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

Mr. Memani has been a Senior Vice President and Head of the Investment Grade Fixed Income Team of the Manager since March 2009. Mr. Memani was a Managing Director and Head of the U.S. and European Credit Analyst Team at Deutsche Bank Securities from June 2006 through January 2009. He was the Chief Credit Strategist at Credit Suisse Securities from August 2002 through March 2006. He was a Managing Director and Senior Portfolio Manager at Putnam Investments from September 1998 through June 2002. Mr. Memani is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

Mr. Welsh, CFA, has been the Head of the Manager's High Yield Corporate Debt Team since April 2009 and a Vice President of the Manager since December 2000. He was an Assistant Vice President of the Manager from December 1996 to November 2000 and a high yield bond analyst of the Manager from January 1995 to December 1996. He was a senior bond analyst with W.R. Huff Asset Management from November 1991 to December 1994. Mr. Welsh is a portfolio manager and officer of other portfolios in the OppenheimerFunds complex.

Mr. Wong has been a Vice President of the Manager since June 1999 and has worked in fixed-income quantitative research and risk management for the Manager since July 1996. He has been a member of the Manager's Asset Allocation Committee since April 2005. Mr. Wong is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts they manage and their ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Redemptions "In-Kind." Shares may be "redeemed in-kind" under certain circumstances (such as redemptions of substantial amounts of shares by shareholders that have consented to such in kind redemptions). That means that the redemption proceeds will be paid to the participating insurance companies in securities from the Fund's portfolio. If the Fund redeems shares in-kind, the insurance company accounts may bear transaction costs and will bear market risks until such securities are converted into cash.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$5.56	$5.26	$5.11	$5.21	$5.05
Income (loss) from investment operations:
Net investment income1	.30	.28	.26	.25	.22
Net realized and unrealized gain (loss)	(1.04)	.21	.11	(.12)	.20
Total from investment operations	(.74)	.49	.37	.13	.42
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.27)	(.19)	(.22)	(.23)	(.26)
Distributions from net realized gain	(.06)	--	--	--	--
Total dividends and distributions to shareholders	(.33)	(.19)	(.22)	(.23)	(.26)
Net asset value, end of period	$4.49	$5.56	$5.26	$5.11	$5.21
Total Return, at Net Asset Value2	(14.21)%	9.69%	7.49%	2.67%	8.67%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$648,570	$734,611	$606,632	$538,141	$614,915
Average net assets (in thousands)	$753,062	$664,668	$564,248	$550,201	$584,878
Ratios to average net assets:3,4
Net investment income	5.78%	5.34%	5.05%	4.91%	4.50%
Total expenses	0.59%5	0.59%5	0.64%5	0.71%	0.74%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.57%	0.57%	0.63%	0.71%	0.74%
Portfolio turnover rate6	86%	76%	93%	98%	88%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Includes the Fund's share of the Master Funds' allocated expenses and/or net investment income.
5. Total expenses including indirect expenses from Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC were as follows:
             Year Ended December 31, 2008 0.60%
             Year Ended December 31, 2007 0.61%
             Year Ended December 31, 2006 0.64%




6. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase Transactions Sale Transactions
             Year Ended December 31, 2008 $634,319,548 $594,845,589
             Year Ended December 31, 2007 $1,061,009,472 $1,120,098,096
             Year Ended December 31, 2006 $742,785,501 $749,719,239
             Year Ended December 31, 2005 $890,029,144 $873,786,459
             Year Ended December 31, 2004 $959,649,113 $973,488,511

Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$5.65	$5.34	$5.19	$5.29	$5.13
Income (loss) from investment operations:
Net investment income1	.29	.28	.25	.21	.19
Net realized and unrealized gain (loss)	(1.06)	.22	.11	(.08)	.22
Total from investment operations	(.77)	.50	.36	.13	.41
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.26)	(.19)	(.21)	(.23)	(.25)
Distributions from net realized gain	(.06)	--	--	--	--
Total dividends and distributions to shareholders	(.32)	(.19)	(.21)	(.23)	(.25)
Net asset value, end of period	$4.56	$5.65	$5.34	$5.19	$5.29
Total Return, at Net Asset Value2	(14.49)%	9.55%	7.23%	2.48%	8.43%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$2,810,315	$2,876,016	$1,396,188	$658,107	$242,705
Average net assets (in thousands)	$3,152,967	$2,075,028	$1,016,582	$408,515	$150,040
Ratios to average net assets:3,4
Net investment income	5.54%	5.08%	4.83%	4.20%	3.82%
Total expenses	0.84%5	0.84%5	0.89%5	0.96%	0.99%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.82%	0.82%	0.88%	0.96%	0.99%
Portfolio turnover rate6	86%	76%	93%	98%	88%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Includes the Fund's share of the Master Funds' allocated expenses and/or net investment income.
5. Total expenses including indirect expenses from Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC were as follows:
             Year Ended December 31, 2008 0.85%
             Year Ended December 31, 2007 0.86%
             Year Ended December 31, 2006 0.89%





6. The portfolio turnover rate excludes purchases and sales of To Be Announced (TBA) mortgage-related securities as follows:
Purchase Transactions Sale Transactions
             Year Ended December 31, 2008 $ 634,319,548 $ 594,845,589
             Year Ended December 31, 2007 $1,061,009,472 $1,120,098,096
             Year Ended December 31, 2006 $ 742,785,501 $ 749,719,239
             Year Ended December 31, 2005 $ 890,029,144 $ 873,786,459
             Year Ended December 31, 2004 $ 959,649,113 $ 973,488,511

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0265.001.0408

Oppenheimer

Value Fund/VA
A series of Oppenheimer Variable Account Funds

Prospectus dated April 30, 2009

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Value Fund/VA is a mutual fund. It seeks long-term growth of capital by investing primarily in common stocks with low price-earnings ratios and better-than-anticipated earnings. Realization of current income is a secondary consideration.
 
Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class or classes you are eligible to purchase.
 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Oppenheimer Value Fund/VA

Contents
	ABOUT THE FUND
3	The Fund's Investment Objective and Principal Investment Strategies
4	Main Risks of Investing in the Fund
6	The Fund's Past Performance
7	Fees and Expenses of the Fund
9	About the Fund's Investments
15	How the Fund is Managed
	INVESTING IN THE FUND
17	How to Buy and Sell Shares
23	Dividends, Capital Gains and Taxes
24	Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks long-term growth of capital by investing primarily in common stocks with low price-earnings ratios and better-than-anticipated earnings. Realization of current income is a secondary consideration.

THE FUND'S MAIN INVESTMENT STRATEGIES.

What is "Value Investing"? Value investing uses fundamental analysis to seek companies whose intrinsic value is greater than the current price of their securities.

The Fund mainly invests in common stocks of companies that the portfolio managers believe are undervalued in the marketplace. The Fund may also invest in other equity securities, such as preferred stock, rights, warrants and securities convertible into common stock. The Fund may buy securities issued by companies of any size or market capitalization range and at times might increase its emphasis on securities of issuers in a particular capitalization range. While the Fund does not limit its investments to issuers in a particular capitalization range, the portfolio managers currently focus on securities of larger-size companies.

The Fund may invest up to 25% of its total assets in foreign securities of companies or governments in any country, including in developed and emerging market countries.  The Fund may invest up to 10% of its net assets in debt securities.

HOW THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL. In selecting securities to buy, the portfolio managers look for companies they believe have been undervalued by the market. A security may be undervalued because the market is not aware of the issuer's intrinsic value, does not yet recognize its future potential, or the issuer may be temporarily out of favor. The Fund seeks to realize gains in the prices of those securities when other investors recognize their real or prospective worth. The portfolio managers use a "bottom up" approach to select securities one at a time before considering industry trends. The portfolio managers use fundamental analysis to select securities based on factors such as a company's long-term earnings and growth potential. The portfolio managers currently focus on companies with the following characteristics, which may vary in particular cases and may change over time:

• Future supply/demand conditions for its key products,

• Product cycles,

• Quality of management,

• Competitive position in the market place, 

• Reinvestment plans for cash generated,

• Better-than-expected earnings reports, and 

• Attractive valuation.

The portfolio managers also monitor individual issuers for changes in their business fundamentals or prospects that could trigger a decision to sell a security. The portfolio managers may consider selling a stock for one or more of the following reasons:

• the stock price is approaching its price target,

• the company's fundamentals are deteriorating, or

• alternative investment ideas have been developed.

WHO IS THE FUND DESIGNED FOR? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed for investors seeking capital appreciation over the long term. Those investors should be willing to assume the risks of short-term share price fluctuations and losses that are typical for a fund emphasizing investments in stocks. Because of its focus on long-term growth, the Fund may be appropriate for investors with longer term investment goals. Since the Fund's income level will fluctuate and will likely be small, it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

Main Risks of Investing in the Fund

All investments have some degree of risk. The value of the Fund's shares fluctuates as the value of the Fund's investments changes, and may decline. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from more specific factors like those described below. There is also the risk that poor security selection could cause the Fund to underperform other funds with similar objectives. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

RISKS OF INVESTING IN STOCK. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience significant volatility and may fall sharply at times. Adverse events in any part of the equity or fixed-income markets may have unexpected negative effects on other market segments. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

A variety of factors can affect the price of a particular company's stock and the prices of individual stocks generally do not all move in the same direction at the same time. These factors may include: poor earnings reports, a loss of customers, litigation against the company, or changes in government regulations affecting the company or its industry.

At times, the Fund may emphasize investments in a particular industry or sector. To the extent that the Fund increases its emphasis on stocks in a particular industry, the value of its investments may fluctuate more in response to events affecting that industry, such as changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others.

RISKS OF VALUE INVESTING. Value investing entails the risk that if the market does not recognize that the securities selected by the Fund are undervalued, the prices of those securities might not appreciate as anticipated. The portfolio managers' value approach could also result in acquiring fewer investments in securities that increase in price rapidly during times of market advances. This could cause the Fund to underperform other funds that seek capital appreciation but that employ only a growth or non-value approach to investing. Value investing has also gone in and out of favor during past market cycles and is likely to continue to do so. During periods when value investing is out of favor or when markets are unstable, the securities of "value" companies may underperform the securities of "growth" companies.

RISKS OF SMALL- AND MID-SIZED COMPANIES. Small- and mid-sized companies may be either established or newer companies, including "unseasoned" companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain than larger companies, they also involve greater risk of loss. They may be more sensitive to changes in a company's earnings expectations and may experience more abrupt and erratic price movements. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-sized companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since small- and mid-sized companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Smaller companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. Securities of small, unseasoned companies may be particularly volatile, especially in the short term, and may have very limited liquidity. It may take a substantial period of time to realize a gain on an investment in a small- or mid-sized company, if any gain is realized at all.

RISKS OF FOREIGN INVESTING. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, expropriation or nationalization of a company's assets, or other political and economic factors.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Fund and the Board believe to be their fair value, may help deter those activities.

These risks may be greater for investments in emerging or developing market countries.

     __________________________________________________

There is no assurance that the Fund will achieve its investment objective. Stock markets can be volatile, and the prices of the Fund's shares can go up and down substantially. The Fund generally does not use income-oriented investments to help to cushion the Fund's total return from changes in stock prices. The Fund's share price is likely to be more volatile than funds that invest in stocks and bonds or in investment-grade debt securities.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund by showing changes in the Fund's performance. The bar chart shows the yearly performance of the Fund's Non-Service Shares for each completed calendar year since the Fund's inception.

Charges imposed by the separate accounts that invest in the Fund are not included in the calculations of return in this bar chart and if those charges were included, the returns may be less than those shown. During the period shown in the bar chart, the highest return before taxes for a calendar quarter was 17.01% (2nd qtr 03) and the lowest return before taxes for a calendar quarter was -24.60% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes compared to a broad-based market index. Because the Fund's Service Shares are subject to a service fee, their performance is expected to be lower than the performance of Non-Service Shares for any given period. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future.

Average Annual Total Returns for the periods ended December 31, 2008	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 1-2-03)	(36.43%)	(1.43%)	3.09%
Service Shares (inception 9-18-06)	(41.62%)	(16.67%)	N/A
Russell 1000 Value Index	(36.85%)	(0.79%)	3.79%2
(reflects no deduction for fees, expenses or taxes)		(14.47%)1	N/A

1.  From 8-31-06
2.  From 12-31-02

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares. The Fund's performance is compared to the performance of the Russell 1000 Value Index, an unmanaged index of equity securities of large capitalization value companies. The index performance includes income reinvestment but does not reflect any transaction costs, fees, expenses or taxes. The Fund's investments vary from those in the index.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and expenses you may pay if you buy and hold shares of the Fund. The Fund pays a variety of expenses for the management of its assets, administration, distribution of its shares and other services. Since those expenses are paid from the Fund's assets, all shareholders pay those expenses indirectly.

The numbers in the Table are based on the Fund's expenses during its fiscal year ended December 31, 2008, but have been restated to reflect the transfer agent fee changes described below as if those changes had been in effect during that entire fiscal year. Expenses may vary in future years.

Shareholder Fees. The Fund does not charge an initial sales charge to buy shares or to reinvest dividends. There are no redemption fees and no contingent deferred sales charges. Please refer to the accompanying prospectus of the participating insurance company for information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. Those charges and fees are not reflected in the tables below.

Annual Fund Operating Expenses (deducted from Fund assets): (% of average daily net assets)
	Non-Service Shares	Service Shares
Management Fees	0.75%	0.75%
Distribution and/or Service (12b-1) Fees	None	0.21%
Other Expenses1	0.83%	1.27%
Total Annual Operating Expenses2	1.58%	2.23%

1. "Other expenses" include transfer agent fees, custodial fees, and accounting and legal expenses that the Fund pays. Effective May 1, 2009 the Fund's transfer agent fee structure has changed. The "Other Expenses" and "Total Annual Operating Expenses" per the above table reflect the estimated annual effect of these contractual changes. Prior to May 1, 2009, the Transfer Agent had voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35% of average daily net assets per fiscal year for all classes. For the Fund's fiscal year ended December 31, 2008, the transfer agent fees did not exceed that expense limitation. The actual "Other Expenses" as a percentage of the average daily net assets for the Fund's fiscal year ended December 31, 2008 were 0.73% for Non-Service and 1.17% for Service Shares. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year ended December 31, 2008, reduced its custodial expenses for all share classes by less than 0.01% of average daily net assets. 
2. For the fiscal year ended December 31, 2008, the Manager voluntarily agreed to waive any total annual operating expenses over 1.25% of average net assets for Non-Service Shares and 1.50% of average net assets for Service Shares. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. This voluntary undertaking may be amended or withdrawn at any time without notice to shareholders. After all of the fee and expense waivers and credits in effect during that period, the actual "Total Annual Operating Expenses," as a percentage of average daily net assets for the Fund's fiscal year ended December 31, 2008, were 1.25% for the Non-Service Shares and 1.50% for the Service Shares. It is estimated that after giving effect to all of the current fee structures, waivers and credits, the Fund's "Total Annual Operating Expenses," as percentages of average daily net assets would have been 0.80% for Non-Service Shares and 1.05% for Service Shares during the fiscal year ended December 31, 2008. 

EXAMPLE. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. The Fund's expenses will vary over time and your actual costs may be higher or lower. Based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year	3 Years	5 Years	10 Years
Non-Service Shares	$162	$503	$867	$1,893
Service Shares	$229	$705	$1,208	$2,593

In evaluating the Fund's expenses, it is important to remember that mutual funds offer you the opportunity to combine your resources with those of many other investors to obtain professional portfolio management, exposure to a larger number of markets and issuers, reliable custody for investment assets, liquidity, and convenient recordkeeping and reporting services. Funds also offer investment benefits to individuals without the expense and inconvenience of buying and selling individual securities. Because a fund is a pooled investment, however, shareholders may bear certain fund operating costs as a result of the activities of other fund investors. Because some investors may use fund services more than others, or may have smaller accounts or more frequent account activity, those activities may increase the Fund's overall expenses, which are indirectly borne by all of the Fund's shareholders.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS.  The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

Common Stock and Other Equity Investments. Equity securities include common stock, preferred stock, rights, warrants and certain debt securities that are convertible into common stock. Equity investments may be exchange-traded or over-the-counter securities. Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy.

Preferred stock has a set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The dividends on preferred stock may be cumulative (they remain a liability of the company until paid) or non-cumulative. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. When interest rates rise, the value of preferred stock having a fixed dividend rate tends to fall.

A convertible security can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. Some convertible debt securities may be considered "equity equivalents" because of the feature that makes them convertible into common stock. Convertible securities may offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible securities may provide more income than common stock but they generally provide less income than comparable non-convertible debt securities. Convertible securities are subject to credit and interest rate risk, however credit ratings of convertible securities generally have less impact on the value of the securities than they do for non-convertible debt securities.

The Fund's convertible debt securities are subject to the same credit rating limits as the Fund's other debt securities and to the Fund's policy of not investing more than 10% of its net assets in all debt securities.

Foreign Investing. The Fund can buy foreign securities that are listed on a domestic or foreign stock exchange, traded in domestic or foreign over-the-counter markets, or that are represented by American Depository Receipts (ADRs). The Fund also can invest in emerging markets, which have greater risks than developed markets. The Fund will hold foreign currency only in connection with buying and selling foreign securities.

     Special Risks of Developing and Emerging Markets. Developing or emerging market countries generally have less developed securities markets or exchanges. Securities of companies in developing or emerging market countries may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of companies in countries with more mature markets. Settlements of trades may be subject to greater delays so that the proceeds of a sale of a security may not be received on a timely basis. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Developing or emerging market countries may have less developed legal and accounting systems, and investments in those countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of company assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Their governments may also be more unstable than the governments of more developed countries. The value of the currency of a developing or emerging market country may fluctuate more than the currencies of countries with more mature markets. Investments in companies in developing or emerging market countries may be considered speculative.

     Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Manager and the Board believe to be their fair value, may help deter those activities.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Debt Securities.  The Fund may invest in debt securities, including: securities issued or guaranteed by the U.S. government or its agencies and instrumentalities, foreign government securities, and foreign and domestic corporate bonds and debentures. Normally the Fund's investments in debt securities, including convertible debt securities, are limited to not more than 10% of the Fund's net assets.

Debt securities may be subject to the following risks:

• Interest Rate Risk. The values of debt securities usually change when prevailing interest rates change. When interest rates rise, the values of outstanding debt securities generally fall, and those securities may sell at a discount from their face amount. When interest rates fall, the values of already-issued debt securities generally rise. However, when interest rates fall, the Fund's investments in new securities may be at lower yields and may reduce the Fund's income. The values of longer-term debt securities usually change more than the values of shorter-term debt securities when interest rates change.

• Credit Risk. Debt securities are also subject to credit risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. Securities directly issued by the U.S. Treasury and certain agencies that are backed by the full faith and credit of the U.S. Government have little credit risk, and other U.S. Government securities generally have lower credit risks, while securities issued by private issuers or certain foreign governments generally have greater credit risks. If an issuer fails to pay interest, the Fund's income might be reduced, and if an issuer fails to repay principal, the values of the security might fall. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. A downgrade in an issuer's credit rating or other adverse news about an issuer can reduce the market value of that issuer's securities.

Credit Quality.  The Fund may invest in securities that are rated or unrated. "Investment grade" securities are rated in one of the top four rating categories by nationally-recognized statistical rating organizations such as Moody's Investors Service or Standard & Poor's Ratings Services. "Lower grade" securities are those that are rated below those categories. While securities rated "Baa" by Moody's or "BBB" by S&P are considered "investment grade," they may also have some speculative characteristics. 

        Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner. They do not reflect any judgment of market risk. Rating agencies might not always change their credit rating of an issuer in a timely manner to reflect events that could affect the issuer's ability to make timely payments on its obligations. In selecting securities for its portfolio and evaluating their income potential and credit risk, the Fund does not rely solely on ratings by rating organizations but evaluates business and economic factors affecting issuers as well. The ratings definitions of the principal ratings organizations are included in Appendix B to the Statement of Additional Information.

The Fund can invest in debt securities with credit ratings as low as "B," or in equivalent unrated securities. Below investment grade debt securities are commonly known as "junk bonds."

Derivative Investments. The Fund can invest in a number of different types of "derivative" investments. A derivative is an investment whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency. Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

Options, futures, forward contracts, swaps, mortgage-related securities and "stripped" securities are some of the types of derivatives the Fund can use. The Fund may also use other types of derivatives that are consistent with its investment strategies or for hedging purposes.

The Fund has percentage limits on its use of hedging instruments and is not required to use hedging instruments in seeking its objective.

Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. At times, however, a hedging instrument's value might not be correlated with the investment it is intended to hedge, and the hedge might be unsuccessful. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, the strategy could reduce its return or create a loss.

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Fund expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. The Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or the use of a derivative for hedging might be unsuccessful.

Asset-Backed Securities. Asset-backed securities are fractional interests in pools of loans, other assets or receivables. They are issued by trusts or other special purpose vehicles and are collateralized by the loans, other assets or receivables that make up the pool. The trust or other issuer passes the income from the underlying pool to the investor. Neither the Fund nor the Manager selects the loans or other assets that are included in the pools or the collateral backing those pools. Asset-backed securities are subject to interest rate risk and credit risk. Certain asset-backed securities are subject to prepayment and extension risk.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 10% of its net assets in illiquid or restricted securities.  The Board can increase that limit to 15%. The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer Family of Funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Cash and Cash Equivalents. Under normal market conditions the Fund can invest up to 15% of its net assets in cash and cash equivalents, including shares of Oppenheimer Institutional Money Market Fund. This strategy would be used primarily for cash management or liquidity purposes. To the extent that the Fund uses this strategy, it might reduce its opportunities to seek its objective of long-term growth of capital.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares, however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is not a fundamental policy but will not be changed by the Board without advance notice to shareholders. Investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with more than 6 million shareholder accounts as of December 31, 2008. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of the average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2008 was 0.75% of the Fund's average annual net assets.

Effective January 1, 2007, the Manager voluntarily agreed to an expense waiver of any total expenses over 1.25% for Non-Service Shares and over 1.50% for Service Shares on an annual basis. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund's total annual operating expenses so that those expenses, as percentages of average daily net assets will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. The expense waiver is a voluntary undertaking and may be amended or withdrawn by the Manager at any time without notice to shareholders. 

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2008.

Portfolio Managers. The Fund's portfolio is managed by Mitch Williams and John Damian, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Williams and Mr. Damian have been portfolio managers and Vice Presidents of the Fund since January 2009.

Mr. Williams, CFA, has been a Vice President of the Manager since July 2006 and a Senior Research Analyst of the Manager since April 2002. He was a Vice President and Research Analyst for Evergreen Funds from October 2000 to January 2002. Mr. Williams is a portfolio manager of other portfolios in the OppenheimerFunds complex.

Mr. Damian has been Head of Value Equity Investments and Senior Vice President of the Manager since February 2007. He was a Vice President of the Manager from September 2001 to February 2007. He was a Senior Analyst/Director for Citigroup Asset Management  from November 1999 to September 2001. Mr. Damian is a portfolio manager and officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts they manage and their ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund, values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments to brokers, dealers and other financial intermediaries or service providers for distribution and/or shareholder servicing activities. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to these financial intermediaries and any commissions the Distributor pays to those firms out of the sales charges paid by investors. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers or financial advisers, sponsors of fund "supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors of college and retirement savings programs, banks, trust companies and other intermediaries offering products that hold Fund shares, and insurance companies that offer variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the NASD) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

       Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders or retirement plan participants, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include retirement plan administrators, qualified tuition program sponsors, banks and trust companies, insurance companies that offer variable annuity or variable life insurance products, and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders, such as retirement plans. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, the Fund's independent registered public accounting firm, whose report, along with the Fund's financial statements, is included in the Statement of Additional Information, which is available upon request. KPMG LLP has been appointed as the independent registered public accounting firm to the Fund for fiscal year end 2009. See the Statement of Additional Information for additional information.

FINANCIAL HIGHLIGHTS

Financial Highlights Table

Non-Service Shares      Year Ended December 31,	2008	2007	2006	2005	2004
Per Share Operating Data
Net asset value, beginning of period	$11.73	$11.58	$11.16	$12.26	$12.90
Income (loss) from investment operations:
Net investment income (loss)1	.12	.10	(.03)	.02	(.01)
Net realized and unrealized gain (loss)	(4.44)	.59	1.61	.71	1.82
Total from investment operations	(4.32)	.69	1.58	.73	1.81
Dividends and/or distributions to shareholders:
Dividends from net investment income	(2.42)	(.10)	(.01)	(.02)	(.03)
Distributions from net realized gain	--	(.44)	(1.15)	(1.81)	(2.42)
Total dividends and/or distributions to shareholders	(2.42)	(.54)	(1.16)	(1.83)	(2.45)
Net asset value, end of period	$4.99	$11.73	$11.58	$11.16	$12.26
Total Return, at Net Asset Value2	(36.43)%	5.89%	14.03%	5.88%	14.50%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$    6	$1,728	$2,657	$2,562	$2,815
Average net assets (in thousands)	$857	$2,753	$2,695	$2,878	$3,370
Ratios to average net assets:3
Net investment income (loss)	1.07%	0.80%	(0.29)%	0.15%	(0.08)%
Total expenses	1.48%4	1.49%4	2.14%4	1.78%	1.82%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.25%	1.25%	2.14%	1.78%	1.82%
Portfolio turnover rate	175%	142%	124%	86%	100%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 2008 1.48%
             Year Ended December 31, 2007 1.49%
             Year Ended December 31, 2006 2.14%

Service Shares      Year Ended December 31,	2008	2007	20061
Per Share Operating Data
Net asset value, beginning of period	$11.75	$11.57	$11.89
Income (loss) from investment operations:
Net investment income (loss)2	.08	.06	(.05)
Net realized and unrealized gain (loss)	(4.97)	.60	.88
Total from investment operations	(4.89)	.66	.83
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.07)	(.04)	--
Distributions from net realized gain	--	(.44)	(1.15)
Total dividends and/or distributions to shareholders	(.07)	(.48)	(1.15)
Net asset value, end of period	$6.79	$11.75	$11.57
Total Return, at Net Asset Value3	(41.62)%	5.70%	6.81%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$4,690	$6,481	$455
Average net assets (in thousands)	$5,561	$3,527	$268
Ratios to average net assets:4
Net investment income (loss)	0.84%	0.49%	(1.30)%
Total expenses5	2.13%	1.63%	2.89%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.50%	1.50%	2.88%
Portfolio turnover rate	175%	142%	124%

1. For the period from September 18, 2006 (inception of offering) to December 31, 2006.
2. Per share amounts calculated based on the average shares outstanding during the period.
3. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20082.13%
             Year Ended December 31, 20071.63%
             Year Ended December 31, 20062.89%

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You may request documents, and read or download certain documents at www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.942.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

PR0642.001.0409

Oppenheimer Variable Account Funds

6803 S. Tucson Way, Centennial, Colorado 80112

1.800.981.2871

Statement of Additional Information dated April 30, 2009

OPPENHEIMER VARIABLE ACCOUNT FUNDS (the "Trust") is an investment company consisting of 11 separate Series (the "Funds"):
 

Oppenheimer Balanced Fund/VA
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Core Bond Fund/VA
Oppenheimer Global Securities Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Fund^®/VA
Oppenheimer Main Street Small Cap Fund^®/VA

Oppenheimer MidCap Fund/VA
Oppenheimer Money Fund/VA
Oppenheimer Strategic Bond Fund/VA
Oppenheimer Value Fund/VA

Shares of the Funds are sold to provide benefits under variable life insurance policies and variable annuity contracts and other insurance company separate accounts, as described in the Prospectuses for the Funds and for the insurance products you have selected.

This Statement of Additional Information is not a Prospectus. This document contains additional information about the Funds and the Trust, and supplements information in the Funds' Prospectuses dated April 30, 2009. It should be read together with the Prospectuses. You can obtain a Prospectus by writing to the Funds' Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, by calling the Transfer Agent at the toll-free number shown above or by visiting the OppenheimerFunds website at www.oppenheimerfunds.com.

Contents                                                                                                   Page

About the Funds

Additional Information About the Funds' Investment Policies and Risks               

The Funds' Investment Policies               

Other Investment Techniques and Strategies     

Other Investment Restrictions               

Disclosure of Portfolio Holdings               

How the Funds are Managed            

Organization and History               

Board of Trustees and Oversight Committees               

Trustees and Officers of the Funds               

The Manager               

Brokerage Policies of the Funds               

Distribution and Service Plans (Service Shares and Class 4 Shares)                

Payments to Fund Intermediaries               

Performance of the Funds               

About Your Account

How To Buy and Sell Shares               
Dividends, Capital Gains and Taxes               
Additional Information About the Funds               

Financial Information About the Funds *
Report of Independent Registered Public Accounting Firm and Financial Statements          

Appendix A: Ratings Definitions                                                                                           A-1

Appendix B: Major Shareholders                                                                                         B-1

___________________________________

*This Statement of Additional Information consists of two separate documents. This text comprises the first document. The second document contains the Report of the Independent Registered Public Accounting Firm and Financial Statements for each Fund. The two documents should be read together with the Prospectuses for the Funds and for the insurance products you have selected. These documents can also be viewed or downloaded online. Call 1.888.981.2871 if you want the domain name of an insurance sponsor's website that displays both documents comprising this Statement of Additional Information online, or if you have technical difficulties, or to request a paper copy of both documents comprising this Statement of Additional Information at no charge.

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ABOUT THE FUNDS

Additional Information About the Funds' Investment Policies and Risks

The investment objective, the principal investment policies and the main risks of the Funds are described in the Funds' Prospectuses. This Statement of Additional Information ("SAI") contains supplemental information about those policies and risks and the types of securities that the Funds' investment manager, OppenheimerFunds, Inc. (the "Manager"), can select for the Funds. Additional information is also provided about the strategies that each Fund may use to try to achieve its objective. The full name of each Fund is shown on the cover page, the word "Oppenheimer" is omitted from these names in the rest of this document, to conserve space.

The Funds' Investment Policies. The composition of the Funds' portfolios and the techniques and strategies that the Manager uses in selecting portfolio securities will vary over time. The Funds are not required to use all of the investment techniques and strategies described below at all times in seeking their goals. They may use some of the special investment techniques and strategies at some times or not at all.

In selecting securities for the Funds' portfolios, the Manager evaluates the merits of particular securities primarily through the exercise of its own investment analysis. That process may include, among other things:

·      evaluation of the issuer's historical operations,

·      prospects for the industry of which the issuer is part,

·      the issuer's financial condition,

·      its pending product developments and business (and those of competitors),

·      the effect of general market and economic conditions on the issuer's business, and

·      legislative proposals that might affect the issuer.

The Funds are categorized by the types of investment they make. Capital Appreciation Fund/VA, Global Securities Fund/VA, Main Street Small Cap Fund^®/VA, MidCap Fund/VA and Value Fund/VA can be categorized as "Equity Funds." High Income Fund/VA, Core Bond Fund/VA, and Strategic Bond Fund/VA can be categorized as "Fixed Income Funds." Balanced Fund/VA and Main Street Fund^®/VA share the investment characteristics (and certain of the investment policies) of both the Equity Funds and the Fixed Income Funds, depending upon the allocations determined from time to time by their respective portfolio managers. However, if a Fund is referred to in general, the discussion below of particular investments and strategies indicates which Funds can use that investment or technique as part of their investment program. For example, some investments can be held by only some of the Funds and some can be held by all. Please refer to the prospectus of a particular Fund for an explanation of its principal investment policies and risks. The allocation of Main Street Fund^®/VA's portfolio to equity securities is generally substantially larger than its allocation to fixed-income securities. Money Fund/VA's investment policies are explained separately; however, discussion below about investment restrictions, repurchase agreements, illiquid securities and loans of portfolio securities also apply to Money Fund/VA.

|X|     Investments in Equity Securities. The Equity Funds focus their investments in equity securities, which include common stocks, preferred stocks, rights and warrants, and securities convertible into common stock. Certain equity securities may be selected not only for their appreciation possibilities but because they may provide dividend income. At times, a Fund may have substantial amounts of its assets invested in securities of issuers in one or more capitalization ranges, based upon the Manager's use of its investment strategies and its judgment of where the best market opportunities are to seek a Fund's objective.

Small-cap growth companies may offer greater opportunities for capital appreciation than securities of large, more established companies. However, these securities also involve greater risks than securities of larger companies. Securities of small- and mid- cap issuers may be subject to greater price volatility in general than securities of large-cap companies. Therefore, to the degree that a Fund has investments in smaller capitalization companies at times of market volatility, that Fund's share prices may fluctuate more. Main Street Small Cap Fund^®/VA will invest primarily in securities of small-cap issuers, but, for the other Equity Funds those investments may be limited to the extent the Manager believes that such investments would be inconsistent with the goal of preservation of principal.

·     Growth Investing. In selecting equity investments, the portfolio managers for the Equity Funds may from time to time use a growth investing style, a value investing style, or a combination of both. In using a growth approach, the portfolio managers seek securities of "growth" companies. Growth companies are those companies that the Manager believes are entering into a growth cycle in their business, with the expectation that their stock will increase in value. They may be established companies, as well as, newer companies in the development stage. Growth companies may have a variety of characteristics that in the Manager's view define them as "growth" issuers.

Growth companies may be generating or applying new technologies, new or improved distribution techniques or new services. They may own or develop natural resources. They may be companies that can benefit from changing consumer demands or lifestyles, or companies that have projected earnings in excess of the average for their sector or industry. In each case, they have prospects that the Manager believes are favorable for the long term. The portfolio managers of the Funds look for growth companies with strong, capable management, sound financial and accounting policies, successful product development and marketing and other factors.

·     Value Investing. In selecting equity investments, the portfolio managers for the Equity Funds in particular may from time to time use a value investing style. In using a value approach, the portfolio managers seek stock and other equity securities that appear to be temporarily undervalued, by various measures, such as price/earnings ratios, rather than seeking stocks of "growth" issuers. This approach is subject to change and might not necessarily be used in all cases. Value investing seeks stocks having prices that are low in relation to their real worth or future prospects, in the hope that a Fund will realize appreciation in the value of its holdings when other investors realize the intrinsic value of the stock.

3

Using value investing requires research as to the issuer's underlying financial condition and prospects. Some of the measures that can be used to identify these securities include, among others:

·      Price/Earnings ratio, which is the stock's price divided by its earnings per share. A stock having a price/earnings ratio lower than its historical range, or the market as a whole or that of similar companies may offer attractive investment opportunities.

·      Price/book value ratio, which is the stock price divided by the book value of the company per share, which measures the company's stock price in relation to its asset value.

·      Dividend Yield is measured by dividing the annual dividend by the stock price per share.

·      Valuation of Assets, which compares the stock price to the value of the company's underlying assets, including their projected value in the marketplace and liquidation value.

·      Convertible Securities. Convertible securities are debt securities that are convertible into an issuer's common stock. Convertible securities rank senior to common stock in a corporation's capital structure and therefore are subject to less risk than common stock in case of the issuer's bankruptcy or liquidation.

The value of a convertible security is a function of its "investment value" and its "conversion value." If the investment value exceeds the conversion value, the security will behave more like a debt security, and the security's price will likely increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the security will behave more like an equity security: it will likely sell at a premium over its conversion value, and its price will tend to fluctuate directly with the price of the underlying security.

While many convertible securities are a form of debt security, in some cases their conversion feature (allowing conversion into equity securities) causes the Manager to regard them more as "equity equivalents." In those cases, the credit rating assigned to the security has less impact on the Manager's investment decision than in the case of non-convertible fixed income securities. Convertible securities are subject to the credit risks and interest rate risks described below in "Investments in Bonds and other Debt Securities."

To determine whether convertible securities should be regarded as "equity equivalents," the Manager may examine the following factors:

(1)      whether, at the option of the investor, the convertible security can be exchanged for a fixed number of shares of common stock of the issuer,

(2)      whether the issuer of the convertible securities has restated its earnings per share of common stock on a fully diluted basis (considering the effect of conversion of the convertible securities), and

(3)      the extent to which the convertible security may be a defensive "equity substitute," providing the ability to participate in any appreciation in the price of the issuer's common stock.

·      Rights and Warrants. The Funds may invest in warrants or rights. Warrants basically are options to purchase equity securities at specific prices valid for a specific period of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to warrants, but normally have a short duration and are distributed directly by the issuer to its shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.

|X|     Preferred Stocks. Preferred stocks are equity securities but have certain attributes of debt securities. Preferred stock, unlike common stock, has a stated dividend rate payable from the corporation's earnings. Preferred stock dividends may be cumulative or non-cumulative, participating, or auction rate. "Cumulative" dividend provisions require all or a portion of prior unpaid dividends to be paid before the issuer can pay dividends on common shares.

If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as provisions for their call or redemption prior to maturity which can have a negative effect on their prices when interest rates decline. Preferred stock may be "participating" stock, which means that it may be entitled to a dividend exceeding the stated dividend in certain cases.

Preferred stocks are equity securities because they do not constitute a liability of the issuer and therefore do not offer the same degree of protection of capital as debt securities and may not offer the same degree of assurance of continued income as debt securities. The rights of preferred stock on distribution of a corporation's assets in the event of its liquidation are generally subordinate to the rights associated with a corporation's debt securities. Preferred stock generally has a preference over common stock on the distribution of a corporation's assets in the event of its liquidation.

|X|     Investments in Bonds and Other Debt Securities. The Fixed Income Funds in particular can invest in bonds, debentures and other debt securities to seek current income as part of their investment objectives.

A Fund's debt investments can include investment-grade and non-investment-grade bonds (commonly referred to as "junk bonds"). Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors Service, Inc., ("Moody's") or at least "BBB" by Standard & Poor's Rating Services ("S&P") or Fitch, Inc. ("Fitch") or that have comparable ratings by another nationally recognized rating organization. In making investments in debt securities, the Manager may rely to some extent on the ratings of ratings organizations or it may use its own research to evaluate a security's credit-worthiness. If the securities that a Fund buys are unrated, to be considered part of a Fund's holdings of investment-grade securities, they must be judged by the Manager to be of comparable quality to bonds rated as investment grade by a rating organization.

·      Special Risks of Lower-Grade Securities. Because lower-grade securities tend to offer higher yields than investment grade securities, a Fund may invest in lower grade securities if the Manager is trying to achieve greater income (and, in some cases, the appreciation possibilities of lower-grade securities may be a reason they are selected for a Fund's portfolio). High-yield convertible debt securities might be selected as "equity substitutes," as described above but are subject to a Fund's limitation on its investment in debt securities as stated in the Prospectus.

As mentioned above, "lower-grade" debt securities are those rated below "investment grade," which means they have a rating lower than "Baa" by Moody's or lower than "BBB" by S&P or Fitch, Inc. or similar ratings by other nationally recognized rating organizations. If they are unrated, and are determined by the Manager to be of comparable quality to debt securities rated below investment grade, they are included in the limitation on the percentage of a Fund's assets that can be invested in lower-grade securities.

While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's or Fitch are investment-grade and are not regarded as junk bonds, those securities may be subject to special risks, and have some speculative characteristics. Definitions of the debt security ratings categories of Moody's, Standard & Poor's and Fitch are included in Appendix A to this SAI.

·      Credit Risk. Credit risk relates to the ability of the issuer of a debt security to meet interest and principal payment obligations as they become due. Some of the special credit risks of lower-grade securities are discussed in the Prospectus. There is a greater risk that the issuer may default on its obligation to pay interest or to repay principal than in the case of investment grade securities. The issuer's low creditworthiness may increase the potential for its insolvency. An overall decline in values in the high yield bond market is also more likely during a period of a general economic downturn. An economic downturn or an increase in interest rates could severely disrupt the market for high yield bonds, adversely affecting the values of outstanding bonds as well as the ability of issuers to pay interest or repay principal. In the case of foreign high yield bonds, these risks are in addition to the special risks of foreign investing discussed in the Prospectus and in this SAI.

·      Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already-issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

Fluctuations in the market value of fixed-income securities after the Funds buy them will not affect the interest income payable on those securities (unless the security pays interest at a variable rate pegged to interest rate changes). However, those price fluctuations will be reflected in the valuations of the securities, and therefore the Funds' net asset values will be affected by those fluctuations.

n     Event-Linked Bonds. The Funds may invest in "event-linked" bonds. Event-linked bonds, which are sometimes referred to as "catastrophe" bonds, are fixed income securities for which the return of principal and payment of interest is contingent on the non-occurrence of a specific trigger event, such as a hurricane, earthquake, or other occurrence that leads to physical or economic loss. In some cases, the trigger event will not be deemed to have occurred unless the event is of a certain magnitude (based on scientific readings) or causes a certain measurable amount of loss to the issuer, a particular industry group or a reference index. If the trigger event occurs prior to maturity, a Fund may lose all or a portion of its principal and additional interest. The Funds may also invest in similar bonds where a Fund may lose all or a portion of its principal and additional interest if the mortality rate in a geographic area exceeds a stated threshold prior to maturity whether or not a particular catastrophic event has occurred. 

Event-linked bonds may be issued by government agencies, insurance companies, reinsurers, and financial institutions, among other issuers, or special purpose vehicles associated with the foregoing. Often event-linked bonds provide for extensions of maturity in order to process and audit loss claims in those cases when a trigger event has occurred or is likely to have occurred. An extension of maturity may increase a bond's volatility.

Event-linked bonds may expose the Funds to certain other risks, including issuer default, adverse regulatory or jurisdictional interpretations, liquidity risk and adverse tax consequences. Lack of a liquid market may result in higher transaction costs and the possibility that a Fund may be forced to liquidate positions when it would not be advantageous to do so. Event-linked bonds are typically rated by one or more nationally recognized statistical rating organization and a Fund will only invest in event-linked bonds that meet the credit quality requirements for the Fund.

|X|     Floating Rate and Variable Rate Obligations. Some securities the Funds can purchase have variable or floating interest rates. Variable rates are adjusted at stated periodic intervals. Variable rate obligations can have a demand feature that allows the Funds to tender the obligation to the issuer or a third party prior to its maturity. The tender may be at par value plus accrued interest, according to the terms of the obligations.

The interest rate on a floating rate demand note is adjusted automatically according to a stated prevailing market rate, such as a bank's prime rate, the 91-day U.S. Treasury Bill rate, or some other standard. The instrument's rate is adjusted automatically each time the base rate is adjusted. The interest rate on a variable rate note is also based on a stated prevailing market rate but is adjusted automatically at specified intervals of not less than one year. Generally, the changes in the interest rate on such securities reduce the fluctuation in their market value. As interest rates decrease or increase, the potential for capital appreciation or depreciation is less than that for fixed-rate obligations of the same maturity. The Manager may determine that an unrated floating rate or variable rate demand obligation meets the Funds' quality standards by reason of being backed by a letter of credit or guarantee issued by a bank that meets those quality standards.

Floating rate and variable rate demand notes that have a stated maturity in excess of one year may have features that permit the holder to recover the principal amount of the underlying security at specified intervals not exceeding one year and upon no more than 30 days' notice. The issuer of that type of note normally has a corresponding right in its discretion, after a given period, to prepay the outstanding principal amount of the note plus accrued interest. Generally, the issuer must provide a specified number of days' notice to the holder.

|X|     Asset-Backed Securities. Asset-backed securities are fractional interests in pools of assets, typically accounts receivable or consumer loans. They are issued by trusts or special-purpose corporations. They are similar to mortgage-backed securities, described below, and are backed by a pool of assets that consist of obligations of individual borrowers. The income from the pool is passed through to the holders of participation interest in the pools. The pools may offer a credit enhancement, such as a bank letter of credit, to try to reduce the risks that the underlying debtors will not pay their obligations when due. However, the enhancement, if any, might not be for the full par value of the security. If the enhancement is exhausted and any required payments of interest or repayments of principal are not made, that Fund could suffer losses on its investment or delays in receiving payment.

The value of an asset-backed security is affected by changes in the market's perception of the asset backing the security, the creditworthiness of the servicing agent for the loan pool, the originator of the loans, or the financial institution providing any credit enhancement, and is also affected if any credit enhancement has been exhausted. The risks of investing in asset-backed securities are ultimately related to payment of consumer loans by the individual borrowers. As a purchaser of an asset-backed security, a Fund would generally have no recourse to the entity that originated the loans in the event of default by a borrower. The underlying loans are subject to prepayments, which may shorten the weighted average life of asset-backed securities and may lower their return, in the same manner as in the case of mortgage-backed securities and CMOs, described below. Unlike mortgage-backed securities, asset-backed securities typically do not have the benefit of a security interest in the underlying collateral.

|X|     Mortgage-Related Securities. Mortgage-related securities (also referred to as mortgage-backed securities) are a form of derivative investment collateralized by pools of commercial or residential mortgages. Pools of mortgage loans are assembled as securities for sale to investors by government agencies or entities or by private issuers. These securities include collateralized mortgage obligations ("CMOs"), mortgage pass-through securities, stripped mortgage pass-through securities, interests in real estate mortgage investment conduits ("REMICs") and other real-estate related securities.

Mortgage-related securities that are issued or guaranteed by agencies or instrumentalities of the U.S. government have relatively little credit risk (depending on the nature of the issuer). Privately issued mortgage-related securities have some credit risk, as the underlying mortgage may not fully collateralize the obligation and full payment of them is not guaranteed. Both types of mortgage-related securities are subject to interest rate risks and prepayment risks, as described in the Prospectuses.

As with other debt securities, the prices of mortgage-related securities tend to move inversely to changes in interest rates. The Fixed Income Funds and Value Fund/VA can buy mortgage-related securities that have interest rates that move inversely to changes in general interest rates, based on a multiple of a specific index. Although the value of a mortgage-related security may decline when interest rates rise, the converse is not always the case.

In periods of declining interest rates, mortgages are more likely to be prepaid. Therefore, a mortgage-related security's maturity can be shortened by unscheduled prepayments on the underlying mortgages. Therefore, it is not possible to predict accurately the security's yield. The principal that is returned earlier than expected may have to be reinvested in other investments having a lower yield than the prepaid security. Therefore, these securities may be less effective as a means of "locking in" attractive long-term interest rates, and they may have less potential for appreciation during periods of declining interest rates, than conventional bonds with comparable stated maturities.

Prepayment risks can lead to substantial fluctuations in the value of a mortgage-related security. In turn, this can affect the value of that Fund's shares. If a mortgage-related security has been purchased at a premium, all or part of the premium that Fund paid may be lost if there is a decline in the market value of the security, whether that results from interest rate changes or prepayments on the underlying mortgages. In the case of stripped mortgage-related securities, if they experience greater rates of prepayment than were anticipated, that Fund may fail to recoup its initial investment on the security.

During periods of rapidly rising interest rates, prepayments of mortgage-related securities may occur at slower than expected rates. Slower prepayments effectively may lengthen a mortgage-related security's expected maturity. Generally, that would cause the value of the security to fluctuate more widely in responses to changes in interest rates. If the prepayments on a Fund's mortgage-related securities were to decrease broadly, that Fund's effective duration, and therefore its sensitivity to interest rate changes, would increase. As with other debt securities, the values of mortgage-related securities may be affected by changes in the market's perception of the creditworthiness of the entity issuing the securities or guaranteeing them. Their values may also be affected by changes in government regulations and tax policies.

·     Forward Rolls. The Funds can enter into "forward roll" transactions with respect to mortgage-related securities (also referred to as "mortgage dollar rolls"). In this type of transaction, a Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security (the same type of security, and having the same coupon and maturity) at a later date at a set price. The securities that are repurchased will have the same interest rate as the securities that are sold, but typically will be collateralized by different pools of mortgages (with different prepayment histories) than the securities that have been sold. Proceeds from the sale are invested in short-term instruments, such as repurchase agreements. The income from those investments, plus the fees from the forward roll transaction, are expected to generate income to a Fund in excess of the yield on the securities that have been sold.

The Funds will only enter into "covered" rolls. To assure its future payment of the purchase price, the Funds will identify on its books liquid assets in an amount equal to the payment obligation under the roll.

These transactions have risks. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. It is possible that the market value of the securities the Fund sells may decline below the price at which the Fund is obligated to repurchase securities.

·     Collateralized Mortgage Obligations. CMOs are multi-class bonds that are backed by pools of mortgage loans or mortgage pass-through certificates. They may be collateralized by:

(1)      pass-through certificates issued or guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac,

(2)      unsecuritized mortgage loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans' Affairs,

(3)      unsecuritized conventional mortgages,

(4)      other mortgage-related securities, or

(5)      any combination of these.

Each class of CMO, referred to as a "tranche," is issued at a specific coupon rate and has a stated maturity or final distribution date. Principal prepayments on the underlying mortgages may cause the CMO to be retired much earlier than the stated maturity or final distribution date. The principal and interest on the underlying mortgages may be allocated among the several classes of a series of a CMO in different ways. One or more trenches may have coupon rates that reset periodically at a specified increase over an index. These are floating rate CMOs, and typically have a cap on the coupon rate. Inverse floating rate CMOs have a coupon rate that moves in the reverse direction to an applicable index. The coupon rate on these CMOs will increase as general interest rates decrease. These are usually much more volatile than fixed rate CMOs or floating rate CMOs.

|X|     U.S. Government Securities. These are securities issued or guaranteed by the U.S. Treasury or other government agencies or federally-chartered corporate entities referred to as "instrumentalities." The obligations of U.S. government agencies or instrumentalities in which the Funds may invest may or may not be guaranteed or supported by the "full faith and credit" of the United States. "Full faith and credit," means generally that the taxing power of the U.S. government is pledged to the payment of interest and repayment of principal on a security. If a security is not backed by the full faith and credit of the United States, the owner of the security must look principally to the agency issuing the obligation for repayment. The owner might not be able to assert a claim against the United States if the issuing agency or instrumentality does not meet its commitment. The Funds will invest in securities of U.S. government agencies and instrumentalities only if the Manager is satisfied that the credit risk with respect to the agency or instrumentality is minimal.

·      U.S. Treasury Obligations. These include Treasury bills (maturities of one year or less when issued), Treasury notes (maturities of one to 10 years), and Treasury bonds (maturities of more than 10 years). Treasury securities are backed by the full faith and credit of the United States as to timely payments of interest and repayments of principal. They also can include U.S. Treasury securities that have been "stripped" by a Federal Reserve Bank, zero-coupon U.S. Treasury securities described below, and Treasury Inflation-Protection Securities ("TIPS").

·      Treasury Inflation-Protection Securities. The Funds can buy these TIPS, which are designed to provide an investment vehicle that is not vulnerable to inflation. The interest rate paid by TIPS is fixed. The principal value rises or falls semi-annually based on changes in the published Consumer Price Index. If inflation occurs, the principal and interest payments on TIPS are adjusted to protect investors from inflationary loss. If deflation occurs, the principal and interest payments will be adjusted downward, although the principal will not fall below its face amount at maturity.

·      Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities. These include direct obligations and mortgage-related securities that have different levels of credit support from the government. Some are supported by the full faith and credit of the U.S. government, such as Government National Mortgage Association ("GNMA") pass-through mortgage certificates (called "Ginnie Maes"). Some are supported by the right of the issuer to borrow from the U.S. Treasury under certain circumstances, such as Federal National Mortgage Association bonds ("Fannie Maes"). Others are supported only by the credit of the entity that issued them, such as Federal Home Loan Mortgage Corporation ("FHLMC") obligations ("Freddie Macs").

n      U.S. Government Mortgage-Related Securities. The Funds can invest in a variety of mortgage-related securities that are issued by U.S. government agencies or instrumentalities, some of which are described below.

·      GNMA Certificates. The Government National Mortgage Association is a wholly-owned corporate instrumentality of the United States within the U.S. Department of Housing and Urban Development. GNMA's principal programs involve its guarantees of privately-issued securities backed by pools of mortgages. Ginnie Maes are debt securities representing an interest in one mortgage or a pool of mortgages that are insured by the Federal Housing Administration ("FHA") or the Farmers Home Administration ("FMHA") or guaranteed by the Veterans Administration ("VA").

The Ginnie Maes in which the Funds invest are of the "fully modified pass-through" type. They provide that the registered holders of the Ginnie Maes will receive timely monthly payments of the pro-rata share of the scheduled principal payments on the underlying mortgages, whether or not those amounts are collected by the issuers. Amounts paid include, on a pro rata basis, any prepayment of principal of such mortgages and interest (net of servicing and other charges) on the aggregate unpaid principal balance of the Ginnie Maes, whether or not the interest on the underlying mortgages has been collected by the issuers.

The Ginnie Maes purchased by the Funds are guaranteed as to timely payment of principal and interest by GNMA. In giving that guaranty, GNMA expects that payments received by the issuers of Ginnie Maes on account of the mortgages backing the Ginnie Maes will be sufficient to make the required payments of principal of and interest on those Ginnie Maes. However, if those payments are insufficient, the guaranty agreements between the issuers of the Ginnie Maes and GNMA require the issuers to make advances sufficient for the payments. If the issuers fail to make those payments, GNMA will do so.

Under federal law, the full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guaranty issued by GNMA as to such mortgage pools. An opinion of an Assistant Attorney General of the United States, dated December 9, 1969, states that such guaranties "constitute general obligations of the United States backed by its full faith and credit." GNMA is empowered to borrow from the United States Treasury to the extent necessary to make any payments of principal and interest required under those guaranties.

Ginnie Maes are backed by the aggregate indebtedness secured by the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages. Except to the extent of payments received by the issuers on account of such mortgages, Ginnie Maes do not constitute a liability of those issuers, nor do they evidence any recourse against those issuers. Recourse is solely against GNMA. Holders of Ginnie Maes (such as the Funds) have no security interest in or lien on the underlying mortgages.

Monthly payments of principal will be made, and additional prepayments of principal may be made, to the Funds with respect to the mortgages underlying the Ginnie Maes owned by the Funds. All of the mortgages in the pools relating to the Ginnie Maes in the Funds are subject to prepayment without any significant premium or penalty, at the option of the mortgagors. While the mortgages on one-to-four family dwellings underlying certain Ginnie Maes have a stated maturity of up to 30 years, it has been the experience of the mortgage industry that the average life of comparable mortgages, as a result of prepayments, refinancing and payments from foreclosures, is considerably less.

·      Federal Home Loan Mortgage Corporation (FHLMC) Certificates. FHLMC, a corporate instrumentality of the United States, issues FHLMC Certificates representing interests in mortgage loans. FHLMC guarantees to each registered holder of a FHLMC Certificate timely payment of the amounts representing a holder's proportionate share in:

(i)      interest payments less servicing and guarantee fees,

(ii)      principal prepayments, and

(iii)      the ultimate collection of amounts representing the holder's proportionate interest in principal payments on the mortgage loans in the pool represented by the FHLMC Certificate, in each case whether or not such amounts are actually received.

The obligations of FHLMC under its guarantees are obligations solely of FHLMC and are not backed by the full faith and credit of the United States.

·      Federal National Mortgage Association (Fannie Mae) Certificates. Fannie Mae, a federally-chartered and privately-owned corporation, issues Fannie Mae Certificates which are backed by a pool of mortgage loans. Fannie Mae guarantees to each registered holder of a Fannie Mae Certificate that the holder will receive amounts representing the holder's proportionate interest in scheduled principal and interest payments, and any principal prepayments, on the mortgage loans in the pool represented by such Certificate, less servicing and guarantee fees, and the holder's proportionate interest in the full principal amount of any foreclosed or other liquidated mortgage loan. In each case the guarantee applies whether or not those amounts are actually received. The obligations of Fannie Mae under its guarantees are obligations solely of Fannie Mae and are not backed by the full faith and credit of the United States or any of its agencies or instrumentalities other than Fannie Mae.

n     Zero-Coupon U.S. Government Securities. The Funds may buy zero-coupon U.S. government securities. These will typically be U.S. Treasury Notes and Bonds that have been stripped of their unmatured interest coupons, the coupons themselves, or certificates representing interests in those stripped debt obligations and coupons.

Zero-coupon securities do not make periodic interest payments and are sold at a deep discount from their face value at maturity. The buyer recognizes a rate of return determined by the gradual appreciation of the security, which is redeemed at face value on a specified maturity date. This discount depends on the time remaining until maturity, as well as prevailing interest rates, the liquidity of the security and the credit quality of the issuer. The discount typically decreases as the maturity date approaches.

Because zero-coupon securities pay no interest and compound semi-annually at the rate fixed at the time of their issuance, their value is generally more volatile than the value of other debt securities that pay interest. Their value may fall more dramatically than the value of interest-bearing securities when interest rates rise. When prevailing interest rates fall, zero-coupon securities tend to rise more rapidly in value because they have a fixed rate of return.

A Fund's investment in zero-coupon securities may cause that Fund to recognize income and make distributions to shareholders before it receives any cash payments on the zero-coupon investment. To generate cash to satisfy those distribution requirements, a Fund may have to sell portfolio securities that it otherwise might have continued to hold or to use cash flows from other sources such as the sale of Fund shares.

n     Commercial (Privately-Issued) Mortgage Related Securities. The Funds can invest in commercial mortgage-related securities issued by private entities. Generally these are multi-class debt or pass-through certificates secured by mortgage loans on commercial properties. They are subject to the credit risk of the issuer. These securities typically are structured to provide protection to investors in senior classes from possible losses on the underlying loans. They do so by having holders of subordinated classes take the first loss if there are defaults on the underlying loans. They may also be protected to some extent by guarantees, reserve funds or additional collateralization mechanisms.

|X|     Participation Interests. The Funds can invest in participation interests, subject to the Funds' limitation on investments in illiquid investments. A participation interest is an undivided interest in a loan made by the issuing financial institution in the proportion that the buyer's participation interest bears to the total principal amount of the loan. The issuing financial institution may have no obligation to the Funds other than to pay the Funds the proportionate amount of the principal and interest payments they receive.

Participation interests are primarily dependent upon the creditworthiness of the borrowing corporation, which is obligated to make payments of principal and interest on the loan. There is a risk that a borrower may have difficulty making payments. If a borrower fails to pay scheduled interest or principal payments, the Funds could experience a reduction in its income. The value of that participation interest might also decline, which could affect the net asset value of the Funds' shares. If the issuing financial institution fails to perform its obligations under the participation agreement, the Funds might incur costs and delays in realizing payment and suffer a loss of principal and/or interest.

|X|     Foreign Securities. The Equity Funds and the Fixed Income Funds may invest in foreign securities, and Global Securities Fund/VA expects to have substantial investments in foreign securities. These include equity securities issued by foreign companies and debt securities issued or guaranteed by foreign companies or governments, including supra-national entities. "Foreign securities" include equity and debt securities of companies organized under the laws of countries other than the United States and debt securities issued or guaranteed by governments other than the U.S. government or by foreign supra-national entities. They also include securities of companies (including those that are located in the U.S. or organized under U.S. law) that derive a significant portion of their revenue or profits from foreign businesses, investments or sales, or that have a significant portion of their assets abroad. They may be traded on foreign securities exchanges or in the foreign over-the-counter markets. Value Fund/VA can purchase up to 25% of its total assets in certain equity and debt securities issued or guaranteed by foreign companies or of foreign governments or their agencies and as stated in the Prospectus, Value Fund/VA does not concentrate 25% or more of its total assets in the securities of any one foreign government.

Securities of foreign issuers that are represented by American Depository Receipts or that are listed on a U.S. securities exchange or traded in the U.S. over-the-counter markets are not considered "foreign securities" for the purpose of a Fund's investment allocations, because they are not subject to many of the special considerations and risks, discussed below, that apply to foreign securities traded and held abroad.

Because the Funds may purchase securities denominated in foreign currencies, a change in the value of such foreign currency against the U.S. dollar will result in a change in the amount of income the Funds have available for distribution. Because a portion of the Funds' investment income may be received in foreign currencies, the Funds will be required to compute their income in U.S. dollars for distribution to shareholders, and therefore the Funds will absorb the cost of currency fluctuations. After the Funds have distributed income, subsequent foreign currency losses may result in the Funds' having distributed more income in a particular fiscal period than was available from investment income, which could result in a return of capital to shareholders.

Investing in foreign securities offers potential benefits not available from investing solely in securities of domestic issuers. They include the opportunity to invest in foreign issuers that appear to offer growth potential, or in foreign countries with economic policies or business cycles different from those of the U.S., or to reduce fluctuations in portfolio value by taking advantage of foreign stock markets that do not move in a manner parallel to U.S. markets. The Funds will hold foreign currency only in connection with the purchase or sale of foreign securities.

·      Foreign Debt Obligations. The debt obligations of foreign governments and entities may or may not be supported by the full faith and credit of the foreign government. The Fixed Income Funds may buy securities issued by certain supra-national entities, which include entities designated or supported by governments to promote economic reconstruction or development, international banking organizations and related government agencies. Examples are the International Bank for Reconstruction and Development (commonly called the "World Bank"), the Asian Development bank and the Inter-American Development Bank.

The governmental members of these supra-national entities are "stockholders" that typically make capital contributions and may be committed to make additional capital contributions if the entity is unable to repay its borrowings. A supra-national entity's lending activities may be limited to a percentage of its total capital, reserves and net income. There can be no assurance that the constituent foreign governments will continue to be able or willing to honor their capitalization commitments for those entities.

The Fixed Income Funds can invest in U.S. dollar-denominated "Brady Bonds." These foreign debt obligations may be fixed-rate par bonds or floating-rate discount bonds. They are generally collateralized in full as to repayment of principal at maturity by U.S. Treasury zero-coupon obligations that have the same maturity as the Brady Bonds. Brady Bonds can be viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity. Those uncollateralized amounts constitute what is called the "residual risk".

If there is a default on collateralized Brady Bonds resulting in acceleration of the payment obligations of the issuer, the zero-coupon U.S. Treasury securities held as collateral for the payment of principal will not be distributed to investors, nor will those obligations be sold to distribute the proceeds. The collateral will be held by the collateral agent to the scheduled maturity of the defaulted Brady Bonds. The defaulted bonds will continue to remain outstanding, and the face amount of the collateral will equal the principal payments which would have then been due on the Brady Bonds in the normal course. Because of the residual risk of Brady Bonds and the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, Brady Bonds are considered speculative investments.

·      Risks of Foreign Investing. Investments in foreign securities may offer special opportunities for investing but also present special additional risks and considerations not typically associated with investments in domestic securities. Some of these additional risks are:

·      reduction of income by foreign taxes;

·      fluctuation in value of foreign investments due to changes in currency rates or currency control regulations (for example, currency blockage);

·      transaction charges for currency exchange;

·      lack of public information about foreign issuers;

·      lack of uniform accounting, auditing and financial reporting standards in foreign countries comparable to those applicable to domestic issuers;

·      less volume on foreign exchanges than on U.S. exchanges;

·      greater volatility and less liquidity on foreign markets than in the U.S.;

·      less governmental regulation of foreign issuers, stock exchanges and brokers than in the U.S.;

·      greater difficulties in commencing lawsuits;

·      higher brokerage commission rates than in the U.S.;

·      increased risks of delays in settlement of portfolio transactions or loss of certificates for portfolio securities;

·      possibilities in some countries of expropriation, confiscatory taxation, currency devaluation, political, financial or social instability or adverse diplomatic developments; and

·      unfavorable differences between the U.S. economy and foreign economies.

In the past, U.S. government policies have discouraged certain investments abroad by U.S. investors, through taxation or other restrictions, and it is possible that such restrictions could be re-imposed.

·      Special Risks of Emerging Markets. Emerging and developing markets abroad may also offer special opportunities for growth investing but have greater risks than more developed foreign markets, such as those in Europe, Canada, Australia, New Zealand and Japan. There may be even less liquidity in their securities markets, and settlements of purchases and sales of securities may be subject to additional delays. They are subject to greater risks of limitations on the repatriation of income and profits because of currency restrictions imposed by local governments. Those countries may also be subject to the risk of greater political and economic instability, which can greatly affect the volatility of prices of securities in those countries. The Manager will consider these factors when evaluating securities in these markets, because the selection of those securities must be consistent with a Fund's goal of preservation of principal.

n     Portfolio Turnover. "Portfolio turnover" describes the rates at which the Funds traded their portfolio securities during their last fiscal year. For example, if a Fund sold all of its securities during the year, its portfolio turnover rate would have been 100%. The Funds' portfolio turnover rates will fluctuate from year to year, and any of the Funds may have portfolio turnover rates of more than 100% annually.

Other Investment Techniques and Strategies. In seeking their respective objectives, the Funds may from time to time use the types of investment strategies and investments described below. They are not required to use all of these strategies at all times, and at times may not use them.
 

|X|Investing in Small, Unseasoned Companies. A Fund may invest in securities of small, unseasoned companies, subject to limits (if any) stated in that Fund's Prospectus. These are companies that have been in operation for less than three years, including the operations of any predecessors. Securities of these companies may be subject to volatility in their prices. They may have a limited trading market or no trading market, which may adversely affect a Fund's ability to value them or to dispose of them and can reduce the price that Fund might be able to obtain for them. Other investors that own a security issued by a small, unseasoned issuer for which there is limited liquidity might trade the security when a Fund is attempting to dispose of their holdings of that security. In that case, a Fund might receive a lower price for its holdings than might otherwise be obtained.

|X|When-Issued and Delayed-Delivery Transactions. The Funds may invest in securities on a "when-issued" basis and may purchase or sell securities on a "delayed-delivery" or "forward commitment" basis. When-issued and delayed-delivery are terms that refer to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery.

When such transactions are negotiated, the price (which is generally expressed in yield terms) is fixed at the time the commitment is made. Delivery and payment for the securities take place at a later date. The securities are subject to change in value from market fluctuations during the period until settlement. The value at delivery may be less than the purchase price. For example, changes in interest rates in a direction other than that expected by the Manager before settlement will affect the value of such securities and may cause a loss to the Funds. During the period between purchase and settlement, no payment is made by a Fund to the issuer and no interest accrues to that Fund from the investment until it receives the security at settlement. There is a risk of loss to a Fund if the value of the security changes prior to the settlement date, and there is the risk that the other party may not perform.

The Funds engage in when-issued transactions to secure what the Manager considers to be an advantageous price and yield at the time of entering into the obligation. When a Fund enters into a when-issued or delayed-delivery transaction, it relies on the other party to complete the transaction. Its failure to do so may cause that Fund to lose the opportunity to obtain the security at a price and yield the Manager considers to be advantageous.

When a Fund engages in when-issued and delayed-delivery transactions, it does so for the purpose of acquiring or selling securities consistent with its investment objective and policies for its portfolio or for delivery pursuant to options contracts it has entered into, and not for the purpose of investment leverage. Although a Fund will enter into delayed-delivery or when-issued purchase transactions to acquire securities, it may dispose of a commitment prior to settlement. If a Fund chooses to dispose of the right to acquire a when-issued security prior to its acquisition or to dispose of its right to delivery against a forward commitment, it may incur a gain or loss.

At the time a Fund makes the commitment to purchase or sell a security on a when-issued or delayed delivery basis, it records the transaction on its books and reflects the value of the security purchased in determining that Fund's net asset value. In a sale transaction, it records the proceeds to be received. That Fund will identify on its books liquid assets at least equal in value to the value of that Fund's purchase commitments until that Fund pays for the investment.

When-issued and delayed-delivery transactions can be used by the Funds as a defensive technique to hedge against anticipated changes in interest rates and prices. For instance, in periods of rising interest rates and falling prices, a Fund might sell securities in its portfolio on a forward commitment basis to attempt to limit its exposure to anticipated falling prices. In periods of falling interest rates and rising prices, a Fund might sell portfolio securities and purchase the same or similar securities on a when-issued or delayed-delivery basis to obtain the benefit of currently higher cash yields.

|X|Zero-Coupon Securities. The Fixed Income Funds may buy zero-coupon and delayed interest securities, and "stripped" securities of foreign government issuers, which may or may not be backed by the "full faith and credit" of the issuing foreign government, and of domestic and foreign corporations. The Fixed Income Funds and Value Fund/VA may also buy zero-coupon and "stripped" U.S. government securities. Zero-coupon securities issued by foreign governments and by corporations will be subject to greater credit risks than U.S. government zero-coupon securities.

|X|"Stripped" Mortgage-Related Securities. The Fixed Income Funds and Value Fund/VA can invest in stripped mortgage-related securities that are created by segregating the cash flows from underlying mortgage loans or mortgage securities to create two or more new securities. Each has a specified percentage of the underlying security's principal or interest payments. These are a form of derivative investment.

Mortgage securities may be partially stripped so that each class receives some interest and some principal. However, they may be completely stripped. In that case all of the interest is distributed to holders of one type of security, known as an "interest-only" security, or "I/O," and all of the principal is distributed to holders of another type of security, known as a "principal-only" security or "P/O." Strips can be created for pass-through certificates or CMOs.

The yields to maturity of I/Os and P/Os are very sensitive to principal repayments (including prepayments) on the underlying mortgages. If the underlying mortgages experience greater than anticipated prepayments of principal, a Fund might not fully recoup its investment in an I/O based on those assets. If underlying mortgages experience less than anticipated prepayments of principal, the yield on the P/Os based on them could decline substantially.

|X|Repurchase Agreements. The Funds may acquire securities subject to repurchase agreements. They may do so for liquidity purposes to meet anticipated redemptions of Funds shares, or pending the investment of the proceeds from sales of Funds shares, or pending the settlement of portfolio securities transactions, or for temporary defensive purposes, as described below.

In a repurchase transaction, a Fund buys a security from, and simultaneously resells it to, an approved vendor for delivery on an agreed-upon future date. The resale price exceeds the purchase price by an amount that reflects an agreed-upon interest rate effective for the period during which the repurchase agreement is in effect. Approved vendors include U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that have been designated as primary dealers in government securities. They must meet credit requirements set by the Manager from time to time.

The majority of these transactions run from day to day, and delivery pursuant to the resale typically occurs within one to five days of the purchase. Repurchase agreements having a maturity beyond seven days are subject to each Fund's limit on holding illiquid investments. No Fund will enter into a repurchase agreement that causes more than 15% of its net assets (for Money Fund/VA, 10%) to be subject to repurchase agreements having a maturity beyond seven days. There is no limit on the amount of a Fund's net assets that may be subject to repurchase agreements having maturities of seven days or less.

Repurchase agreements, considered "loans" under the Investment Company Act, are collateralized by the underlying security. The Funds' repurchase agreements require that at all times while the repurchase agreements are in effect, the value of the collateral must equal or exceed the repurchase price to fully collateralize the repayment obligation. However, if the vendor fails to pay the resale price on the delivery date, the Funds may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so. The Manager will monitor the vendor's creditworthiness to confirm that the vendor is financially sound and will continuously monitor the collateral's value.

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the "SEC"), the Funds, along with other affiliated entities managed by the Manager, may transfer uninvested cash balances into one or more joint repurchase accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities that are collateral for repurchase agreements are financial assets subject to the Funds' entitlement orders through its securities account at its custodian bank until the agreements mature. Each joint repurchase arrangement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention or sale of the collateral may be subject to legal proceedings.

|X|Illiquid and Restricted Securities. Under the policies and procedures established by the Funds' Board of Trustees, the Manager determines the liquidity of certain of the Funds' investments. To enable a Fund to sell its holdings of a restricted security not registered under applicable securities laws, that Fund may have to cause those securities to be registered. The expenses of registering restricted securities may be negotiated by a Fund with the issuer at the time that Fund buys the securities. When a Fund must arrange registration because that Fund wishes to sell the security, a considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that that Fund could sell it. That Fund would bear the risks of any downward price fluctuation during that period.

The Funds may also acquire restricted securities through private placements. Those securities have contractual restrictions on their public resale. Those restrictions might limit a Fund's ability to dispose of the securities and might lower the amount that Fund could realize upon the sale.

The Funds have limitations that apply to purchases of restricted securities, as stated in the Prospectus. Those percentage restrictions do not limit purchases of restricted securities that are eligible for sale to qualified institutional purchasers under Rule 144A of the Securities Act, if those securities have been determined to be liquid by the Manager under Board-approved guidelines. Those guidelines take into account the trading activity for such securities and the availability of reliable pricing information, among other factors. If there is a lack of trading interest in a particular Rule 144A security, the Funds' holdings of that security may be considered to be illiquid.

Illiquid securities include repurchase agreements maturing in more than seven days and participation interests that do not have puts exercisable within seven days.

n      Loans of Portfolio Securities. The Funds may lend its portfolio securities pursuant to a Securities Lending Agency Agreement (the "Securities Lending Agreement") with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs"), subject to the restrictions stated in the Prospectus. The Funds will lend portfolio securities to attempt to increase its income. Goldman Sachs has agreed, in general, to guarantee the obligations of borrowers to return loaned securities and to be responsible for certain expenses relating to securities lending. Under the Securities Lending Agreement, the Funds' securities lending procedures and applicable regulatory requirements (which are subject to change), the Funds must receive collateral from the borrower consisting of cash, bank letters of credit or securities of the U.S. Government (or its agencies or instrumentalities). On each business day, the amount of collateral that the Funds have received must at least equal the value of the loaned securities. If the Funds receive cash collateral from the borrower, the Funds may invest that cash in certain high quality, short-term investments, including money market funds advised by the Manager, specified in its securities lending procedures. The Funds will be responsible for the risks associated with the investment of cash collateral, including the risk that the Funds may lose money on the investment or may fail to earn sufficient income to meet its obligations to the borrower.

The terms of the Funds' portfolio loans must comply with all applicable regulations and with the Funds' Securities Lending Procedures adopted by the Board. The terms of the loans must permit the Funds to recall loaned securities on five business days' notice and the Funds will seek to recall loaned securities in time to vote on any matters that the Manager determines would have a material effect on the Funds' investment. The Securities Lending Agreement may be terminated by either Goldman Sachs or the Fund on 30 days' written notice.

|X|Borrowing for Leverage. Each Fund has the ability to borrow from banks on an unsecured basis. Each Fund has undertaken to limit borrowing to 25% of the value of that Fund's net assets, which is further limited to 10% if borrowing is for a purpose other than to facilitate redemptions. Investing borrowed funds in portfolio securities is a speculative technique known as "leverage." A Fund cannot borrow money in excess of 33-1/3% of the value of that Fund's total assets. The Funds may borrow only from banks and/or affiliated investment companies. With respect to this fundamental policy, the Funds can borrow only if they maintain a 300% ratio of assets to borrowings at all times in the manner set forth in the Investment Company Act. If the value of that Fund's assets fails to meet this 300% asset coverage requirement, that Fund will reduce its bank debt within three days to meet the requirement. To do so, that Fund might have to sell a portion of its investments at a disadvantageous time.

A Fund will pay interest on these loans, and that interest expense will raise the overall expenses of that Fund and reduce its returns. If it does borrow, its expenses will be greater than comparable funds that do not borrow for leverage. Additionally, that Fund's net asset values per share might fluctuate more than that of funds that do not borrow. Currently, the Funds do not contemplate using this technique in the next year but if they do so, it will not likely be to a substantial degree.

·      Bank Obligations. The Funds can buy time deposits, certificates of deposit and bankers' acceptances. They must be:

·      obligations issued or guaranteed by a domestic bank (including a foreign branch of a domestic bank) having total assets of at least U.S. $1 billion, or

·     obligations of a foreign bank with total assets of at least U.S. $1 billion.

"Banks" include commercial banks, savings banks and savings and loan associations, which may or may not be members of the Federal Deposit Insurance Corporation.

·      Commercial Paper. The Funds can invest in commercial paper if it is rated within the top three rating categories of S&P and Moody's or other rating organizations.

If the paper is not rated, it may be purchased if the Manager determines that it is comparable to rated commercial paper in the top three rating categories of national rating organizations.

The Funds can buy commercial paper, including U.S. dollar-denominated securities of foreign branches of U.S. banks, issued by other entities if the commercial paper is guaranteed as to principal and interest by a bank, government or corporation whose certificates of deposit or commercial paper may otherwise be purchased by the Funds.

·      Variable Amount Master Demand Notes. Master demand notes are corporate obligations that permit the investment of fluctuating amounts by the Funds at varying rates of interest under direct arrangements between the Funds, as lender, and the borrower. They permit daily changes in the amounts borrowed. The Funds have the right to increase the amount under the note at any time up to the full amount provided by the note agreement, or to decrease the amount. The borrower may prepay up to the full amount of the note without penalty. These notes may or may not be backed by bank letters of credit.

Because these notes are direct lending arrangements between the lender and borrower, it is not expected that there will be a trading market for them. There is no secondary market for these notes, although they are redeemable (and thus are immediately repayable by the borrower) at principal amount, plus accrued interest, at any time. Accordingly, the Funds' right to redeem such notes is dependent upon the ability of the borrower to pay principal and interest on demand.

The Funds have no limitations on the type of issuer from whom these notes will be purchased. However, in connection with such purchases and on an ongoing basis, the Manager will consider the earning power, cash flow and other liquidity ratios of the issuer, and its ability to pay principal and interest on demand, including a situation in which all holders of such notes made demand simultaneously. Investments in master demand notes are subject to the limitation on investments by the Funds in illiquid securities, described in the Prospectus. A description of the investment policies for Money Fund/VA is located below under the heading "Money Fund/VA Investment Policies."

n     Derivatives. The Funds can invest in a variety of derivative investments, including swaps, "structured" notes, convertible notes, options, forward contracts and futures contracts, to seek income or for hedging purposes. The use of derivatives requires special skills and knowledge of investment techniques that are different than what is required for normal portfolio management.  If the Manager uses a derivative instrument at the wrong time or judges market conditions incorrectly, the use of derivatives may reduce a Fund's return.

     Although it is not obligated to do so, the Funds can use derivatives to hedge. To attempt to protect against declines in the market value of a Fund's portfolio, to permit a Fund to retain unrealized gains in the value of portfolio securities which have appreciated, or to facilitate selling securities for investment reasons, a Fund could:

·      sell futures contracts,

·      buy puts on such futures or on securities, or

·      write covered calls on securities or futures. Covered calls may also be used to increase a Fund's income, but the Manager does not expect to engage extensively in that practice.

The Funds can use hedging to establish a position in the securities market as a temporary substitute for purchasing particular securities. In that case a Fund would normally seek to purchase the securities and then terminate that hedging position. A Fund might also use this type of hedge to attempt to protect against the possibility that its portfolio securities would not be fully included in a rise in value of the market. To do so a Fund could:

·      buy futures, or

·      buy calls on such futures or on securities.

A Fund's strategy of hedging with futures and options on futures will be incidental to that Fund's activities in the underlying cash market. The particular hedging strategies a Fund can use are described below. A Fund may employ new hedging strategies when they are developed, if those investment methods are consistent with that Fund's investment objectives and are permissible under applicable regulations governing that Fund.

·     "Structured" Notes. The Funds can invest in "structured" notes, which are specially-designed derivative debt investments whose principal payments or interest payments are linked to the value of an underlying asset, such as an equity or debt security, currency, or commodity, or non-asset reference, such as an interest rate or index. The terms of the instrument may be "structured" by the purchaser (the Fund) and the borrower issuing the note.

The values of these notes will fall or rise in response to changes in the values of the underlying asset or reference and the Fund might receive less principal or interest if the underlying asset or reference does not perform as anticipated. In some cases, these notes may pay an amount based on a multiple of the relative change in value of the asset or reference. This type of note offers the potential for increased income or principal payments but at a greater risk of loss than a typical debt security of the same maturity and credit quality.

The values of these notes are also subject to both credit risk (if the counterparty fails to meet its obligations) and interest rate risk and therefore the Funds could receive more or less than it originally invested when a note matures. The prices of these notes may be very volatile and they may have a limited trading market, making it difficult for the Funds to value them or sell them at an acceptable price.

·     Swaps. The Funds may enter into swap agreements, including interest rate, total return, credit default and volatility swaps. Swap agreements are two-party contracts entered into primarily by institutional investors for a specified period of time typically ranging from a few weeks to more than one year. In a standard swap transaction, two parties agree to exchange the returns (or the difference between the returns) earned or realized on a particular asset, such as an equity or debt security, commodity or currency, or non-asset reference, such as an interest rate or index. The swapped returns are generally calculated with respect to a notional amount, that is, the return on a particular dollar amount invested in the underlying asset or reference. A Fund may enter into a swap agreement to, among other reasons, gain exposure to certain markets in the most economical way possible, protect against currency fluctuations, or reduce risk arising from ownership of a particular security or instrument. A Fund will identify liquid assets on that Fund's books (such as cash or U.S. government securities) to cover any amounts it could owe under swaps that exceed the amounts it is entitled to receive, and it will adjust that amount daily, as needed.

The Funds may enter into swap transactions with certain counterparties pursuant to master netting agreements. A master netting agreement provides that all swaps done between a Fund and that counterparty shall be regarded as parts of an integral agreement. If amounts are payable on a particular date in the same currency in respect of more than one swap transaction, the amount payable shall be the net amount. In addition, the master netting agreement may provide that if one party defaults generally or on any swap, the counterparty can terminate all outstanding swaps with that party.

The use of swap agreements by the Funds entails certain risks. The swaps market is generally unregulated. There is no central exchange or market for swap transactions and therefore they are less liquid investments than exchange-traded instruments and may be considered illiquid by a Fund. Swap agreements entail credit risk arising from the possibility that the counterparty will default. If the counterparty defaults, a Fund's loss will consist of the net amount of contractual payments that that Fund has not yet received. The Manager will monitor the creditworthiness of counterparties to a Fund's swap transactions on an ongoing basis. A Fund's successful use of swap agreements is dependent upon the Manager's ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Swap agreements may effectively add leverage to a Fund's portfolio because that Fund would be subject to investment exposure on the notional amount of the swap.

·     Interest Rate Swaps. The Funds, especially Core Bond Fund/VA, High Income Fund/VA, Strategic Bond Fund/ VA and Value Fund/VA, may enter into interest rate swaps. In an interest rate swap, a Fund and another party exchange their right to receive or their obligation to pay interest on a security. For example, they might swap the right to receive floating rate payments for fixed rate payments. There is a risk that, based on movements of interest rates, the payments made by a Fund under a swap agreement will be greater than the payments it receives.

·     Total Return Swaps. The Funds may enter into total return swaps, under which one party agrees to pay the other the total return of a defined underlying asset, such as a security or basket of securities, or non-asset reference, such as a securities index, during the specified period in return for periodic payments based on a fixed or variable interest rate or the total return from different underlying assets or references. Total return swaps could result in losses if the underlying asset or reference does not perform as anticipated by the Manager.

·     Credit Default Swaps. The Fixed Income Funds and Balanced Fund/ VA may enter into credit default swaps. A credit default swap enables an investor to buy or sell protection against a credit event, such as an issuer's failure to make timely payments of interest or principal, bankruptcy or restructuring. The Funds may seek to enhance returns by selling protection or attempt to mitigate credit risk by buying protection against the occurrence of a credit event by a specified issuer. The Funds may enter into credit default swaps, both directly ( "unfunded swaps") and indirectly ("funded swaps") in the form of a swap embedded within a structured security. Unfunded and funded credit default swaps may refer to a single security or on a basket of securities.

If a Fund buys credit protection using a credit default swap and a credit event occurs, that Fund will deliver the defaulted bonds underlying the swap and the swap counterparty will pay the par amount of the bonds. If a Fund sells credit protection using a credit default swap and a credit event occurs, that Fund will pay the par amount of the defaulted bonds underlying the swap and the swap counterparty will deliver the bonds. If the swap is on a basket of securities, the notional amount of the swap is reduced by the par amount of the defaulted bonds, and the fixed payments are then made on the reduced notional amount.

Risks of credit default swaps include counterparty credit risk (if the counterparty fails to meet its obligations) and the risk that a Fund will not properly assess the cost of the instrument based on the lack of transparency in the market. If a Fund is selling credit protection, there is a risk that a credit event will occur and that the Fund will have to pay par value on defaulted bonds. If a Fund is buying credit protection, there is a risk that no credit event will occur and that Fund will receive no benefit for the premium paid. In addition, if a Fund is buying credit protection and a credit event does occur, there is a risk when that Fund does not own the underlying security, that Fund will have difficulty acquiring the bond on the open market and may receive adverse pricing.

·     Volatility Swap Contracts. The Funds may enter into volatility swaps to hedge the direction of volatility in a particular asset or non-asset reference, or for other non-speculative purposes. For volatility swaps, counterparties agree to buy or sell volatility at a specific level over a fixed period. Volatility swaps are subject to credit risks (if the counterparty fails to meet its obligations), and the risk that the Manager is incorrect in forecasts of volatility of the underlying asset or reference.

·     Swap Options and Swap Forwards. The Funds also may enter into options on swaps as well as forwards on swaps. A swap option is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement on pre-designated terms. The Funds may write (sell) and purchase put and call swap options. A swap forward is an agreement to enter into a swap agreement at some point in the future, usually three to six months from the date of the contract.

The writer of the contract receives the premium and bears the risk of unfavorable changes in the preset rate on the underlying swap. The Funds generally will incur a greater risk when it writes a swap option than when it purchases a swap option. When a Fund purchases a swap option it risks losing only the amount of the premium it has paid if that Fund lets the option expire unexercised. When a Fund writes a swap option it will become obligated, upon exercise of the option by the counterparty, according to the terms of the underlying agreement.

     ·   Futures. The Funds can buy and sell futures contracts that relate to debt securities (these are referred to as "interest rate futures"), broadly-based securities indices ("stock index futures" and "bond index futures"), foreign currencies, commodities and an individual stock ("single stock futures").

     A broadly-based stock index is used as the basis for trading stock index futures. They may in some cases be based on stocks of issuers in a particular industry or group of industries. A stock index assigns relative values to the securities included in the index and its value fluctuates in response to the changes in value of the underlying securities. A stock index cannot be purchased or sold directly. Bond index futures are similar contracts based on the future value of the basket of securities that comprise the index. These contracts obligate the seller to deliver, and the purchaser to take, cash to settle the futures transaction. There is no delivery made of the underlying securities to settle the futures obligation. Either party may also settle the transaction by entering into an offsetting contract.

An interest rate future obligates the seller to deliver (and the purchaser to take) cash or a specified type of debt security to settle the futures transaction. Either party could also enter into an offsetting contract to close out the position. Similarly, a single stock future obligates the seller to deliver (and the purchaser to take) cash or a specified equity security to settle the futures transaction. Either party could also enter into an offsetting contract to close out the position. Single stock futures trade on a very limited number of exchanges, with contracts typically not fungible among the exchanges.

The Funds can invest a portion of its assets in commodity futures contracts. Commodity futures may be based upon commodities within five main commodity groups: (1) energy, which includes crude oil, natural gas, gasoline and heating oil; (2) livestock, which includes cattle and hogs; (3) agriculture, which includes wheat, corn, soybeans, cotton, coffee, sugar and cocoa; (4) industrial metals, which includes aluminum, copper, lead, nickel, tin and zinc; and (5) precious metals, which includes gold, platinum and silver. The Funds may purchase and sell commodity futures contracts, options on futures contracts and options and futures on commodity indices with respect to these five main commodity groups and the individual commodities within each group, as well as other types of commodities.

     No money is paid or received by the Funds on the purchase or sale of a future. Upon entering into a futures transaction, the Funds will be required to deposit an initial margin payment with the futures commission merchant (the "futures broker"). Initial margin payments will be deposited with the Funds' custodian bank in an account registered in the futures broker's name. However, the futures broker can gain access to that account only under specified conditions. As the future is marked to market (that is, its value on that Fund's books is changed) to reflect changes in its market value, subsequent margin payments, called variation margin, will be paid to or by the futures broker daily.
 
     At any time prior to expiration of the future, the Funds may elect to close out its position by taking an opposite position, at which time a final determination of variation margin is made and any additional cash must be paid by or released to that Fund. Any loss or gain on the future is then realized by that Fund for tax purposes. All futures transactions (except forward contracts) are effected through a clearinghouse associated with the exchange on which the contracts are traded.
 

      Put and Call Options. The Funds can buy and sell exchange-traded and over-the-counter put options ("puts") and call options ("calls"), including index options, securities options, currency options, commodities options and options on futures.

           Writing Call Options. The Funds may write (that is, sell) calls. If a Fund sells a call option, it must be covered. That means a Fund must own the security subject to the call while the call is outstanding, or the call must be covered by segregating liquid assets to enable that Fund to satisfy its obligations if the call is exercised. There is no limit on the amount of a Fund's total assets that may be subject to covered calls that Fund writes.

     When a Fund writes a call on a security, it receives cash (a premium). That Fund agrees to sell the underlying security to a purchaser of a corresponding call on the same security during the call period at a fixed exercise price regardless of market price changes during the call period. The call period is usually not more than nine months. The exercise price may differ from the market price of the underlying security. That Fund has the risk of loss that the price of the underlying security may decline during the call period. That risk may be offset to some extent by the premium that Fund receives. If the value of the investment does not rise above the call price, it is likely that the call will lapse without being exercised. In that case that Fund would keep the cash premium and the investment.
 
     When a Fund writes a call on an index, it receives cash (a premium). If the buyer of the call exercises it, that Fund will pay an amount of cash equal to the difference between the closing price of the call and the exercise price, multiplied by a specific multiple that determines the total value of the call for each point of difference. If the value of the underlying investment does not rise above the call price, it is likely that the call will lapse without being exercised. In that case, that Fund would keep the cash premium.
 

A Fund's custodian bank, or a securities depository acting for the custodian, will act as that Fund's escrow agent, through the facilities of the Options Clearing Corporation ("OCC"), as to the investments on which that Fund has written calls traded on exchanges or as to other acceptable escrow securities. In that way, no margin will be required for such transactions. OCC will release the securities on the expiration of the option or when the Fund enters into a closing transaction.

     When a Fund writes an over-the-counter ("OTC") option, it will enter into an arrangement with a primary U.S. government securities dealer which will establish a formula price at which that Fund will have the absolute right to repurchase that OTC option. The formula price will generally be based on a multiple of the premium received for the option, plus the amount by which the option is exercisable below the market price of the underlying security (i.e., the option is "in the money"). When that Fund writes an OTC option, it will treat as illiquid (for purposes of its restriction on holding illiquid securities) the market-to-market value of the underlying security, unless the option is subject to a buy-back agreement with the executing broker.
 
     To terminate its obligation on a call it has written, a Fund may purchase a corresponding call in a "closing purchase transaction." That Fund will then realize a profit or loss, depending upon whether the net of the amount of the option transaction costs and the premium received on the call that Fund wrote is more or less than the price of the call that Fund purchases to close out the transaction. That Fund may realize a profit if the call expires unexercised, because that Fund will retain the underlying security and the premium it received when it wrote the call. If that Fund cannot effect a closing purchase transaction due to the lack of a market, it will have to hold the callable securities until the call expires or is exercised.

A Fund may also write calls on a futures contract without owning the futures contract or securities deliverable under the contract. To do so, at the time the call is written, that Fund must cover the call by segregating an equivalent dollar amount of liquid assets as identified in that Fund's books. That Fund will segregate additional liquid assets if the value of the segregated assets drops below 100% of the current value of the future. Because of this segregation requirement, in no circumstances would that Fund's receipt of an exercise notice as to that future require that Fund to deliver a futures contract. It would simply put that Fund in a short futures position, which is permitted by that Fund's hedging policies.

           Writing Put Options. The Funds may write (that is, sell) put options.

A put option on securities gives the purchaser the right to sell, and the writer the obligation to buy, the underlying investment at the exercise price during the option period. A put must be covered by segregated liquid assets.
 

If a Fund writes a put, the put must be covered by liquid assets identified in that Fund's books. The premium a Fund receives from writing a put represents a profit, as long as the price of the underlying investment remains equal to or above the exercise price. However, a Fund also assumes the obligation during the option period to buy the underlying investment from the buyer of the put at the exercise price, even if the value of the investment falls below the exercise price.

If a put a Fund has written expires unexercised, that Fund realizes a gain in the amount of the premium less the transaction costs incurred. If the put is exercised, that Fund must fulfill its obligation to purchase the underlying investment at the exercise price. That price will usually exceed the market value of the investment at that time. In that case, that Fund may incur a loss if it sells the underlying investment. That loss will be equal to the sum of the sale price of the underlying investment and the premium received minus the sum of the exercise price and any transaction costs that Fund incurred.

When writing a put option on a security, to secure its obligation to pay for the underlying security a Fund will deposit in escrow liquid assets with a value equal to or greater than the exercise price of the underlying securities. That Fund therefore forgoes the opportunity of investing the segregated assets or writing calls against those assets.

     As long as a Fund's obligation as the put writer continues, it may be assigned an exercise notice by the broker-dealer through which the put was sold. That notice will require that Fund to take delivery of the underlying security and pay the exercise price. That Fund has no control over when it may be required to purchase the underlying security, since it may be assigned an exercise notice at any time prior to the termination of its obligation as the writer of the put. That obligation terminates upon expiration of the put. It may also terminate if, before it receives an exercise notice, that Fund effects a closing purchase transaction by purchasing a put of the same series as it sold. Once that Fund has been assigned an exercise notice, it cannot effect a closing purchase transaction.
 

A Fund may decide to effect a closing purchase transaction to realize a profit on an outstanding put option it has written or to prevent the underlying security from being put. Effecting a closing purchase transaction will also permit that Fund to write another put option on the security, or to sell the security and use the proceeds from the sale for other investments. That Fund will realize a profit or loss from a closing purchase transaction depending on whether the cost of the transaction is less or more than the premium received from writing the put option.

           Purchasing Puts and Calls. The Funds may purchase call options. When a Fund buys a call (other than in a closing purchase transaction), it pays a premium. That Fund then has the right to buy the underlying investment from a seller of a corresponding call on the same investment during the call period at a fixed exercise price.

      A Fund benefits only if it sells the call at a profit or if, during the call period, the market price of the underlying investment is above the sum of the call price plus the transaction costs and the premium paid for the call and that Fund exercises the call. If that Fund does not exercise the call or sell it (whether or not at a profit), the call will become worthless at its expiration date. In that case that Fund will have paid the premium but lost the right to purchase the underlying investment.
 

A Fund can buy puts whether or not it owns the underlying investment. When a Fund purchases a put, it pays a premium and, except as to puts on indices, has the right to sell the underlying investment to a seller of a put on a corresponding investment during the put period at a fixed exercise price.

Buying a put on an investment the Fund does not own (such as an index or a future) permits the Fund either to resell the put or to buy the underlying investment and sell it at the exercise price. The resale price will vary inversely to the price of the underlying investment. If the market price of the underlying investment is above the exercise price and, as a result, the put is not exercised, the put will become worthless on its expiration date.

Buying a put on securities or futures a Fund owns enables the Fund to attempt to protect itself during the put period against a decline in the value of the underlying investment below the exercise price by selling the underlying investment at the exercise price to a seller of a corresponding put. If the market price of the underlying investment is equal to or above the exercise price and, as a result, the put is not exercised or resold, the put will become worthless at its expiration date. In that case the Fund will have paid the premium but lost the right to sell the underlying investment. However, the Fund may sell the put prior to its expiration. That sale may or may not be at a profit.

When the Fund purchases a call or put on an index or future, it pays a premium, but settlement is in cash rather than by delivery of the underlying investment to the Fund. Gain or loss depends on changes in the index in question (and thus on price movements in the securities market generally) rather than on price movements in individual securities or futures contracts.

      Buying and Selling Options on Foreign Currencies. The Funds can buy and sell exchange-traded and over-the-counter put options and call options on foreign currencies. A Fund could use these calls and puts to try to protect against declines in the dollar value of foreign securities and increases in the dollar cost of foreign securities the Fund wants to acquire.

     If the Manager anticipates a rise in the dollar value of a foreign currency in which securities to be acquired are denominated, the increased cost of those securities may be partially offset by purchasing calls or writing puts on that foreign currency. If the Manager anticipates a decline in the dollar value of a foreign currency, the decline in the dollar value of portfolio securities denominated in that currency might be partially offset by writing calls or purchasing puts on that foreign currency. However, the currency rates could fluctuate in a direction adverse to a Fund's position. That Fund will then have incurred option premium payments and transaction costs without a corresponding benefit.
 

A call the Fund writes on a foreign currency is "covered" if the Fund owns the underlying foreign currency covered by the call or has an absolute and immediate right to acquire that foreign currency without additional cash consideration (or it can do so for additional cash consideration held in a segregated account by its custodian bank) upon conversion or exchange of other foreign currency held in its portfolio.

A Fund could write a call on a foreign currency to provide a hedge against a decline in the U.S. dollar value of a security which a Fund owns or has the right to acquire and which is denominated in the currency underlying the option. That decline might be one that occurs due to an expected adverse change in the exchange rate. This is known as a "cross-hedging" strategy. In those circumstances, that Fund covers the option by maintaining cash, U.S. government securities or other liquid, high grade debt securities in an amount equal to the exercise price of the option, in a segregated account with that Fund's custodian bank.

      Risks of Hedging with Options and Futures. The use of hedging strategies requires special skills and knowledge of investment techniques that are different than what is required for normal portfolio management. If the Manager uses a hedging strategy at the wrong time or judges market conditions incorrectly, hedging strategies may reduce a Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments.

A Fund's option activities could affect its portfolio turnover rate and brokerage commissions. The exercise of calls written by a Fund might cause that Fund to sell related portfolio securities, thus increasing its turnover rate. The exercise by a Fund of puts on securities will cause the sale of underlying investments, increasing portfolio turnover. Although the decision whether to exercise a put it holds is within a Fund's control, holding a put might cause that Fund to sell the related investments for reasons that would not exist in the absence of the put.

A Fund could pay a brokerage commission each time it buys a call or put, sells a call or put, or buys or sells an underlying investment in connection with the exercise of a call or put. Those commissions could be higher on a relative basis than the commissions for direct purchases or sales of the underlying investments. Premiums paid for options are small in relation to the market value of the underlying investments. Consequently, put and call options offer large amounts of leverage. The leverage offered by trading in options could result in a Fund's net asset value being more sensitive to changes in the value of the underlying investment.

If a covered call written by a Fund is exercised on an investment that has increased in value, that Fund will be required to sell the investment at the call price. It will not be able to realize any profit if the investment has increased in value above the call price.

An option position may be closed out only on a market that provides secondary trading for options of the same series, and there is no assurance that a liquid secondary market will exist for any particular option. The Fund might experience losses if it could not close out a position because of an illiquid market for the future or option.

     There is a risk in using short hedging by selling futures or purchasing puts on broadly-based indices or futures to attempt to protect against declines in the value of a Fund's portfolio securities. The risk is that the prices of the futures or the applicable index will correlate imperfectly with the behavior of the cash prices of a Fund's securities. For example, it is possible that while a Fund has used derivative instruments in a short hedge, the market may advance and the value of the securities held in that Fund's portfolio might decline. If that occurred, that Fund would lose money on the derivative instruments and also experience a decline in the value of its portfolio securities. However, while this could occur for a very brief period or to a very small degree, over time the value of a diversified portfolio of securities will tend to move in the same direction as the indices upon which the derivative instruments are based.

 

The risk of imperfect correlation increases as the composition of a Fund's portfolio diverges from the securities included in the applicable index. To compensate for the imperfect correlation of movements in the price of the portfolio securities being hedged and movements in the price of the hedging instruments, that Fund might use derivative instruments in a greater dollar amount than the dollar amount of portfolio securities being hedged. It might do so if the historical volatility of the prices of the portfolio securities being hedged is more than the historical volatility of the applicable index.

The ordinary spreads between prices in the cash and futures markets are subject to distortions, due to differences in the nature of those markets. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities markets. Therefore, increased participation by speculators in the futures market may cause temporary price distortions.

The Fund can use derivative instruments to establish a position in the securities markets as a temporary substitute for the purchase of individual securities (long hedging) by buying futures and/or calls on such futures, broadly-based indices or on securities. It is possible that when the Fund does so the market might decline. If the Fund then concludes not to invest in securities because of concerns that the market might decline further or for other reasons, the Fund will realize a loss on the hedge position that is not offset by a reduction in the price of the securities purchased.

      Forward Contracts. Forward contracts are foreign currency exchange contracts. They are used to buy or sell foreign currency for future delivery at a fixed price. The Funds can use them to "lock in" the U.S. dollar price of a security denominated in a foreign currency that the Fund has bought or sold, or to protect against possible losses from changes in the relative values of the U.S. dollar and a foreign currency. The Fund can also use "cross-hedging" where the Fund hedges against changes in currencies other than the currency in which a security it holds is denominated.

     Under a forward contract, one party agrees to purchase, and another party agrees to sell, a specific currency at a future date. That date may be any fixed number of days from the date of the contract agreed upon by the parties. The transaction price is set at the time the contract is entered into. These contracts are traded in the inter-bank market conducted directly among currency traders (usually large commercial banks) and their customers.
 

The Fund may use forward contracts to protect against uncertainty in the level of future exchange rates. The use of forward contracts does not eliminate the risk of fluctuations in the prices of the underlying securities the Fund owns or intends to acquire, but it does fix a rate of exchange in advance. Although forward contracts may reduce the risk of loss from a decline in the value of the hedged currency, at the same time they limit any potential gain if the value of the hedged currency increases.

When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when it anticipates receiving dividend payments in a foreign currency, the Fund might desire to "lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent of the dividend payments. To do so, the Fund could enter into a forward contract for the purchase or sale of the amount of foreign currency involved in the underlying transaction, in a fixed amount of U.S. dollars per unit of the foreign currency. This is called a "transaction hedge." The transaction hedge will protect the Fund against a loss from an adverse change in the currency exchange rates during the period between the date on which the security is purchased or sold or on which the payment is declared, and the date on which the payments are made or received.

The Fund could also use forward contracts to lock in the U.S. dollar value of portfolio positions. This is called a "position hedge." When the Fund believes that a foreign currency might suffer a substantial decline against the U.S. dollar, it could enter into a forward contract to sell an amount of that foreign currency approximating the value of some or all of a Fund's portfolio securities denominated in that foreign currency. When the Fund believes that the U.S. dollar might suffer a substantial decline against a foreign currency, it could enter into a forward contract to buy that foreign currency for a fixed dollar amount. Alternatively, the Fund could enter into a forward contract to sell a different foreign currency for a fixed U.S. dollar amount if the Fund believes that the U.S. dollar value of the foreign currency to be sold pursuant to its forward contract will fall whenever there is a decline in the U.S. dollar value of the currency in which portfolio securities of the Fund are denominated. That is referred to as a "cross hedge."

A Fund will cover its short positions in these cases by identifying on its books assets having a value equal to the aggregate amount of that Fund's commitment under forward contracts. A Fund will not enter into forward contracts or maintain a net exposure to such contracts if the consummation of the contracts would obligate that Fund to deliver an amount of foreign currency in excess of the value of that Fund's portfolio securities or other assets denominated in that currency or another currency that is the subject of the hedge.

However, to avoid excess transactions and transaction costs, a Fund may maintain a net exposure to forward contracts in excess of the value of that Fund's portfolio securities or other assets denominated in foreign currencies if the excess amount is "covered" by liquid securities denominated in any currency. The cover must be at least equal at all times to the amount of that excess. As one alternative, the Fund may purchase a call option permitting the Fund to purchase the amount of foreign currency being hedged by a forward sale contract at a price no higher than the forward contract price. As another alternative, the Fund may purchase a put option permitting the Fund to sell the amount of foreign currency subject to a forward purchase contract at a price as high or higher than the forward contact price.

The precise matching of the amounts under forward contracts and the value of the securities involved generally will not be possible because the future value of securities denominated in foreign currencies will change as a consequence of market movements between the date the forward contract is entered into and the date it is sold. In some cases the Manager might decide to sell the security and deliver foreign currency to settle the original purchase obligation. If the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver, the Fund might have to purchase additional foreign currency on the "spot" (that is, cash) market to settle the security trade. If the market value of the security instead exceeds the amount of foreign currency the Fund is obligated to deliver to settle the trade, the Fund might have to sell on the spot market some of the foreign currency received upon the sale of the security. There will be additional transaction costs on the spot market in those cases.

The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward contracts involve the risk that anticipated currency movements will not be accurately predicted, causing the Fund to sustain losses on these contracts and to pay additional transactions costs. The use of forward contracts in this manner might reduce a Fund's performance if there are unanticipated changes in currency prices to a greater degree than if the Fund had not entered into such contracts.

At or before the maturity of a forward contract requiring a Fund to sell a currency, that Fund might sell a portfolio security and use the sale proceeds to make delivery of the currency. In the alternative a Fund might retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract. Under that contract the Fund will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, a Fund might close out a forward contract requiring it to purchase a specified currency by entering into a second contract entitling it to sell the same amount of the same currency on the maturity date of the first contract. The Fund would realize a gain or loss as a result of entering into such an offsetting forward contract under either circumstance. The gain or loss will depend on the extent to which the exchange rate or rates between the currencies involved moved between the execution dates of the first contract and offsetting contract.

The costs to the Fund of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no brokerage fees or commissions are involved. Because these contracts are not traded on an exchange, the Fund must evaluate the credit and performance risk of the counterparty under each forward contract.

Although the Fund values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. The Fund may convert foreign currency from time to time, and will incur costs in doing so. Foreign exchange dealers do not charge a fee for conversion, but they do seek to realize a profit based on the difference between the prices at which they buy and sell various currencies. Thus, a dealer might offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange if the Fund desires to resell that currency to the dealer.

Regulatory Aspects of Certain Derivative Instruments. The Commodities Futures Trading Commission (the "CFTC") recently eliminated limitations on futures trading by certain regulated entities including registered investment companies and consequently registered investment companies may engage in unlimited futures transactions and options thereon provided that the Fund claims an exclusion from regulation as a commodity pool operator. The Fund has claimed such an exclusion from registration as a commodity pool operator under the Commodity Exchange Act ("CEA"). The Fund may use futures and options for hedging and non-hedging purposes to the extent consistent with its investment objective, internal risk management guidelines adopted by the Funds' investment advisor (as they may be amended from time to time), and as otherwise set forth in each Fund's prospectus or this SAI.

Transactions in options by a Fund are subject to limitations established by the option exchanges. The exchanges limit the maximum number of options that may be written or held by a single investor or group of investors acting in concert. Those limits apply regardless of whether the options were written or purchased on the same or different exchanges or are held in one or more accounts or through one or more different exchanges or through one or more brokers. Thus, the number of options that a Fund may write or hold may be affected by options written or held by other entities, including other investment companies having the same advisor as that Fund (or an advisor that is an affiliate of that Fund's advisor). The exchanges also impose position limits on futures transactions. An exchange may order the liquidation of positions found to be in violation of those limits and may impose certain other sanctions.

Under the Investment Company Act, when a Fund purchases a future, it must maintain cash or readily marketable short-term debt instruments in an amount equal to the market value of the securities underlying the future, less the margin deposit applicable to it.

·     Regulatory Aspects of Hedging Instruments. The Commodity Futures Trading Commission (the "CFTC") recently eliminated limitations on futures trading by certain regulated entities including registered investment companies and consequently registered investment companies may engage in unlimited futures transactions and options thereon provided that the Funds claim an exclusion from regulation as a commodity pool operator. The Funds have claimed such an exclusion from registration as a commodity pool operator under the Commodity Exchange Act ("CEA"). A Fund may use futures and options for hedging and non-hedging purposes to the extent consistent with its investment objective, internal risk management guidelines adopted by the Manager (as they may be amended from time to time), and as otherwise set forth in each Fund's prospectus or this SAI.

Transactions in options by a Fund are subject to limitations established by the option exchanges. The exchanges limit the maximum number of options that may be written or held by a single investor or group of investors acting in concert. Those limits apply regardless of whether the options were written or purchased on the same or different exchanges or are held in one or more accounts or through one or more different exchanges or through one or more brokers. Thus, the number of options that a Fund may write or hold may be affected by options written or held by other entities, including other investment companies having the same Advisor as that Fund (or an Advisor that is an affiliate of that Fund's Advisor). The exchanges also impose position limits on futures transactions. An exchange may order the liquidation of positions found to be in violation of those limits and may impose certain other sanctions.

Under interpretations of staff members of the SEC regarding applicable provisions of the Investment Company Act, when the Fund purchases a future, it must segregate cash or readily marketable short-term debt instruments in an amount equal to the purchase price of the future, less the margin deposit applicable to it.

·     Tax Aspects of Certain Hedging Instruments. Certain foreign currency exchange contracts in which a Fund may invest are treated as "Section 1256 contracts" under the IRC. In general, gains or losses relating to Section 1256 contracts are characterized as 60% long-term and 40% short-term capital gains or losses under the Code. However, foreign currency gains or losses arising from Section 1256 contracts that are forward contracts generally are treated as ordinary income or loss. In addition, Section 1256 contracts held by a Fund at the end of each taxable year are "marked-to-market," and unrealized gains or losses are treated as though they were realized. These contracts also may be marked-to-market for purposes of determining the excise tax applicable to investment company distributions and for other purposes under rules prescribed pursuant to the IRC. An election can be made by a Fund to exempt those transactions from this marked-to-market treatment.

Certain forward contracts a Fund enters into may result in "straddles" for federal income tax purposes. The straddle rules may affect the character and timing of gains (or losses) recognized by that Fund on straddle positions. Generally, a loss sustained on the disposition of a position making up a straddle is allowed only to the extent that the loss exceeds any unrecognized gain in the offsetting positions making up the straddle. Disallowed loss is generally allowed at the point where there is no unrecognized gain in the offsetting positions making up the straddle, or the offsetting position is disposed of.

Under the IRC, the following gains or losses are treated as ordinary income or loss:

1.      gains or losses attributable to fluctuations in exchange rates that occur between the time the Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time a Fund actually collects such receivables or pays such liabilities, and

2.      gains or losses attributable to fluctuations in the value of a foreign currency between the date of acquisition of a debt security denominated in a foreign currency or foreign currency forward contracts and the date of disposition.

     Currency gains and losses are offset against market gains and losses on each trade before determining a net "Section 988" gain or loss under the IRC for that trade, which may increase or decrease the amount of a Fund's investment income available for distribution to its shareholders.

|X|Temporary Defensive and Interim Investments. When market conditions are unstable, or the Manager believes it is otherwise appropriate to reduce holdings in stocks or bonds, the Funds can invest in a variety of debt securities for defensive purposes. The Funds can also purchase these securities for liquidity purposes to meet cash needs due to the redemption of Fund shares, or to hold while waiting to reinvest cash received from the sale of other portfolio securities. The Funds can buy:

·      obligations issued or guaranteed by the U.S. government or its instrumentalities or agencies,

·      commercial paper (short-term, unsecured, promissory notes of domestic or foreign companies) rated in the three top rating categories of a nationally recognized rating organization,

·      short-term debt obligations of corporate issuers, rated investment grade (rated at least Baa by Moody's or at least BBB by Standard & Poor's or a comparable rating by another rating organization), or unrated securities judged by the Manager to have a comparable quality to rated securities in those categories,

·      certificates of deposit and bankers' acceptances of domestic and foreign banks having total assets in excess of $1 billion, and

·      repurchase agreements.

Short-term debt securities would normally be selected for defensive or cash management purposes because they can normally be disposed of quickly, are not generally subject to significant fluctuations in principal value and their value will be less subject to interest rate risk than longer-term debt securities.

|X|Investment in Other Investment Companies. The Funds can also invest in the securities of other investment companies, which can include open-end funds, closed-end funds and unit investment trusts, subject to the limits set forth in the Investment Company Act that apply to those types of investments. For example, a Fund can invest in Exchange-Traded Funds, which are typically open-end funds or unit investment trusts, listed on a stock exchange. A Fund might do so as a way of gaining exposure to the segments of the equity or fixed-income markets represented by the Exchange-Traded Funds' portfolio, at times when a Fund may not be able to buy those portfolio securities directly.

Investing in another investment company may involve the payment of substantial premiums above the value of such investment company's portfolio securities and is subject to limitations under the Investment Company Act. The Funds do not intend to invest in other investment companies unless the Manager believes that the potential benefits of the investment justify the payment of any premiums or sales charges. As a shareholder of an investment company, a Fund would be subject to its ratable share of that investment company's expenses, including its advisory and administration expenses. The Funds do not anticipate investing a substantial amount of its net assets in shares of other investment companies.

Money Fund/VA Investment Policies. Under Rule 2a-7 under the investment Company Act, Money Fund/VA may purchase only "Eligible Securities," as defined below, that the Manger, under procedures approved by the Trust's Board of Trustees, has determined have minimal credit risk. An "Eligible Security" is (a) a security that has received a rating in one of the two highest short-term rating categories by any two "nationally-recognized statistical rating organizations" as defined in Rule 2a-7 ("Rating Organizations"), or, if only one Rating Organization has rated that security, by that Rating Organization (the "Rating Requirements"), (b) a security that is guaranteed, and either that guarantee or the party providing that guarantee meets the Rating Requirements, or (c) an unrated security that is either issued by an issuer having another similar security that meets the Rating Requirements, or is judged by the Manager to be of comparable quality to investments that meet the Rating Requirements. Rule 2a-7 permits Money Fund/VA to purchase "First Tier Securities," which are Eligible Securities rated in the highest category for short-term debt obligations by at least two Rating Organizations, or, if only one Rating Organization has rated a particular security, by that Rating Organization, or comparable unrated securities. The Fund can also buy "Second Tier Securities," which are Eligible Securities that are not First Tier securities.
 

If a security's rating is downgraded, the Manager and/or the Board may have to reassess the security's credit risk. If a security has ceased to be a First Tier Security, the Manager will promptly reassess whether the security continues to present "minimal credit risk." If the Manager becomes aware that any Rating Organization has downgraded its rating of a Second Tier Security or rated an unrated security below its second highest rating category, the Trust's Board of Trustees shall promptly reassess whether the security presents minimal credit risk and whether it is in Money Fund/VA's best interests to dispose of it.

If Money Fund/VA disposes of the security within five days of the Manager learning of the downgrade, the Manager will provide the Board with subsequent notice of such downgrade. If a security is in default, or ceases to be an Eligible Security, or is determined no longer to present minimal credit risks, the Board must determine if disposal of the security would be in Money Fund/VA's best interests.

The Rating Organizations currently designated as nationally-recognized statistical rating organizations by the SEC are Standard & Poor's (a division of the McGraw-Hill Companies), Moody's Investors Service, Inc., Fitch, Inc. and Dominion Bond Rating Service Limited. See Appendix A to this SAI for a description of the rating categories of the Rating Organizations.

·      Certificates of Deposit and Commercial Paper. Money Fund/VA may invest in certificates of deposit of up to $100,000 of a domestic bank if such certificates of deposit are fully insured as to principal by the Federal Deposit Insurance Corporation. For purposes of this section, the term "bank" includes commercial banks, savings banks, and savings and loan associations and the term "foreign bank" includes foreign branches of U.S. banks (issuers of "Eurodollar" instruments), U.S. branches and agencies of foreign banks (issuers of "Yankee dollar" instruments) and foreign branches of foreign banks. Money Fund/VA also may purchase obligations issued by other entities if they are: (i) guaranteed as to principal and interest by a bank or corporation whose certificates of deposit or commercial paper may otherwise be purchased by Money Fund/VA, or (ii) subject to repurchase agreements (explained in the prospectus), if the collateral for the agreement complies with Rule 2a-7.

·      Bank Loan Participation Agreements. Money Fund/VA may invest in bank loan participation agreements, although such investments have not been a principal investment strategy. They provide that Fund with an undivided interest in a loan made by the issuing bank in the proportion that Fund's interest bears to the total principal amount of the loan. In evaluating the risk of these investments, that Fund looks to the creditworthiness of the borrower that is obligated to make principal and interest payments on the loan.

·      Time Deposits. Money Fund/VA may invest in fixed time deposits, which are non-negotiable deposits in a bank for a specified period of time at a stated interest rate, whether or not subject to withdrawal penalties; however, such deposits which are subject to such penalties, other than deposits maturing in less than seven days, are subject to the 10% limitation applicable to illiquid securities purchased by Money Fund/VA.

·      Floating Rate/Variable Rate Notes. Money Fund/VA may invest in instruments with floating or variable interest rates. The interest rate on a floating rate obligation is based on a stated prevailing market rate, such as a bank's prime rate, the 90-day U.S. Treasury Bill rate, the rate of return on commercial paper or bank certificates of deposit, or some other standard, and is adjusted automatically each time such market rate is adjusted. The interest rate on a variable rate obligation is also based on a stated prevailing market rate but is adjusted automatically at a specified interval of no less than one year. Some variable rate or floating rate obligations in which Money Fund/VA may invest have a demand feature entitling the holder to demand payment at an amount approximately equal to the principal amount thereof plus accrued interest at any time, or at specified intervals not exceeding one year. These notes may or may not be backed by bank letters of credit. The interest rates on these notes fluctuate from time to time. Generally, the changes in the interest rate on such securities reduce the fluctuation in their market value. As interest rates decrease or increase, the potential for capital appreciation or depreciation is less than that for fixed-rate obligations of the same maturity.

·      Master Demand Notes. Master demand notes are corporate obligations that permit the investment of fluctuating amounts by Money Fund/VA at varying rates of interest pursuant to direct arrangements between Money Fund/VA, as lender, and the corporate borrower that issues the note. These notes permit daily changes in the amounts borrowed. Money Fund/VA has the right to increase the amount under the note at any time up to the full amount provided by the note agreement, or to decrease the amount. The borrower may repay up to the full amount of the note at any time without penalty. It is not generally contemplated that master demand notes will be traded because they are direct lending arrangements between the lender and the borrower. There is no secondary market for these notes, although they are redeemable and thus immediately repayable by the borrower at face value, plus accrued interest, at any time. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, Money Fund/VA's right to redeem is dependent upon the ability of the borrower to pay principal and interest on demand. In evaluating the master demand arrangements, the Manager considers the earning power, cash flow, and other liquidity ratios of the issuer. If they are not rated by Rating Organizations, Money Fund/VA may invest in them only if, at the time of an investment, they are Eligible Securities. The Manager will continuously monitor the borrower's financial ability to meet all of its obligations because Money Fund/VA's liquidity might be impaired if the borrower were unable to pay principal and interest on demand. There is no limit on the amount of the Money Fund/VA's assets that may be invested in floating rate and variable rate obligations. Floating rate or variable rate obligations which do not provide for recovery of principal and interest within seven days' notice will be subject to the 10% limitation applicable to illiquid securities purchased by Money Fund/VA.

Other Investment Restrictions. In addition to having a number of investment policies and restrictions identified in the Prospectuses or elsewhere as "fundamental policies," the Funds have other investment restrictions that are fundamental policies, described below.
 

|X|What Are "Fundamental Policies?" Fundamental policies are those policies that the Funds have adopted to govern its investments that can be changed only by the vote of a "majority" of each Fund's outstanding voting securities. Under the Investment Company Act, a "majority" vote is defined as the vote of the holders of the lesser of:

·      67% or more of the shares present or represented by proxy at a shareholder meeting, if the holders of more than 50% of the outstanding shares are present or represented by proxy, or

·      more than 50% of the outstanding shares.

The Funds' (except Value Fund /VA) investment objectives are fundamental policies. Other policies described in the Prospectuses or this SAI are "fundamental" only if they are identified as such. The Funds' Board of Trustees can change non-fundamental policies without shareholder approval. However, significant changes to investment policies will be described in supplements or updates to the Prospectuses or this SAI, as appropriate. The Funds' most significant investment policies are described in the Prospectus.

|X|Do the Funds Have Additional Fundamental Policies? The following investment restrictions are fundamental policies of the Funds (except Value Fund/VA).

·      No Fund can buy securities issued or guaranteed by any one issuer if (i) more than 5% of its total assets would be invested in securities of that issuer or (ii) it would then own more than 10% of that issuer's voting securities, or (iii) it would then own more than 10% in principal amount of that issuer's outstanding debt securities. The restriction on debt securities does not apply to Strategic Bond Fund/VA. All of the restrictions apply only to 75% of each Fund's total assets. The limits do not apply to securities issued by the U.S. government or any of its agencies or instrumentalities, or securities of other investment companies.

·      The Funds cannot make loans except (a) through lending of securities, (b) through the purchase of debt instruments or similar evidences of indebtedness, (c) through an interfund lending program with other affiliated funds, and (d) through repurchase agreements.

·      The Funds cannot concentrate investments. That means they cannot invest 25% or more of their total assets in companies in any one industry. Obligations of the U.S. government, its agencies and instrumentalities are not considered to be part of an "industry" for the purposes of this restriction. This policy does not limit investments by Money Fund/VA in obligations issued by banks.

·      The Funds cannot buy or sell real estate or interests in real estate. However, the Funds can purchase debt securities secured by real estate or interests in real estate, or issued by companies, including real estate investment trusts, which invest in real estate or interests in real estate.

·      The Funds cannot underwrite securities of other companies. A permitted exception is in case a Fund is deemed to be an underwriter under the Securities Act when reselling any securities held in its own portfolio.

·      The Funds cannot invest in commodities or commodity contracts, other than the hedging instruments permitted by any of its other fundamental policies. It does not matter whether the hedging instrument is considered to be a commodity or commodity contract.

·      The Funds cannot issue "senior securities," but this does not prohibit certain investment activities for which assets of the Funds are designated as segregated, or margin, collateral or escrow arrangements are established, to cover the related obligations. Examples of those activities include borrowing money, reverse repurchase agreements, delayed-delivery and when-issued arrangements for portfolio securities transactions, and contracts to buy or sell derivatives, hedging instruments, options or futures.

·      The Funds cannot borrow money in excess of 33-1/3% of the value of that Fund's total assets. The Funds may borrow only from banks and/or affiliated investment companies. With respect to this fundamental policy, the Funds can borrow only if they maintain a 300% ratio of assets to borrowings at all times in the manner set forth in the Investment Company Act.

The following investment restrictions are fundamental policies of Value Fund/VA.

·      Value Fund/VA cannot issue senior securities. However, it can make payments or deposits of margin in connection with options or futures transactions, lend its portfolio securities, enter into repurchase agreements, borrow money and pledge its assets as permitted by its other fundamental policies. For purposes of this restriction, the issuance of shares of common stock in multiple classes or series, the purchase or sale of options, futures contracts and options on futures contracts, forward commitments, and repurchase agreements entered into in accordance with Value Fund/VA's investment policies, and the pledge, mortgage or hypothecation of Value Fund/VA's assets are not deemed to be senior securities.

·      Value Fund/VA cannot buy securities or other instruments issued or guaranteed by any one issuer if more than 5% of its total assets would be invested in securities or other instruments of that issuer or if it would then own more than 10% of that issuer's voting securities. This limitation applies to 75% of the Value Fund/VA's total assets. The limit does not apply to securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies.

·      Value Fund/VA cannot invest 25% or more of its total assets in any one industry. That limit does not apply to securities issued or guaranteed by the U.S. government or its agencies and instrumentalities or securities issued by investment companies.

·      Value Fund/VA cannot invest in physical commodities or commodities contracts. However, the Fund can invest in hedging instruments permitted by any of its other investment policies, and can buy or sell options, futures, securities or other instruments backed by, or the

investment return from which is linked to, changes in the price of physical commodities, commodity contracts or currencies.
 

·      Value Fund/VA cannot invest in real estate or in interests in real estate. However, the Fund can purchase securities of issuers holding real estate or interests in real estate (including securities of real estate investment trusts) if permitted by its other investment policies.

·      Value Fund/VA cannot underwrite securities of other issuers. A permitted exception is in case it is deemed to be an underwriter under the Securities Act in reselling its portfolio securities.

·      Value Fund/VA cannot make loans, except to the extent permitted under the Investment Company Act, the rules or regulations thereunder or any exemption therefrom that is applicable to the Fund, as such statute, rules or regulations may be amended or interpreted from time to time.

·      Value Fund/VA may not borrow money, except to the extent permitted under the Investment Company Act, the rules or regulations thereunder or any exemption therefrom that is applicable to the Fund, as such statute, rules or regulations may be amended or interpreted from time to time.

n     Do the Funds Have Any Restrictions That Are Not Fundamental? Main Street Small Cap Fund^®/VA, MidCap Fund/VA and Value Fund/VA have other investment restrictions that are not fundamental policies, which means that they can be changed by the Board of Trustees without shareholder approval.

·     Main Street Small Cap Fund^®/VA has also adopted the following non-fundamental policy: With respect to the Main Street Small Cap Fund/VA's non-fundamental policy to invest, under normal circumstances, at least 80% of its net assets (plus the amount of any borrowings used for investment purposes) in equity securities of "small-cap" issuers, Main Street Small Cap Fund/VA will provide shareholders at least 60 days ' prior notice of any change in such policy as required by the Investment Company Act.

·     MidCap Fund/VA has also adopted the following non-fundamental policy, effective April 30, 2006: Under normal market conditions, as a non-fundamental policy, the MidCap Fund /VA invests at least 80% of its net assets (plus borrowings for investment purposes) in equity securities of growth companies that have a market capitalization of between $2 billion and $11.5 billion (referred to as "mid-cap" stocks). MidCap Fund/VA's non-fundamental policy of investing at least 80% of its net assets in these investments will not be changed by MidCap Fund/VA's Board of Trustees without first providing shareholders 60 days' written notice.

·     Value Fund/VA has also adopted the following non-fundamental policy: The Fund cannot invest in securities of other investment companies, except to the extent permitted under the Investment Company Act, the rules or regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time.

Unless the Prospectus or this SAI states that a percentage restriction applies on an ongoing basis, it applies only at the time the Funds makes an investment (except in the case of borrowing and investments in illiquid securities). The Funds need not sell securities to meet the percentage limits if the value of the investment increases in proportion to the size of the Fund.

For purposes of the Funds' policy not to concentrate its investments as described above, the Funds have adopted classifications of industries and group of related industries. These classifications are not fundamental policies.

Disclosure of Portfolio Holdings. The Funds have adopted policies and procedures concerning the dissemination of information about their portfolio holdings by employees, officers and/or directors of the Manager, Distributor and Transfer Agent. These policies are designed to assure that non-public information about portfolio securities is distributed only for a legitimate business purpose, and is done in a manner that (a) conforms to applicable laws and regulations and (b) is designed to prevent that information from being used in a way that could negatively affect the Funds' investment program or enable third parties to use that information in a manner that is harmful to the Funds.
 

·      Public Disclosure. Each of the Fund's portfolio holdings are made publicly available no later than 60 days after the close of each of the Fund's fiscal quarters in the semi-annual and annual reports to shareholders and in their Statements of Investments on Form N-Q. Those documents are publicly available at the SEC. In addition, the top 20 month-end holdings may be posted on the OppenheimerFunds' website at www.oppenheimerfunds.com (select a Fund's name under the "View Fund Information for:" menu) with a 15-day lag. A Fund may release a more restrictive list of holdings (e.g., the top five or top 10 portfolio holdings) or may release no holdings if that is in the best interests of that Fund and its shareholders. Other general information about a Fund's portfolio investments, such as portfolio composition by asset class, industry, country, currency, credit rating or maturity, may also be posted.

Until publicly disclosed, each of the Fund's portfolio holdings are proprietary, confidential business information. While recognizing the importance of providing Fund shareholders with information about their Fund's investments and providing portfolio information to a variety of third parties to assist with the management, distribution and administrative process, the need for transparency must be balanced against the risk that third parties who gain access to a Fund's portfolio holdings information could attempt to use that information to trade ahead of or against that Fund, which could negatively affect the prices that Fund is able to obtain in portfolio transactions or the availability of the securities that portfolio managers are trading on that Fund's behalf.

The Manager and its subsidiaries and affiliates, employees, officers, and directors, shall neither solicit nor accept any compensation or other consideration (including any agreement to maintain assets in the Funds or in other investment companies or accounts managed by the Manager or any affiliated person of the Manager) in connection with the disclosure of the Funds' non-public portfolio holdings. The receipt of investment advisory fees or other fees and compensation paid to the Manager and its subsidiaries pursuant to agreements approved by the Funds' Board shall not be deemed to be "compensation" or "consideration" for these purposes. It is a violation of the Code of Ethics for any covered person to release holdings in contravention of portfolio holdings disclosure policies and procedures adopted by the Funds.
 
A list of the top 20 portfolio securities holdings (based on invested assets), listed by security or by issuer, as of the end of each month may be disclosed to third parties (subject to the procedures below) no sooner than 15 days after month-end.
 
Except under special limited circumstances discussed below, month-end lists of a Fund's complete portfolio holdings may be disclosed no sooner than 30-days after the relevant month-end, subject to the procedures below. If the Funds' complete portfolio holdings have not been disclosed publicly, they may be disclosed pursuant to special requests for legitimate business reasons, provided that:
 

·      The third-party recipient must first submit a request for release of Fund portfolio holdings, explaining the business reason for the request;

·      Senior officers (a Senior Vice President or above) in the Manager's Portfolio and Legal departments must approve the completed request for release of Fund portfolio holdings; and

·      The third-party recipient must sign the Manager's portfolio holdings non-disclosure agreement before receiving the data, agreeing to keep information that is not publicly available regarding a Fund's holdings confidential and agreeing not to trade directly or indirectly based on the information.

An exception may be made to provide portfolio holdings information on a more current basis to insurance company sponsors that have signed a Participation Agreement with, and offer series of, Oppenheimer Variable Account Funds or Panorama Series Fund, Inc. to their separate account contract holders, if such insurance companies require such portfolio holdings information for the preparation of reports to their contract holders, and have contractually undertaken to keep such information confidential. Additionally, such information may be made available to new insurance company sponsors that first sign a confidentiality agreement in connection with evaluating offering such funds under their separate accounts.
 

The Funds' complete portfolio holdings positions may be released to the following categories of entities or individuals on an ongoing basis, provided that such entity or individual either (1) has signed an agreement to keep such information confidential and not trade on the basis of such information or (2) is subject to fiduciary obligations, as a member of the Funds' Board, or as an employee, officer and/or director of the Manager, Distributor, or Transfer Agent, or their respective legal counsel, not to disclose such information except in conformity with these policies and procedures and not to trade for his/her personal account on the basis of such information:
 

·      Employees of the Funds' Manager, Distributor and Transfer Agent who need to have access to such information (as determined by senior officers of such entity),

·      The Funds' independent registered public accounting firm,

·      Members of the Funds' Board and the Board's legal counsel,

·      The Funds' custodian bank,

·      A proxy voting service designated by the Funds and their Board,

·      Rating/ranking organizations (such as Lipper and Morningstar),

·      Insurance companies having separate accounts invested in Oppenheimer Variable Account Funds or Panorama Series Fund, Inc. (to prepare their financial statements or analysis),

·      Portfolio pricing services retained by the Manager to provide portfolio security prices, and

·      Dealers, to obtain bids (price quotations if securities are not priced by the Funds' regular pricing services).

Portfolio holdings information of the Funds may be provided, under limited circumstances, to brokers and/or dealers with whom the Funds trade and/or entities that provide investment coverage and/or analytical information regarding the Funds' portfolio, provided that there is a legitimate investment reason for providing the information to the broker, dealer or other entity. Month-end portfolio holdings information may, under this procedure, be provided to vendors providing research information and/or analytics to the Funds, with at least a 15-day delay after the month end, but in certain cases may be provided to a broker or analytical vendor with a 1-2 day lag to facilitate the provision of requested investment information to the Manager to facilitate a particular trade or the portfolio manager's investment process for the Funds. Any third party receiving such information must first sign the Manager's portfolio holdings non-disclosure agreement as a pre-condition to receiving this information.
 
Portfolio holdings information (which may include information on individual securities positions or multiple securities) may be provided to the entities listed below (1) by portfolio traders employed by the Manager in connection with portfolio trading, and (2) by the members of the Manager's Security Valuation Group and Accounting Departments in connection with portfolio pricing or other portfolio evaluation purposes:
 

·      Brokers and dealers in connection with portfolio transactions (purchases and sales)

·      Brokers and dealers to obtain bids or bid and asked prices (if securities held by the Fund are not priced by the Funds' regular pricing services)

·      Dealers to obtain price quotations where the Funds are not identified as the owner.

Portfolio holdings information (which may include information on each Fund's entire portfolio or individual securities therein) may be provided by senior officers of the Manager or attorneys on the legal staff of the Manager, Distributor, or Transfer Agent, in the following circumstances:
 

·      Response to legal process in litigation matters, such as responses to subpoenas or in class action matters where a Fund may be part of the plaintiff class (and seeks recovery for losses on a security) or a defendant,

·      Response to regulatory requests for information (the SEC, Financial Industry Regulatory Authority ("FINRA"), state securities regulators, and/or foreign securities authorities, including without limitation requests for information in inspections or for position reporting purposes),

·      To potential sub-advisers of portfolios (pursuant to confidentiality agreements),

·      To consultants for retirement plans for plan sponsors/discussions at due diligence meetings (pursuant to confidentiality agreements),

·      Investment bankers in connection with merger discussions (pursuant to confidentiality agreements).

Portfolio managers and analysts may, subject to the Manager's policies on communications with the press and other media, discuss portfolio information in interviews with members of the media, or in due diligence or similar meetings with clients or prospective purchasers of Fund shares or their financial intermediary representatives.

The shareholders of Global Securities Fund/VA, Main Street Fund/VA and Strategic Bond Fund/VA may, under unusual circumstances (such as a lack of liquidity in a Fund's portfolio to meet redemptions), receive redemption proceeds of their Fund shares paid as pro rata shares of securities held in a Fund's portfolio. In such circumstances, disclosure of a Fund's portfolio holdings may be made to such shareholders.

Any permitted release of otherwise non-public portfolio holdings information must be in accordance with the Funds' then-current policy on approved methods for communicating confidential information, including but not limited to the Funds' policies as to use of secure e-mail technology.
 
The Chief Compliance Officer (the "CCO") of the Funds and the Manager, Distributor, and Transfer Agent shall oversee the compliance by the Manager, Distributor, Transfer Agent, and their personnel with these policies and procedures. At least annually, the CCO shall report to the Funds' Board on such compliance oversight and on the categories of entities and individuals to which disclosure of portfolio holdings of the Funds has been made during the preceding year pursuant to these policies. The CCO shall report to the Funds' Board any material violation of these policies and procedures and shall make recommendations to the Board as to any amendments that the CCO believes are necessary and desirable to carry out or improve these policies and procedures.
 
The Manager and/or the Funds have entered into ongoing arrangements to make available information about the Funds' portfolio holdings. One or more of the Oppenheimer funds may currently disclose portfolio holdings information based on ongoing arrangements to the following parties:
 

ABG Securities	Fortis Securities	Nomura Securities
ABN AMRO	Fox-Pitt, Kelton	Oppenheimer & Co.
AG Edwards	Friedman, Billing, Ramsey	Oscar Gruss
Allen & Co	Gabelli	OTA
American Technology Research	Garp Research	Pacific Crest Securities
Auerbach Grayson	Gartner	Piper Jaffray Inc.
Avondale	George K Baum & Co.	Portales Partners
Banc of America Securities	Goldman Sachs	Punk Ziegel & Co
Barra	Howard Weil	Raymond James
BB&T	HSBC	RBC
Bear Stearns	ISI Group	Reuters
Belle Haven	ITG	RiskMetrics/ISS
Bloomberg	Janco	Robert W. Baird
BMO Capital Markets	Janney Montgomery	Roosevelt & Cross
BNP Paribas	Jefferies	Russell
Brean Murray	JMP Securities	Sandler O'Neil
Brown Brothers	JNK Securities	Sanford C. Bernstein
Buckingham Research Group	Johnson Rice & Co	Scotia Capital Markets
Canaccord Adams	JP Morgan Securities	Sidoti
Caris & Co.	Kaufman Brothers	Simmons
CIBC World Markets	Keefe, Bruyette & Woods	Sander Morris Harris
Citigroup Global Markets	Keijser Securities	Societe Generale
CJS Securities	Kempen & Co. USA Inc.	Soleil Securities Group
Cleveland Research	Kepler Equities/Julius Baer Sec	Standard & Poors
Cogent	KeyBanc Capital Markets	Stanford Group
Collins Stewart	Lazard Freres & Co	State Street Bank
Cowen & Company	Leerink Swan	Stephens, Inc.
Craig-Hallum Capital Group LLC	Lehman Brothers	Stifel Nicolaus
Credit Agricole Cheuvreux N.A. Inc.	Loop Capital Markets	Stone & Youngberg
Credit Suisse	Louise Yamada Tech Research	Strategas Research
Daiwa Securities	MainFirst Bank AG	Sungard
Davy	Makinson Cowell US Ltd	Suntrust Robinson Humphrey
Deutsche Bank Securities	McAdmas Wright	SWS Group
Dougherty Markets	Merrill Lynch	Think Equity Partners
Dowling	Miller Tabak	Thomas Weisel Partners
Empirical Research	Mizuho Securities	Thomson Financial
Enskilda Securities	Moodys Research	UBS
Exane BNP Paribas	Morgan Stanley	Wachovia Securities
Factset	Natexis Bleichroeder	Wedbush
Fidelity Capital Markets	Ned Davis Research Group	Weeden
First Albany	Needham & Co	William Blair
Fixed Income Securities

How the Funds Are Managed

Organization and History. Each Fund is an investment portfolio, or "series" of Oppenheimer Variable Account Funds (the "Trust"), a multi-series open-end diversified management investment company organized as a Massachusetts business trust that presently includes 11 series. Money Fund/VA, Core Bond Fund/VA and Capital Appreciation Fund/VA were all organized in 1983, High Income Fund/VA, MidCap Fund/VA and Balanced Fund/VA, were all organized in 1986, Global Securities Fund/VA was organized in 1990, Strategic Bond Fund/VA was organized in 1993, Main Street Fund^®/VA was organized in 1995, Main Street Small Cap Fund^®/VA was organized in 1998 and Value Fund/ VA was organized in 2002. The suffix "VA" was added to each Fund's name on May 1, 1999. Prior to that date, Oppenheimer Capital Appreciation Fund/VA was named "Oppenheimer Growth Fund," and Oppenheimer Main Street^® Growth & Income Fund/VA was named "Oppenheimer Growth & Income Fund." Prior to May 1, 2001, Oppenheimer Main Street Small Cap Fund^®/VA was named "Oppenheimer Small Cap Growth Fund/VA." Prior to May 1, 2003, Oppenheimer Main Street Fund^®/VA was named "Oppenheimer Main Street^® Growth & Income Fund/VA." Prior to April 29, 2004, Oppenheimer Balanced Fund/VA was named "Oppenheimer Multiple Strategies Fund/VA." Prior to April 29, 2005, Oppenheimer Core Bond Fund/VA was named "Oppenheimer Bond Fund/VA." Prior to April 30, 2006, Oppenheimer MidCap Fund/VA was named "Oppenheimer Aggressive Growth Fund/VA", and prior to May 1, 1998 that Fund was named "Oppenheimer Capital Appreciation Fund." All references to the Funds' Board of Trustees and Officers refer to the Trustees and Officers, respectively, of Oppenheimer Variable Account Funds.
 

n      Shareholders. Insurance companies that hold shares of the Funds in their separate accounts for the benefit of their customers' variable annuities, variable life insurance policies and other investment products are the record holders and the owners of shares of beneficial interest in the Funds. The right of those customers of the insurance companies to give directions to the insurance company for the purchase or redemption of shares is determined under the contract between the customer and the insurance company. The insurance companies, and not their customers, are "shareholders" of the Funds. The rights of those insurance companies as record holders and owners of shares of a Fund are different from the rights of their customers. These customers are indirect owners for all purposes except for those rights reserved by insurance companies in the insurance contract, or as permitted by the SEC. The term "shareholder" in this SAI refers to the indirect or underlying owner of shares held in the account, and not to the insurance companies.

n     Classes of Shares. The Trustees are authorized, without shareholder approval, to create new series and classes of shares, to reclassify unissued shares into additional series or classes and to divide or combine the shares of a class into a greater or lesser number of shares without changing the proportionate beneficial interest of a shareholder in the Fund. Shares do not have cumulative voting rights, preemptive rights or subscription rights. Shares may be voted in person or by proxy at shareholder meetings.

The Funds currently have four classes of shares authorized. All Funds offer a class of shares with no name designation referred to in this SAI and the Prospectus as "non-service shares." As of September 15, 2006, all Funds except Money Fund/VA also offer a service share class, subject to a Distribution and Service Plan. Money Fund/VA currently only offers the class of non-service shares. Global Securities Fund/VA and High Income Fund/VA offer two additional share classes, referred to in this SAI "Class 3" and "Class 4", which are subject to a redemption fee. In addition, Class 4 shares are subject to a Distribution and Service Plan. Each class of shares:

·      has its own dividends and distributions,

·      pays certain expenses which may be different for the different classes,

·      will generally have a different net asset value,

·      will generally have separate voting rights on matters in which interests of one class are different from interests of another class, and

·      votes as a class on matters that affect that class alone.

Each share of each class has one vote at shareholder meetings, with fractional shares voting proportionally, on matters submitted to a vote of shareholders. Each share of a Fund represents an interest in each Fund proportionately equal to the interest of each other share of the same class of that Fund.

n     Meetings of Shareholders. The Trust is a Massachusetts business Trust. The Funds are not required to hold, and do not plan to hold, regular annual meetings of shareholders, but may hold shareholder meetings from time to time on important matters or when required to do so by the Investment Company Act or other applicable law. Shareholders have the right, upon a vote or declaration in writing of two-thirds of the outstanding shares of the Funds, to remove a Trustee or to take other action described in the Trust's Declaration of Trust.

The Trustees will call a meeting of shareholders to vote on the removal of a Trustee upon the written request of the record holders of 10% of its outstanding shares. If the Trustees receive a request from at least 10 shareholders stating that they wish to communicate with other shareholders to request a meeting to remove a Trustee, the Trustees will then either make the Funds' shareholder list available to the applicants or mail their communication to all other shareholders at the applicants' expense. The shareholders making the request must have been shareholders for at least six months and must hold shares of a Fund valued at $25,000 or more or constituting at least 1% of a Fund's outstanding shares. The Trustees may also take other action as permitted by the Investment Company Act.

n     Shareholder and Trustee Liability. The Trust's Declaration of Trust contains an express disclaimer of shareholder or Trustee liability for the Trust's obligations. It also provides for indemnification and reimbursement of expenses out of the Trust's property for any shareholder held personally liable for its obligations. The Declaration of Trust also states that upon request, the Trust shall assume the defense of any claim made against a shareholder for any act or obligation of the Trust and shall satisfy any judgment on that claim. Massachusetts law permits a shareholder of a business trust (such as the Trust) to be held personally liable as a "partner" under certain circumstances. However, the risk that a Fund shareholder will incur financial loss from being held liable as a "partner" of the Trust is limited to the relatively remote circumstances in which the Trust would be unable to meet its obligations.

The Trust's contractual arrangements state that any person doing business with the Trust (and each shareholder of the Funds) agrees under its Declaration of Trust to look solely to the assets of the Funds for satisfaction of any claim or demand that may arise out of any dealings with the Funds. Additionally, the Trustees shall have no personal liability to any such person, to the extent permitted by law.

Board of Trustees and Oversight Committees. The Funds are governed by a Board of Trustees, which is responsible for protecting the interests of shareholders under Massachusetts law. The Trustees meet periodically throughout the year to oversee the Funds' activities, review their performance, and review the actions of the Manager.

The Board of Trustees has an Audit Committee, a Review Committee and a Governance Committee. Each committee is comprised solely of Trustees who are not "interested persons" under the Investment Company Act (the "Independent Trustees"). The members of the Audit Committee are George C. Bowen (Chairman), Edward L. Cameron, Robert J. Malone and F. William Marshall, Jr. The Audit Committee held 6 meetings during the Funds' fiscal year ended December 31, 2008. The Audit Committee furnishes the Board with recommendations regarding the selection of the Funds' independent registered public accounting firm (also referred to as the "independent Auditors"). Other main functions of the Audit Committee, outlined in the Audit Committee Charter, include, but are not limited to: (i) reviewing the scope and results of financial statement audits and the audit fees charged; (ii) reviewing reports from the Funds' independent Auditors regarding the Funds' internal accounting procedures and controls; (iii) reviewing reports from the Manager's Internal Audit Department; (iv)  reviewing certain reports from and meet periodically with the Funds' Chief Compliance Officer; (v) maintaining a separate line of communication between the Funds' independent Auditors and the Independent Trustees; (vi) reviewing the independence of the Funds' independent Auditors; and (vii) pre-approving the provision of any audit or non-audit services by the Funds' independent Auditors, including tax services, that are not prohibited by the Sarbanes-Oxley Act, to the Funds, the Manager and certain affiliates of the Manager.

The Review Committee is comprised solely of Independent Trustees. The members of the Review Committee are Sam Freedman (Chairman), Jon S. Fossel and Beverly L. Hamilton. The Review Committee held 6 meetings during the Funds' fiscal year ended December 31, 2008. Among other duties, as set forth in the Review Committee's Charter, the Review Committee reports and makes recommendations to the Board concerning the fees paid to the Funds' transfer agent and the Manager and the services provided to the Funds by the transfer agent and the Manager. The Review Committee also reviews the adequacy of the Funds' Codes of Ethics, the Funds' investment performance as well as the policies and procedures adopted by the Funds to comply with the Investment Company Act and other applicable law.

The Governance Committee is comprised solely of Independent Trustees. The members of the Governance Committee are Robert J. Malone (Chairman), William Armstrong, Edward L. Cameron, Beverly L. Hamilton and F. William Marshall, Jr. The Governance Committee held 6 meetings during the Funds' fiscal year ended December 31, 2008. The Governance Committee has adopted a charter setting forth its duties and responsibilities. Among other duties, the Governance Committee reviews and oversees the Funds' governance guidelines, the adequacy of the Funds' Codes of Ethics and the nomination of Trustees, including Independent Trustees. The Governance Committee has adopted a process for shareholder submission of nominees for board positions. Shareholders may submit names of individuals, accompanied by complete and properly supported resumes, for the Governance Committee's consideration by mailing such information to the Governance Committee in care of the Funds. The Governance Committee may consider such persons at such time as it meets to consider possible nominees. The Governance Committee, however, reserves sole discretion to determine which candidates for Trustees and Independent Trustees it will recommend to the Board and/or shareholders and it may identify candidates other than those submitted by Shareholders. The Governance Committee may, but need not, consider the advice and recommendation of the Manager and/or its affiliates in selecting nominees. The full Board elects new Trustees except for those instances when a shareholder vote is required.

Shareholders who desire to communicate with the Board should address correspondence to the Board or an individual Board member and may submit their correspondence electronically at www.oppenheimerfunds.com under the caption "contact us" or by mail to the Funds at the address below.

Trustees and Officers of the Funds. Except for Mr. Murphy, each of the Trustees is an Independent Trustee. All of the Trustees are also trustees or directors of the following Oppenheimer/Centennial funds (referred to as "Board II Funds"):

Oppenheimer Capital Income Fund		Oppenheimer Principal Protected Trust
Oppenheimer Cash Reserves		Oppenheimer Principal Protected Trust II
Oppenheimer Champion Income Fund		Oppenheimer Principal Protected Trust III
Oppenheimer Commodity Strategy Total Return Fund		Oppenheimer Senior Floating Rate Fund
Oppenheimer Equity Fund, Inc.		Oppenheimer Strategic Income Fund
Oppenheimer Integrity Funds		Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund		Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer Master Event-Linked Bond Fund, LLC		Centennial Government Trust
Oppenheimer Master Loan Fund, LLC		Centennial Money Market Trust
Oppenheimer Municipal Fund
Oppenheimer Portfolio Series Fixed Income Active Allocation Fund
Oppenheimer Capital Income Fund	Oppenheimer Principal Protected Trust
Oppenheimer Cash Reserves	Oppenheimer Principal Protected Trust II
Oppenheimer Champion Income Fund	Oppenheimer Principal Protected Trust III
Oppenheimer Commodity Strategy Total Return Fund	Oppenheimer Senior Floating Rate Fund
Oppenheimer Equity Fund, Inc.	Oppenheimer Strategic Income Fund
Oppenheimer Integrity Funds	Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund	Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.	Centennial California Tax Exempt Trust
Oppenheimer Main Street Opportunity Fund	Centennial Government Trust
Oppenheimer Main Street Small Cap Fund	Centennial Money Market Trust
Oppenheimer Master Loan Fund, LLC
Oppenheimer Municipal Fund	Centennial New York Tax Exempt Trust
Oppenheimer Portfolio Series Fixed Income Active Allocation Fund	Centennial Tax Exempt Trust

Present or former officers, directors, trustees and employees (and their immediate family members) of the Funds, the Manager and its affiliates, and retirement plans established by them for their employees are permitted to purchase Class A shares of other Oppenheimer funds at net asset value without sales charge. The sales charge on Class A shares is waived for that group because of the reduced sales efforts realized by the Distributor. Present or former officers, directors, trustees and employees (and their eligible family members) of the Funds, the Manager and its affiliates, its parent company and the subsidiaries of its parent company, and retirement plans established for the benefit of such individuals, are also permitted to purchase Class Y shares of other Oppenheimer funds that offer Class Y shares.

Messrs. Baylin, Bhaman, Damian, Ferreira, Memani, Murphy, Petersen, Reinganum, Steinmetz, Szilagyi, Vandehey, Welsh, Williams, Wixted, Wong, Zack, Zavanelli, Zhou and Zibelli and Mss. Bloomberg, Ives, and Wolf, who are officers of the Funds, hold the same offices with one or more of the other Board II Funds. As of March 31, 2008 the Trustees and officers of the Funds, as a group, owned of record or beneficially less than 1% of any class of shares of the Funds. The foregoing statement does not reflect ownership of shares held of record by an employee benefit plan for employees of the Manager, other than the shares beneficially owned under that plan by the officers of the Board II Funds. In addition, none of the Independent Trustees (nor any of their immediate family members) owns securities of either the Manager or the Distributor or of any entity directly or indirectly controlling, controlled by or under common control with the Manager or the Distributor of the Board II Funds.

Biographical Information. The Trustees and officers, their positions with the Funds, length of service in such position(s), and principal occupations and business affiliations during at least the past five years are listed in the charts below. The charts also include information about each Trustee's beneficial share ownership in the Funds and in all of the registered investment companies that the Trustee oversees in the Oppenheimer family of funds ("Supervised Funds"). The address of each Trustee in the chart below is 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each Trustee serves for an indefinite term, or until his or her resignation, retirement, death or removal.

Independent Trustees
Name, Position(s) with the Trust, Length of Service, Age	Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships Held; Number of Portfolios in the Fund Complex Currently Overseen	Dollar Range of Shares Beneficially Owned in the Trust		Aggregate Dollar Range of Shares Beneficially Owned in All Supervised Funds
		As of December 31, 2008
William L. Armstrong, Chairman of the Board of Trustees since 2003, Trustee since 1999 Age: 72	President, Colorado Christian University (since 2006); Chairman, Cherry Creek Mortgage Company (since 1991), Chairman, Centennial State Mortgage Company (since 1994), Chairman, The El Paso Mortgage Company (since 1993); Chairman, Ambassador Media Corporation (since 1984); Chairman, Broadway Ventures (since 1984); Director of Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992), former Director of Campus Crusade for Christ (non-profit) (1991-2008); former Director, The Lynde and Harry Bradley Foundation, Inc. (non-profit organization) (2002-2006); former Chairman of: Transland Financial Services, Inc. (private mortgage banking company) (1997-2003), Great Frontier Insurance (1995-2000), Frontier Real Estate, Inc. (residential real estate brokerage) (1994-2000) and Frontier Title (title insurance agency) (1995-2000); former Director of the following: UNUMProvident (insurance company) (1991-2004), Storage Technology Corporation (computer equipment company) (1991-2003) and International Family Entertainment (television channel) (1992-1997); U.S. Senator (January 1979-January 1991). Oversees 38 portfolios in the OppenheimerFunds complex.	None	Over $100,000
George C. Bowen, Trustee since 1999 Age: 72	Assistant Secretary and Director of Centennial Asset Management Corporation (December 1991-April 1999); President, Treasurer and Director of Centennial Capital Corporation (June 1989-April 1999); Chief Executive Officer and Director of MultiSource Services, Inc. (March 1996-April 1999); Mr. Bowen held several positions with the Manager and with subsidiary or affiliated companies of the Manager (September 1987-April 1999). Oversees 38 portfolios in the OppenheimerFunds complex.	None	Over $100,000
Edward L. Cameron, Trustee since 1999 Age: 70	Member of The Life Guard of Mount Vernon (George Washington historical site) (June 2000 – June 2006); Partner of PricewaterhouseCoopers LLP (accounting firm) (July 1974-June 1999); Chairman of Price Waterhouse LLP Global Investment Management Industry Services Group (financial services firm) (July 1994-June 1998). Oversees 38 portfolios in the OppenheimerFunds complex.	None	Over $100,000
Jon S. Fossel, Trustee since 1990 Age: 67	Chairman of the Board (since 2006) and Director (since 2002) of UNUMProvident (insurance company) (since June 2002); Director of Northwestern Energy Corp. (public utility corporation) (since November 2004); Director of P.R. Pharmaceuticals (October 1999-October 2003); Director of Rocky Mountain Elk Foundation (non-profit organization) (February 1998-February 2003 and February 2005-February 2007); Chairman and Director (until October 1996) and President and Chief Executive Officer (until October 1995) of the Manager; President, Chief Executive Officer and Director of the following: Oppenheimer Acquisition Corp. ("OAC" ) (parent holding company of the Manager), Shareholders Services, Inc. and Shareholder Financial Services, Inc. (until October 1995). Oversees 38 portfolios in the OppenheimerFunds complex.	None	Over $100,000
Sam Freedman, Trustee since 1996 Age: 68	Director of Colorado UpLIFT (charitable organization) (since September 1984). Mr. Freedman held several positions with the Manager and with subsidiary or affiliated companies of the Manager (until October 1994). Oversees 38 portfolios in the OppenheimerFunds complex.	None	Over $100,000
Beverly L. Hamilton, Trustee since 2002 Age: 62	Trustee of Monterey Institute for International Studies (educational organization) (since February 2000); Board Member of Middlebury College (educational organization) (since December 2005); Director of The California Endowment (philanthropic organization) (April 2002 - April 2008); Director (February 2002-2005) and Chairman of Trustees (2006-2007) of the Community Hospital of Monterey Peninsula; Director (October 1991-2005) and Vice Chairman (since 2006) of American Funds' Emerging Markets Growth Fund, Inc. (mutual fund); President of ARCO Investment Management Company (February 1991-April 2000); Member of the investment committees of The Rockefeller Foundation (2001-2006) and The University of Michigan (since 2000); Advisor at Credit Suisse First Boston's Sprout venture capital unit (venture capital fund) (1994-January 2005); Trustee of MassMutual Institutional Funds (investment company) (1996-June 2004); Trustee of MML Series Investment Fund (investment company) (April 1989-June 2004); Member of the investment committee of Hartford Hospital (2000-2003); and Advisor to Unilever (Holland) pension fund (2000-2003). Oversees 38 portfolios in the OppenheimerFunds complex.	None	None
Robert J. Malone, Trustee since 2002 Age: 64	Board of Directors of Opera Colorado Foundation (non-profit organization) (since March 2008); Director of Jones Knowledge, Inc. (since 2006); Director of Jones International University (educational organization) (since August 2005); Chairman, Chief Executive Officer and Director of Steele Street Bank & Trust (commercial banking) (since August 2003); Director of Colorado UpLIFT (charitable organization) (since 1986); Trustee of the Gallagher Family Foundation (non-profit organization) (since 2000); Former Chairman of U.S. Bank-Colorado (subsidiary of U.S. Bancorp and formerly Colorado National Bank) (July 1996-April 1999); Director of Commercial Assets, Inc. (real estate investment trust) (1993-2000); Director of Jones Knowledge, Inc. (2001-July 2004); and Director of U.S. Exploration, Inc. (oil and gas exploration) ( 1997-February 2004). Oversees 38 portfolios in the OppenheimerFunds complex.	None	Over $100,000
F. William Marshall, Jr., Trustee since 2000 Age: 66	Trustee Emeritas of Worcester Polytech Institute (WPI) (private university) (since 2009); Trustee of MassMutual Select Funds (formerly MassMutual Institutional Funds) (investment company) (since 1996) and MML Series Investment Fund (investment company) (since 1996); President and Treasurer of the SIS Funds (private charitable fund) (since January 1999); former Trustee of WPI (1985-2008); former Chairman of the Investment Committee of the WPI (1994-2008); former Chairman of SIS & Family Bank, F.S.B. (formerly SIS Bank) (commercial bank) (January 1999-July 1999); former Executive Vice President of Peoples Heritage Financial Group, Inc. (commercial bank) (January 1999-July 1999); and former President and Chief Executive Officer of SIS Bancorp. (1993-1999). Oversees 40 portfolios in the OppenheimerFunds complex.*	None	Over $100,000

*     Includes two open-end investment companies: MassMutual Select Funds and MML Series Investment Fund. In accordance with the instructions for SEC Form N-1A, for purposes of this section only, MassMutual Select Funds and MML Series Investment Fund are included in the "Fund Complex." The Manager does not consider MassMutual Select Funds and MML Series Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as that term may be otherwise interpreted.

Mr. Murphy is an "Interested Trustee" because he is affiliated with the Manager by virtue of his positions as an officer and director of the Manager, and as a shareholder of its parent company. The address of Mr. Murphy is Two World Financial Center, 225 Liberty Street, 11^th Floor, New York, New York 10281-1008. Mr. Murphy serves as a Trustee for an indefinite term, or until his resignation, retirement, death or removal. He serves as an officer for an indefinite term, which would end: (a) upon the request of the Board, (b) if he is no longer an officer of the Manager, (c) if a material change in his duties occurs that are inconsistent with a position as officer the Fund, or (d) upon his resignation, retirement, or death. Mr. Murphy was elected as a Trustee of the Funds with the understanding that in the event he ceases to be the chief executive officer of the Manager, he will resign as a Trustee of the Funds and the other Board II Funds for which he is a director or trustee.

Interested Trustee and Officer
Name, Position(s) Held with the Trust, Length of Service, Age	Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships Held; Number of Portfolios in the Fund Complex Currently Overseen	Dollar Range of Shares Beneficially Owned in the Trust	Aggregate Dollar Range Of Shares Beneficially Owned in All supervised Funds
		As of December 31, 2008
John V. Murphy, Trustee, President and Principal Executive Officer since 2001 Age: 59	Chairman and Director of the Manager (since June 2001); Chief Executive of the Manager (June 2001-December 2008); President of the Manager (September 2000-February 2007); President and director or trustee of other Oppenheimer funds; President and Director of Oppenheimer Acquisition Corp. ("OAC") (the Manager's parent holding company) and of Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (November 2001-December 2006); Chairman and Director of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager) (since July 2001); President and Director of OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since July 2001); Director of the following investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management Corporation and Trinity Investment Management Corporation (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 2001) and Director (since July 2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President of Massachusetts Mutual Life Insurance Company (OAC's parent company) (since February 1997); Director of DLB Acquisition Corporation (holding company parent of Babson Capital Management LLC) (since June 1995); Chairman (since October 2007) and Member of the Investment Company Institute's Board of Governors (since October 2003). Oversees 102 portfolios in the OppenheimerFunds complex.	None	Over $100,000

The addresses of the officers in the chart below are as follows: for Messrs. Baylin, Bhaman, Damian, Ferreira, Memani, Reinganum, Steinmetz, Williams, Wong, Zack, Zavanelli, Zhou and Zibelli and Ms. Bloomberg, Two World Financial Center, 225 Liberty Street, New York, New York 10281-1008, for Messrs. Petersen, Szilagyi, Vandehey, Welsh and Wixted and Mss. Ives and Wolf, 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each officer serves for an indefinite term or until his or her resignation, retirement death or removal.
 

Other Officers of the Trust
Name, Position(s) Held with the Trust, Length of Service, Age	Principal Occupation(s) During Past 5 Years
Marc L. Baylin, Vice President and Portfolio Manager since 2005 Age: 41	Vice President of the Manager and has been a member of the Manager's Growth Equity Investment Team since September 2005. He was Managing Director and Lead Portfolio Manager at JP Morgan Fleming Investment Management from June 2002 to August 2005 and was a Vice President of T. Rowe Price, where he was an analyst from June 1993 and a portfolio manager from March 1999 to June 2002. A portfolio manager and officer of 3 portfolios in the OppenheimerFunds complex.
Rajeev Bhaman, Vice President and Portfolio Manager since 2004 Age: 45	Senior Vice President of the Manager since May 2006; Vice President of the Manager from January 1997 to May 2006. A portfolio manager and officer of 2 portfolios in the OppenheimerFunds complex.
John Damian, Vice President and Portfolio Manager since 2009 Age: 40	Senior Vice President and Head of Value Equity Investments since February 2007; Vice President of the Fund since January 2009; Vice President of the Manager (September 2001-February 2007). Senior Analyst/Director for Citigroup Asset Management (November 1999-September 2001). A portfolio manager and officer of 5 portfolios in the OppenheimerFunds complex.
Emmanuel Ferreira, Vice President and Portfolio Manager since 2003 Age: 41	Vice President of the Manager since January 2003; Portfolio Manager at Lashire Investments (July 1999-December 2002). A portfolio manager and officer of 3 portfolios in the OppenheimerFunds complex.
Krishna Memani Vice President and Portfolio Manager since 2009 Age: 48	Senior Vice President and Head of the Investment Grade Fixed Income Team of the Manager since March 2009. Mr. Memani was a Managing Director and Head of the U.S. and European Credit Analyst Team at Deutsche Bank Securities from June 2006 through January 2009. He was the Chief Credit Strategist at Credit Suisse Securities from August 2002 through March 2006. He was a Managing Director and Senior Portfolio Manager at Putnam Investments from September 1998 through June 2002. A portfolio manager and officer of 11 portfolios in the OppenheimerFunds complex.
Dr. Marc Reinganum, Vice President and Senior Portfolio Manager since 2003 Age: 55	Vice President of the Manager and Director of Quantitative Research and Portfolio Strategist for Equities since 2002; the Mary Jo Vaughn Rauscher Chair in Financial Investments at Southern Methodist University from 1995 to 2002. At Southern Methodist University he also served as the Director of the Finance Institute, Chairman of the Finance Department, President of the Faculty at the Cox School of Business and member of the Board of Trustee Investment Committee. A portfolio manager and officer of 6 portfolios in the OppenheimerFunds complex.
Arthur P. Steinmetz, Vice President and Portfolio Manager since 1993 Age: 50	Chief Investment Officer of Fixed Income of the Manager (Since April 2009) and a Senior Vice President of the Manager (since March 1993) and of HarbourView Asset Management Corporation (since March 2000). He was Director of Fixed Income of Investments of the Manager from January 2009 to April 2009. A portfolio manager and officer of 5 portfolios in the OppenheimerFunds complex.
Joseph Welsh Vice President since 1996 and Portfolio Manager since 1999 Age: 45	Head of the Manager's High Yield Corporate Debt Team since April 2009, Vice President of the Manager since December 2000 and a CFA. He was an Assistant Vice President of the Manager from December 1996 to November 2000 and a high yield bond analyst of the Manager from January 1995 to December 1996. He was a senior bond analyst with W.R. Huff Asset Management from November 1991 to December 1994. Mr. Welsh is a portfolio manager and officer of 6 portfolios in the OppenheimerFunds complex.
Mitch Williams Vice President and Portfolio Manager since 2009 Age: 40	Vice President of the Manager since July 2006, Vice President of the Fund since 2009, CFA and a Senior Research Analyst of the Manager since April 2002. Vice President and Research Analyst for Evergreen Funds from October 2000 to January 2002. A portfolio manager of 4 portfolios in the OppenheimerFunds complex.
Carol E. Wolf, Vice President since 2000 and Portfolio Manager since 1998 Age: 57	Senior Vice President of the Manager (since June 2000) and of HarbourView Asset Management Corporation (since June 2003); Vice President of the Manager (June 1990-June 2000). A portfolio manager and officer of 10 portfolios in the OppenheimerFunds complex.
Caleb Wong Vice President Portfolio Manager since 2009 Age: 57	Vice President of the Manager since June 1999; Vice President of the Fund since 2009; employed in fixed-income quantitative research and risk management for the Manager (since July 1996). A portfolio manager and officer of 5 portfolios in the OppenheimerFunds complex.
Mark Zavanelli, Vice President since 2000 and Senior Portfolio Manager since 1999 Age: 38	Vice President of the Manager since November 2000; a Chartered Financial Analyst; Prior to joining the Manager in May 1998 he was President of Waterside Capital Management, a registered investment advisor (August 1995-April 1998). A portfolio manager and officer of 6 portfolios in the OppenheimerFunds complex.
Wentong Alex Zhou Vice President and Portfolio Manager since 2008 Age: 43	Senior quantitative analyst of the Manager since June 1999, assisting in the management and maintenance of the quantitative models for the Main Street Funds. He has been a portfolio manager of the Manager since January 2007 and an Assistant Vice President of the Manager since 2001. He is a portfolio manager of 3 portfolios in the OppenheimerFunds complex.
Ronald Zibelli, Jr. Vice President and Portfolio Manager since 2008 Age: 50	Vice President of the Manager since May 2006. Vice President of the Fund since May 2006; a Chartered Financial Analyst. Managing Director and Small Cap Growth Team Leader at Merrill Lynch Investment Managers (January 2002-May 2006). A portfolio manager and officer of 4 portfolios in the OppenheimerFunds complex.
Mark S. Vandehey, Vice President and Chief Compliance Officer since 2004 Age: 58	Senior Vice President and Chief Compliance Officer of the Manager (since March 2004); Chief Compliance Officer of OppenheimerFunds Distributor, Inc., Centennial Asset Management and Shareholder Services, Inc. (since March 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and Shareholder Services, Inc. (since June 1983); Former Vice President and Director of Internal Audit of the Manager (1997-February 2004). An officer of 102 portfolios in the OppenheimerFunds complex.
Brian W. Wixted, Treasurer and Principal Financial & Accounting Officer since 1999 Age: 49	Senior Vice President of the Manager (since March 1999); Treasurer of the Manager and the following: HarbourView Asset Management Corporation, Shareholder Financial Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management, Inc. and Oppenheimer Partnership Holdings, Inc. (March 1999-June 2008), OFI Private Investments, Inc. (March 2000-June 2008), OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since June 2003); Treasurer and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager) (since May 2000); Assistant Treasurer of the following: OAC (March 1999-June 2008), Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003). An officer of 102 portfolios in the OppenheimerFunds complex.
Brian S. Petersen, Assistant Treasurer since 2004 Age: 38	Vice President of the Manager (since February 2007); Assistant Vice President of the Manager (August 2002-February 2007); Manager/Financial Product Accounting of the Manager (November 1998-July 2002). An officer of 102 portfolios in the OppenheimerFunds complex.
Stephanie Bullington, Assistant Treasurer since 2008 Age: 32	Assistant Vice President of the Manager (since October 2005); Assistant Vice President of ButterField Fund Services (Bermuda) Limited, part of The Bank of N.T. Butterfield & Son Limited (Butterfield) (February 2004-June 2005); Fund Accounting Officer of Butterfield Fund Services (Bermuda) Limited (September 2003-February 2004). An officer of 102 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Vice President and Secretary since 2001 Age: 60	Executive Vice President (since January 2004) and General Counsel (since March 2002) of the Manager; General Counsel and Director of the Distributor (since December 2001); General Counsel of Centennial Asset Management Corporation (since December 2001); Senior Vice President and General Counsel of HarbourView Asset Management Corporation (since December 2001); Secretary and General Counsel of OAC (since November 2001); Assistant Secretary (since September 1997) and Director (since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President, General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice President, General Counsel and Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice President and General Counsel of OFI Institutional Asset Management, Inc. (since November 2001); Director of OppenheimerFunds International Distributor Limited (since December 2003); Senior Vice President (May 1985-December 2003). An officer of 102 portfolios in the OppenheimerFunds complex.
Lisa I. Bloomberg, Assistant Secretary since 2004 Age: 41	Vice President (since 2004) and Deputy General Counsel (since May 2008); of the Manager; Associate Counsel of the Manager (May 2004-May 2008); First Vice President (April 2001-April 2004), Associate General Counsel (December 2000-April 2004) of UBS Financial Services, Inc. An officer of 102 portfolios in the OppenheimerFunds complex.
Kathleen T. Ives, Assistant Secretary since 2001 Age: 43	Vice President (since June 1998), Deputy General Counsel (since May 2008) and Assistant Secretary (since October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset Management Corporation (since October 2003); Vice President and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc. (since December 2001); Senior Counsel of the Manager (October 2003-May 2008). An officer of 102 portfolios in the OppenheimerFunds complex.
Taylor V. Edwards, Assistant Secretary since 2008 Age: 41	Vice President and Assistant Counsel of the Manager (since February 2007); Assistant Vice President and Assistant Counsel of the Manager (January 2006-January 2007); Formerly an Associate at Dechert LLP (September 2000-December 2005). An officer of 102 portfolios in the OppenheimerFunds complex.
Randy G. Legg, Assistant Secretary since 2008 Age: 43	Vice President (since June 2005) and Associate Counsel (since January 2007) of the Manager; Assistant Vice President (February 2004-June 2005) and Assistant Counsel (February 2004-January 2007) of the Manager. An officer of 102 portfolios in the OppenheimerFunds complex.
Adrienne M. Ruffle, Assistant Secretary since 2008 Age: 31	Vice President (since February 2007) and Assistant Counsel (since February 2005) of the Manager; Assistant Vice President of the Manager (February 2005-February 2007); Associate (September 2002-February 2005) at Sidley Austin LLP. An officer of 102 portfolios in the OppenheimerFunds complex.

n      Remuneration of the Officers and Trustees. The officers and the interested Trustee of the Funds, who are affiliated with the Manager, receive no salary or fee from the Funds. The Independent Trustees received the compensation shown below from the Funds for serving as a Trustee and member of a committee (if applicable), with respect to the Funds' fiscal year ended December 31, 2008. The total compensation from the Funds and fund complex represents compensation received for serving as a Trustee and member of a committee (if applicable) of the Boards of the Funds and other funds in the OppenheimerFunds complex during the calendar year ended December 31, 2008.

Name of Trustee and Other Fund Position(s) (as applicable)	Aggregate Compensation From the Funds(1) Fiscal year ended December 31, 2008	Total Compensation From the Funds and Fund Complex(2) Year ended December 31, 2008
William L. Armstrong Chairman of the Board and Governance Committee Member	$49,938	$261,000
George C. Bowen Audit Committee Chairman	$39,950	$208,800
Edward L. Cameron Audit Committee Member and Governance Committee Member	$33,292	$174,000
Jon S. Fossel Review Committee Member	$33,292	$174,000
Sam Freedman Review Committee Chairman	$38,285	$200,100
Beverly Hamilton Review Committee Member and Governance Committee Member	$34,516 (3)	$165,300
Robert J. Malone Governance Committee Chairman and Audit Committee Member	$39,693	$200,100
F. William Marshall, Jr. Audit Committee Member and Governance Committee Member	$34,516	$297,750 (4)

1.      "Aggregate Compensation From the Funds" includes fees and deferred compensation, if any.

2.      In accordance with SEC regulations, for purposes of this section only, "Fund Complex" includes the Oppenheimer funds, the MassMutual Institutional Funds, the MassMutual Select Funds and the MML Series Investment Fund, the investment adviser for which is the indirect parent company of the Funds' Manager. The Manager also serves as the Sub-Advisor to the following: MassMutual Premier International Equity Fund, MassMutual Premier Main Street Fund, MassMutual Premier Strategic Income Fund, MassMutual Premier Capital Appreciation Fund, and MassMutual Premier Global Fund. The Manager does not consider MassMutual Institutional Funds, MassMutual Select Funds and MML Series Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as that term may be otherwise interpreted.

3.      Includes $31,304 deferred by Ms. Hamilton under the "Compensation Deferral Plan" described below.

4.      Includes $81,664 compensation paid to Mr. Marshall for serving as a Trustee for MassMutual Select Funds and MML Series Investment Fund.

n      Compensation Deferral Plan For Trustees. The Board of Trustees has adopted a Compensation Deferral Plan for Independent Trustees that enables them to elect to defer receipt of all or a portion of the annual fees they are entitled to receive from the Funds. Under the plan, the compensation deferred by a Trustee is periodically adjusted as though an equivalent amount had been invested in shares of one or more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under the plan will be determined based upon the amount of compensation deferred and the performance of the selected funds.

Deferral of Trustees' fees under the plan will not materially affect the Funds' assets, liabilities or net income per share. The plan will not obligate the Funds to retain the services of any Trustee or to pay any particular level of compensation to any Trustee. Pursuant to an Order issued by the SEC, the Funds may invest in the funds selected by the Trustees under the plan without shareholder approval for the limited purpose of determining the value of the Trustees' deferred compensation account.

n     Major Shareholders. As of April 1, 2009, the only persons or entities who owned of record or were known by the Funds to own beneficially 5% or more of any class of the Funds' outstanding shares were the Manager and the following insurance companies and their respective affiliates, such shares were held as shown in Appendix B:

i)      Allianz Life Insurance Company of North America ("Allianz") , Minneapolis, MN;

ii)      Allstate Life Insurance Company of New York ("Allstate Life of NY"), Vernon Hills, IL;

iii)      Allstate Life Insurance Company ("Allstate Life Ins. Co."), Vernon Hills, IL;

iv)      Commonwealth Annuity and Life Insurance Company ("Commonwealth Annuity and Life"), Worcester, MA;

v)      Cuna Mutual Life Insurance Company ("Cuna"), Waverly, IA;

vi)      Genworth Life and Annuity Insurance Company, ("Genworth Life and Annuity"), Richmond, VA;

vii)      Genworth Life Insurance Company of New York ("Genworth Life Insurance Co. NY"), Richmond, VA;

viii)      Hartford Life Annuity Insurance Company ("Hartford Life Annuity"), Simsbury, CT;

ix)      Hartford Life Insurance Company ("Hartford Life Ins. Co"), Simsbury, CT;

x)      ING Life Insurance and Annuity Company ("ING"), Hartford, CT;

xi)      Lincoln Benefit Life Company ("Lincoln Benefit"), Lincoln, NE;

xii)      Massachusetts Mutual Life Insurance Company ("Mass Mutual"), Springfield, MA;

xiii)      Merrill Lynch, Pierce, Fenner, & Smith, Inc. ("Merrill Lynch"), Jacksonville, FL;

xiv)      Minnesota Life Insurance Company ("Minnesota Life"), St. Paul, MN;

xv)      Nationwide Life Insurance Company ("Nationwide"), Columbus, OH;

xvi)      Phoenix Life Insurance Company ("Phoenix"), East Bush, NY;

xvii)      Protective Life Insurance Company ("Protective"), Birmingham, AL;

xviii)      Pruco Life Insurance Company of Arizona ("Pruco Life Arizona"), Newark, NJ;

xix)      RiverSource Life Insurance Company ("RiverSource Life"), Minneapolis, MN;

xx)      RiverSource Life Insurance Company of New York ("RiverSource Life NY"), Minneapolis, MN;

xxi)      Security Benefit Life Insurance Company ("Security Benefit Life Insurance Co."), Topeka, KS; and

xxii)      Sun Life Assurance Company of Canada (U.S.) ("Sun Life Financial"), Wellesley Hills, MA

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a holding company controlled by Massachusetts Mutual Life Insurance Company, a global, diversified insurance and financial services organization.

     |X|     Code of Ethics. The Funds (except Money Fund/VA), Manager and the Distributor have a Code of Ethics. It is designed to detect and prevent improper personal trading by certain employees, including portfolio managers, that would compete with or take advantage of a Fund's portfolio transactions. Covered persons include persons with knowledge of the investments and investment intentions of the Fund and other funds advised by the Manager. The Code of Ethics does permit personnel subject to the Code to invest in securities, including securities that may be purchased or held by the Fund, subject to a number of restrictions and controls. Compliance with the Code of Ethics is carefully monitored and enforced by the Manager.

     The Code of Ethics is an exhibit to the Funds' registration statement filed with the SEC and can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information about the hours of operation of the Public Reference Room by calling the SEC at 1.202.551.8090. The Code of Ethics can also be viewed as part of the Funds' registration statement on the SEC's EDGAR database at the SEC's Internet website at http://www.sec.gov . Copies may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

n     Portfolio Proxy Voting. The Funds (except Money Fund/VA) have adopted Portfolio Proxy Voting Policies and Procedures, which include Proxy Voting Guidelines, under which the Funds vote proxies relating to securities held by the Funds ("portfolio proxies"). OppenheimerFunds, Inc. generally undertakes to vote portfolio proxies with a view to enhancing the value of the company 's stock held by the Funds. The Funds have retained an independent, third party proxy voting agent to vote portfolio proxies in accordance with the Funds' Proxy Voting Guidelines and to maintain records of such portfolio proxy voting. The Portfolio Proxy Voting Policies and Procedures include provisions to address conflicts of interest that may arise between the Funds and the Manager or the Manager's affiliates or business relationships. Such a conflict of interest may arise, for example, where the Manager or an affiliate of the Manager manages or administers the assets of a pension plan or other investment account of the portfolio company soliciting the proxy or seeks to serve in that capacity. The Manager and its affiliates generally seek to avoid such material conflicts of interest by maintaining separate investment decision making processes to prevent the sharing of business objectives with respect to proposed or actual actions regarding portfolio proxy voting decisions. Additionally, the Manager employs the following procedures, as long as OFI determines that the course of action is consistent with the best interests of the Funds and their shareholders: (1) if the proposal that gives rise to the conflict is specifically addressed in the Proxy Voting Guidelines, the Manager will vote the portfolio proxy in accordance with the Proxy Voting Guidelines, provided that they do not provide discretion to the Manager on how to vote on the matter; (2) if such proposal is not specifically addressed in the Proxy Voting Guidelines or the Proxy Voting Guidelines provide discretion to the Manager on how to vote, the Manager will vote in accordance with the third-party proxy voting agent 's general recommended guidelines on the proposal provided that the Manager has reasonably determined that there is no conflict of interest on the part of the proxy voting agent; and (3) if neither of the previous two procedures provides an appropriate voting recommendation, the Manager may retain an independent fiduciary to advise the Manager on how to vote the proposal or may abstain from voting. The Proxy Voting Guidelines' provisions with respect to certain routine and non-routine proxy proposals are summarized below:

·      The Funds evaluate director nominees on a case-by-case basis, examining the following factors, among others: composition of the board and key board committees, experience and qualifications, attendance at board meetings, corporate governance provisions and takeover activity, long-term company performance and the nominee' s investment in the company.

·      The Funds generally support proposals requiring the position of chairman to be filled by an independent director unless there are compelling reasons to recommend against the proposal such as a counterbalancing governance structure.

·      The Funds generally support proposals asking that a majority of directors be independent. The Funds generally supports proposals asking that a board audit, compensation, and/or nominating committee be composed exclusively of independent directors.

·      The Funds generally support shareholder proposals to reduce a super-majority vote requirement, and opposes management proposals to add a super-majority vote requirement.

·      The Funds generally support proposals to allow shareholders the ability to call special meetings.

·      The Funds generally support proposals to allow or make easier shareholder action by written consent.

·      The Funds generally vote against proposals to create a new class of stock with superior voting rights.

·      The Funds generally vote against proposals to classify a board.

·      The Funds generally support proposals to eliminate cumulative voting.

·      The Funds generally oppose re-pricing of stock options without shareholder approval.

·      The Funds generally support proposals to require majority voting for the election of directors.

·      The Funds generally support proposals seeking additional disclosure of executive and director pay information.

·      The Funds generally support proposals seeking disclosure regarding the company's, board's or committee' s use of compensation consultants.

·      The Funds generally support "pay-for-performance" proposals that align a significant portion of total compensation of senior executives to company performance.

·      The Funds generally supports having shareholder votes on poison pills.

·      The Funds generally support proposals calling for companies to adopt a policy of not providing tax gross-up payments.

·      In the case of social, political and environmental responsibility issues, the Funds will generally abstain where there could be a detrimental impact on share value or where the perceived value if the proposal was adopted is unclear or unsubstantiated.  The Funds generally support proposals that would clearly have a discernible positive impact on short- or long-term share value, or that would have a presently indiscernible impact on short- or long-term share value but promotes general long-term interests of the company and its shareholders.

     The Funds are required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30^th, no later than August 31^st of each year. The Funds' Form N-PX filing is available (i) without charge, upon request, by calling the Funds toll-free at 1.800.525.7048 and (ii) on the SEC's website at www.sec.gov.

n      The Investment Advisory Agreements. The Manager provides investment advisory and management services to each Fund under an investment advisory agreement between the Manager and the Trust of each Fund. The Manager selects securities for the Funds' portfolios and handles their day-to day business. The portfolio managers of the Funds are employed by the Manager and are the persons who are principally responsible for the day-to-day management of the Funds' portfolios. Other members of the Manager's investment teams provide the portfolio managers with counsel and support in managing the Funds' portfolios as appropriate.

The agreements require the Manager, at its expense, to provide the Funds with adequate office space, facilities and equipment. It also requires the Manager to provide and supervise the activities of all administrative and clerical personnel required to provide effective corporate administration for the Funds. Those responsibilities include the compilation and maintenance of records with respect to the Funds' operations, the preparation and filing of specified reports, and the composition of proxy materials and registration statements for continuous public sale of shares of the Funds.

The Funds pay expenses not expressly assumed by the Manager under the advisory agreements. The investment advisory agreements list examples of expenses paid by the Funds. The major categories relate to interest, taxes, fees to Independent Trustees, legal and audit expenses, custodian and transfer agent expenses, share issuance costs, certain printing and registration costs, brokerage commissions, and non-recurring expenses, including litigation cost. The management fees paid by the Funds to the Manager are calculated at the rates described in the Prospectus, which are applied to the assets of the Funds as a whole. The fees are allocated to each class of shares based upon the relative proportion of a Fund's net assets represented by that class. The management fees paid by the Funds to the Manager during its last three fiscal years are listed below.

Management Fees for the Fiscal Year Ended December 31
Fund	2006	2007	2008
Balanced Fund/VA	$4,020,826	$3,873,049	$2,905,296
Capital Appreciation Fund/VA	$13,090,904	$13,693,507	$11,123,637
Core Bond Fund/VA	$3,030,438	$2,674,865	$2,241,087
Global Securities Fund/VA	$21,291,245	$24,819,247	$19,436,828
High Income Fund/VA	$3,808,520	$3,718,374	$2,529,797
Main Street Fund®/VA	$12,021,246	$14,769,190	$12,491,552
Main Street Small Cap Fund®/VA	$3,908,014	$5,996,201	$5,909,561
MidCap Fund/VA	$7,923,282	$7,411,075	$5,532,191
Money Fund/VA	$770,054	$815,496	$955,875
Strategic Bond Fund/VA	$9,733,081	$15,516,248	$21,372,387
Value Fund/VA	$20,780	$46,993	$48,203

The investment advisory agreements state that in the absence of willful misfeasance, bad faith, gross negligence in the performance of its duties or reckless disregard of its obligations and duties under the investment advisory agreement, the Manager is not liable for any loss the Funds sustain in connection with matters to which the agreement relates.

The agreements permit the Manager to act as investment adviser for any other person, firm or corporation and to use the name "Oppenheimer" in connection with other investment companies for which it may act as investment adviser or general distributor. If the Manager shall no longer act as investment adviser to a Fund, the Manager may withdraw the right of that Fund to use the name "Oppenheimer" as part of its name.

Pending Litigation.  During 2009, a number of complaints have been filed in federal courts against the Manager, the Distributor, and certain other mutual funds ("Defendant Funds") advised by the Manager and distributed by the Distributor.  The complaints naming the Defendant Funds also name certain officers and trustees and former trustees of the respective Defendant Fund.  The plaintiffs are seeking class action status on behalf of those who purchased shares of the respective Defendant Fund during a particular time period.  The complaints against the Defendant Funds raise claims under federal securities laws to the effect that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund's investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations.   The plaintiffs seek unspecified damages, equitable relief and an award of attorneys' fees and litigation expenses.  
 
            A complaint brought in state court against the Manager, the Distributor and another subsidiary of the Manager (but not against the Funds), on behalf of the Oregon College Savings Plan Trust alleges a variety of claims, including breach of contract, breach of fiduciary duty, negligence and violation of state securities laws. Plaintiffs seek compensatory damages, equitable relief and an award of attorneys' fees and litigation expenses.
 

Other complaints have been filed in state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates, regarding the alleged investment fraud perpetrated by Bernard Madoff and his firm ("Madoff").  Those lawsuits, in 2008 and 2009, allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others.  They seek unspecified damages, equitable relief and an award of attorneys' fees and litigation expenses.  None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors.  None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously.  The Defendant Funds' Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the individual independent Trustees named in those suits.  While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Funds, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds. 

Portfolio Managers. Each Fund's portfolio is managed by the following:
 

Fund Name	Portfolio Manager(s)
Balanced Fund/VA	Emmanuel Ferreira, Krishna Memani, Peter A. Strzalkowski
Capital Appreciation Fund/VA	Marc L. Baylin
Core Bond Fund/VA	Krishna Memani
Global Securities Fund/VA	Rajeev Bhaman
High Income Fund/VA	Joseph Welsh
Main Street Fund®/VA	Mark Zavanelli, Marc Reinganum and Alex Zhou
Main Street Small Cap Fund®/VA	Mark Zavanelli and Marc Reinganum
MidCap Fund/VA	Ronald Zibelli, Jr.
Money Fund/VA	Carol E. Wolf
Strategic Bond Fund/VA	Arthur P. Steinmetz, Krishna Memani, Joseph Welsh and Caleb Wong
Value Fund/VA	John Damian and Mitch Williams

Each of the above individuals is referred to as "Portfolio Manager" and collectively they are referred to as the "Portfolio Managers". They are the persons who are responsible for the day-to-day management of each Fund's respective investments.

n      Other Accounts Managed. In addition to managing the Funds' investment portfolio, Messrs. Baylin, Bhaman, Damian, Ferreira, Memani, Reinganum, Steinmetz, Strzalkowski, Welsh, Williams, Zavanelli, Zhou and Zibelli and Ms. Wolf also manage other investment portfolios or accounts on behalf of the Manager or its affiliates. The following tables provide information regarding those portfolios and accounts as of December 31, 2008. Except for one registered investment company managed by Mr. Bhaman no portfolio or account has a performance-base advisory fee:

Fund Name and Portfolio Managers	Registered Investment Companies Managed	Total Assets in Registered Investment Companies Managed1	Other Pooled Investment Vehicles Managed	Total Assets in Other Pooled Investment Vehicles Managed1	Other Accounts Managed	Total Assets in Other Accounts Managed1,2
Balanced Fund/VA
Emmanuel Ferreira	3	$2,049	0	0	0	0
Krishna Memani3
Peter A. Strzalkowski3
Capital Appreciation Fund/VA
Marc L. Baylin	7	$7,858	0	0	1	$575
Core Bond Fund/VA
Krishna Memani3
Global Securities Fund/VA
Rajeev Bhaman	7	$10,654	5	$856	2	$352
High Income Fund/VA
Joseph Welsh	3	$5,152	0	0	0	0
Main Street Fund®/VA
Mark Zavanelli	18	$14,070	1	$39	2	$374
Marc Reinganum	18	$14,070	1	$39	2	$374
Alex Zhou	6	$7,407	1	$39	0	0
Main Street Small Cap Fund®/VA
Mark Zavanelli	18	$14,913	1	$39	2	$374
Marc Reinganum	18	$14,913	1	$39	2	$374
MidCap Fund/VA
Ronald Zibelli, Jr.	3	$971	4	$40	0	0
Money Fund/VA
Carol E. Wolf	8	$15,126	2	$2,709	0	0
Strategic Bond Fund/VA
Arthur P. Steinmetz	6	$19,639	2	$86	0	0
Krishna Memani3
Joseph Welsh	3	$1,835	0	0	0	0
Caleb Wong	4	$1,708	1	$73	0	0
Value Fund/VA
John Damian	13	$7,192	3	$245	1	$104
Mitch Williams	8	$4,846	1	$3	4	$143

1.     In millions.

2.     Does not include personal accounts of portfolio managers and their families, which are subject to the Code of Ethics.

3.      Messrs. Memani and Strzalkowski did not become portfolio managers of their respective Funds until April 2009.

As indicated above, each of the Portfolio Managers also manages other funds and accounts. Potentially, at times, those responsibilities could conflict with the interests of the Funds. That may occur whether the investment strategies of the other funds or accounts are the same as, or different from, the Funds' investment objectives and strategies. For example, a Portfolio Manager may need to allocate investment opportunities between a Fund and another fund or account having similar objectives or strategies, or a Portfolio Manager may need to execute transactions for another fund or account that could have a negative impact on the value of securities held by a Fund. Not all funds and accounts advised by the Manager have the same management fee. If the management fee structure of another fund or account is more advantageous to the Manager than the fee structure of a Fund, the Manager could have an incentive to favor the other fund or account. However, the Manager's compliance procedures and Code of Ethics recognize the Manager's fiduciary obligations to treat all of its clients, including the Funds, fairly and equitably, and are designed to preclude the Portfolio Managers from favoring one client over another. It is possible, of course, that those compliance procedures and the Code of Ethics may not always be adequate to do so. At various times, the Funds' Portfolio Managers may manage other funds or accounts with investment objectives and strategies that are similar to those of the Funds, or may manage funds or accounts with investment objectives and strategies that are different from those of the Funds.

n     Compensation of the Portfolio Managers. The Funds' Portfolio Managers are employed and compensated by the Manager, not the Funds. The Manager's compensation structure is designed to attract and retain highly qualified investment management professionals and to reward individual and team contributions toward creating shareholder value. As of December 31, 2008, each Portfolio Managers ' compensation consisted principally of three elements: a base salary, an annual discretionary bonus and eligibility to participate in long-term

awards of options and appreciation rights in regard to the common stock of the Manager's holding company parent. Senior portfolio managers may also be eligible to participate in the Manager's deferred compensation plan.

To help the Manager attract and retain talent, the base pay component of each portfolio manager is reviewed regularly to ensure that it reflects the performance of the individual, is commensurate with the requirements of the particular portfolio, reflects any specific competence or specialty of the individual manager, and is competitive with other comparable positions. The annual discretionary bonus is determined by senior management of the Manager and is based on a number of factors, including management quality (such as style consistency, risk management, sector coverage, team leadership and coaching) and organizational development. The Portfolio Managers' compensation is not based on the total value of a Fund's portfolio assets or its investment performance. However, each portfolio managers' compensation is based on the performance of a tracking portfolio that is substantially similar to the Fund or Funds that he or she manages, measured against an appropriate Lipper benchmark selected by management. The Manager has a number of procedures in place to ensure that portfolio managers do not allocate securities to those portfolios in an inequitable manner, including monitoring and dispersion analysis. The compensation structure of certain other funds and accounts managed by the Portfolio Managers differs from the compensation structure of the Funds, described above. A portion of the Portfolio Managers' compensation with regard to other portfolios may be based on the performance of those portfolios compared to a particular benchmark and, with respect to one portfolio managed by Mr. Bhaman, may, under certain circumstances, include an amount based in part on the amount of that portfolio's management fee.

n     Ownership of Fund Shares. As of December 31, 2008, the Portfolio Managers did not beneficially own any shares of the Funds, which are sold only through insurance companies to their contract owners.

Brokerage Policies of the Funds

Brokerage Provisions of the Investment Advisory Agreement. One of the duties of the Manager under the investment advisory agreements is to arrange the portfolio transactions for the Funds. The advisory agreements contain provisions relating to the employment of broker-dealers to effect the Funds' portfolio transactions. The Manager is authorized by the advisory agreements to employ broker-dealers, including "affiliated brokers," as that term is defined in the Investment Company Act, that the Manager thinks, in its best judgment based on all relevant factors, will implement the policy of the Funds to obtain, at reasonable expense, the "best execution" of the Funds' portfolio transactions. "Best execution" means prompt and reliable execution at the most favorable price obtainable for the services provided. The Manager need not seek competitive commission bidding. However, it is expected to be aware of the current rates of eligible brokers and to minimize the commissions paid to the extent consistent with the interests and policies of the Funds as established by its Board of Trustees.

     Under the investment advisory agreements, in choosing brokers to execute portfolio transactions for the Funds, the Manager may select brokers (other than affiliates) that provide both brokerage and research services to the Funds. The commissions paid to those brokers may be higher than another qualified broker would charge, if the Manager makes a good faith determination that the commission is fair and reasonable in relation to the services provided.

Brokerage Practices Followed by the Manager. The Manager allocates brokerage for the Funds subject to the provisions of the investment advisory agreements and other applicable rules and procedures described below.

The Manager's portfolio traders allocate brokerage based upon recommendations from the Manager's portfolio managers, together with the portfolio traders' judgment as to the execution capability of the broker or dealer. In certain instances, portfolio managers may directly place trades and allocate brokerage. In either case, the Manager's executive officers supervise the allocation of brokerage.

For Equity Funds, transactions in securities other than those for which an exchange is the primary market are generally done with principals or market makers. In transactions on foreign exchanges, a Fund may be required to pay fixed brokerage commissions and therefore would not have the benefit of negotiated commissions that are available in U.S. markets. Brokerage commissions are paid primarily for transactions in listed securities or for certain fixed-income agency transactions executed in the secondary market. Otherwise, brokerage commissions are paid only if it appears likely that a better price or execution can be obtained by doing so. In an option transaction, a Fund ordinarily uses the same broker for the purchase or sale of the option and any transaction in the securities to which the option relates.

For the Fixed-Income Funds, most securities purchases made by a Fund are in principal transactions at net prices. A Fund usually deals directly with the selling or purchasing principal or market maker without incurring charges for the services of a broker on its behalf unless the Manager determines that a better price or execution may be obtained by using the services of a broker. Therefore, a Fund does not incur substantial brokerage costs. Portfolio securities purchased from underwriters include a commission or concession paid by the issuer to the underwriter in the price of the security. Portfolio securities purchased from dealers include a spread between the bid and asked price. In an option transaction, a Fund ordinarily uses the same broker for the purchase or sale of the option and any transaction in the investment to which the option relates.

Other accounts advised by the Manager have investment policies similar to those of the Funds. Those other accounts may purchase or sell the same securities as a Fund at the same time as that Fund, which could affect the supply and price of the securities. If two or more accounts advised by the Manager purchase the same security on the same day from the same dealer, the transactions under those combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each account. When possible, the Manager tries to combine concurrent orders to purchase or sell the same security by more than one of the accounts managed by the Manager or its affiliates. The transactions under those combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each account.

Rule 12b-1 under the Investment Company Act prohibits any fund from compensating a broker or dealer for promoting or selling the fund's shares by (1) directing to that broker or dealer any of the fund's portfolio transactions, or (2) directing any other remuneration to that broker or dealer, such as commissions, mark-ups, mark downs or other fees from the fund's portfolio transactions, that were effected by another broker or dealer (these latter arrangements are considered to be a type of "step-out" transaction). In other words, a fund and its investment adviser cannot use the fund's brokerage for the purpose of rewarding broker-dealers for selling the fund's shares.

However, the Rule permits funds to effect brokerage transactions through firms that also sell fund shares, provided that certain procedures are adopted to prevent a quid pro quo with respect to portfolio brokerage allocations. As permitted by the Rule, the Manager has adopted procedures (and the Funds' Board of Trustees has approved those procedures) that permit the Funds to direct portfolio securities transactions to brokers or dealers that also promote or sell shares of the Funds, subject to the "best execution" considerations discussed above. Those procedures are designed to prevent: (1) the Manager's personnel who effect the Funds' portfolio transactions from taking into account a broker's or dealer's promotion or sales of the Funds shares when allocating the Funds' portfolio transactions, and (2) the Funds, the Manager and the Distributor from entering into agreements or understandings under which the Manager directs or is expected to direct the Funds' brokerage directly, or through a "step-out" arrangement, to any broker or dealer in consideration of that broker's or dealer's promotion or sale of the Funds' shares or the shares of any of the other Oppenheimer funds.

The investment advisory agreement permits the Manager to allocate brokerage for research services. The research services provided by a particular broker may be useful both to the Funds and to one or more of the other accounts advised by the Manager or its affiliates. Investment research may be supplied to the Manager by the broker or by a third party at the instance of a broker through which trades are placed.

Investment research services include information and analysis on particular companies and industries as well as market or economic trends and portfolio strategy, market quotations for portfolio evaluations, analytical software and similar products and services. If a research service also assists the Manager in a non-research capacity (such as bookkeeping or other administrative functions), then only the percentage or component that provides assistance to the Manager in the investment decision-making process may be paid in commission dollars.

Although the Manager currently does not do so, the Board of Trustees may permit the Manager to use stated commissions on secondary fixed-income agency trades to obtain research if the broker represents to the Manager that: (i) the trade is not from or for the broker's own inventory, (ii) the trade was executed by the broker on an agency basis at the stated commission, and (iii) the trade is not a riskless principal transaction. The Board of Trustees may also permit the Manager to use commissions on fixed-price offerings to obtain research, in the same manner as is permitted for agency transactions.

The research services provided by brokers broaden the scope and supplement the research activities of the Manager. That research provides additional views and comparisons for consideration, and helps the Manager to obtain market information for the valuation of securities that are either held in the Funds' portfolio or are being considered for purchase. The Manager provides information to the Board about the commissions paid to brokers furnishing such services, together with the Manager's representation that the amount of such commissions was reasonably related to the value or benefit of such services.

During the fiscal years ended December 31, 2006, 2007 and 2008, the Fund paid the total brokerage commissions indicated in the chart below:

Fund	Total Brokerage Commissions Paid by the Funds*
	2006	2007	2008
Balanced Fund/VA	$340,353	$331,665	$366,700
Capital Appreciation Fund/VA	$1,864,243	$2,112,465	$2,131,803
Core Bond Fund/VA	$0	$51,115	$79,727
Global Securities Fund/VA	$1,620,456	$1,409,080	$1,165,815
High Income Fund/VA	$15,001	$99,156	$45,699
Main Street Fund®/VA	$2,615,212	$2,631,874	$1,650,295
Main Street Small Cap Fund®/VA	$2,269,615	$2,165,986	$1,480,655
MidCap Fund/VA	$1,193,806	$1,778,422	$1,186,270
Strategic Bond Fund/VA	$106,356	$969,370	$541,579
Value Fund/VA	$5,456	$13,231	$16,525

*     Amounts do not include spreads or commissions on principal transactions on a net trade basis.

During the fiscal year ended December 31, 2008, the Fund paid the following amounts in commissions to firms that provide brokerage and research services to the Fund with respect to the aggregate portfolio transactions indicated. All such transactions were on a "best execution" basis, as described above. The provision of research services was not necessarily a factor in the placement of all such transactions.

Fund	Commissions Paid to Firms that Provide Research	Aggregate Transactions by Firms that Provide Research
Balanced Fund/VA	$277,402	$264,387,591
Capital Appreciation Fund/VA	$1,794,966	$1,915,541,092
Core Bond Fund/VA	$0	$0
Global Securities Fund/VA	$997,278	$985,822,391
High Income Fund/VA	$0	$0
Main Street Fund®/VA	$1,453,269	$4,659,174,593
Main Street Small Cap Fund®/VA	$888,389	$1,842,357,678
MidCap Fund/VA	$941,847	$999,727,405
Strategic Bond Fund/VA	$0	$0
Value Fund/VA	$14,123	$17,927,581

Distribution and Service Plans (Service Shares and Class 4 Shares)

The Distributor. Under its General Distributor's Agreement with each Fund, OppenheimerFunds Distributor, Inc. ("OFDI" or the "Distributor") will act as the principal underwriter for the Funds' Service shares and Class 4 shares only.

Each Fund has adopted a Distribution and Service Plan under Rule 12b-1 of the Investment Company Act (a "Plan") for its Service shares and Class 4 shares, although as of December 31, 2008, only Global Securities Fund/VA and High Income Fund/VA offered Class 4 shares. Each Fund that offers Service shares and/or Class 4 shares will make compensation payments to the Distributor in connection with the distribution and/or servicing of those shares. The Distributor will pay insurance company separate account sponsors and other entities that offer and/or provide services to Service shares and Class 4 shares, as described in the applicable Fund's Prospectus.

Each Plan has been approved by a vote of (i) the Board of Trustees of the Trust, including a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on that Plan, and (ii) the Manager as the then-sole initial holder of such shares.

Under the Plans, the Funds currently use the fees it receives to pay insurance company separate account sponsors or their affiliates (each is referred to as a "Recipient") for personal services and account maintenance services they provide for their customers who hold Service and Class 4 shares. The services include, among others, answering customer inquiries about the Funds, assisting in establishing and maintaining accounts in the Funds, and providing other services at the request of a Fund.

Under the Plans, no payment will be made to any Recipient in any period if the aggregate net assets of a Fund's Service and Class 4 shares held by the Recipient for itself and its customers did not exceed a minimum amount, if any, that may be determined from time to time by a majority of the Trust's Independent Trustees. The Plans provide for a fee of 0.25% of average annual net assets (although the Board of Trustees had set the fee at 0.15% of average net assets for all series prior to May 1, 2003). As of December 31, 2008, the Board had set no minimum asset amount. For the fiscal year ended December 31, 2008, all payments made under the Service share Plan were paid by the Distributor, to Recipients (including Recipients affiliated with the Manager).

The Service shares class payments during the fiscal year ended December 31, 2008, for all Funds having Service shares outstanding as of that date, were as follows:

Fund	Service Plan Payments by OFDI
Balanced Fund/VA Service Shares	$250,142
Capital Appreciation Fund/VA Service Shares	$1,131,349
Core Bond Fund/VA Service Shares	$249,916
Global Securities Fund/VA Service Shares	$2,631,693
Global Securities Fund/VA Class 4	$234,211
High Income Fund/VA Service Shares	$287,674
High Income Fund/VA Class 4	$24,493
Main Street Fund® /VA Service Shares	$3,174,088
Main Street Small Cap Fund®/VA Service Shares	$1,924,705
MidCap Fund/VA Service Shares	$89,039
Strategic Bond Fund/VA Service Shares	$7,876,236
Value Fund/VA Service Shares	$11,571

Under the Plans, the Manager and the Distributor may make payments to affiliates. In their sole discretion, they may also from time to time make substantial payments from their own resources, which include the profits the Manager derives from the advisory fees it receives from the Funds, to compensate brokers, dealers, financial institutions and other intermediaries for providing distribution assistance and/or administrative services or that otherwise promote sales of the Funds' shares. These payments, some of which may be referred to as "revenue sharing," may relate to the Funds' inclusion on a financial intermediary's preferred list of funds offered to its clients.

Unless a plan is terminated as described below, each Plan continues in effect from year to year but only if the Trust's Board of Trustees and its Independent Trustees specially vote annually to approve its continuance. Approval must be by a vote cast in person at a meeting called for the purpose of voting on continuing each Plan. Each Plan may be terminated at any time by the vote of a majority of the Independent Trustees or by the vote of the holders of a "majority" (as defined in the Investment Company Act) of the outstanding Service shares or Class 4 shares. The Board of Trustees and the Independent Trustees must approve all material amendments to each plan. An amendment to increase materially the amount of payments to be made under a plan must be approved by shareholders of the class affected by the amendment.

While the plans are in effect and Service shares and/or Class 4 shares are outstanding, the Treasurer of the Trust shall provide separate written reports on each plan to the Board of Trustees at least quarterly for their review. The reports shall detail the amount of all payments made under a plan and the purpose for which the payments were made. Those reports are subject to the review and approval of the Independent Trustees.

Payments to Fund Intermediaries

Financial intermediaries may receive various forms of compensation or reimbursement from the Funds in the form of 12b-1 plan payments as described in the preceding section of this SAI. They may also receive payments or concessions from the Distributor, derived from sales charges paid by the clients of the financial intermediary, also as described in this SAI. Additionally, the Manager and/or the Distributor (including their affiliates) may make payments to financial intermediaries in connection with their offering and selling shares of the Fund and other Oppenheimer funds, providing marketing or promotional support, transaction processing and/or administrative services. Among the financial intermediaries that may receive these payments are brokers, dealers or insurance agents who sell and/or hold shares of the Funds, banks (including bank trust departments), registered investment advisers, insurance companies, retirement plan and qualified tuition program administrators, third party administrators, and other institutions that have selling, servicing or similar arrangements with the Manager or Distributor. The payments to intermediaries vary by the types of product sold, the features of the Funds' share class and the role played by the intermediary.

Possible types of payments to financial intermediaries include, without limitation, those discussed below.

·      Payments made by the Funds, or by an investor buying or selling shares of the Funds may include:

·      depending on the share class that the investor selects, contingent deferred sales charges or initial front-end sales charges, all or a portion of which front-end sales charges are payable by the Distributor to financial intermediaries (see " About Your Account" in the applicable Fund's Prospectus);

·      ongoing asset-based payments attributable to the share class selected, including fees payable under the Funds' distribution and/or service plans adopted under Rule 12b-1 under the Investment Company Act, which are paid from the Funds' assets and allocated to the class of shares to which the plan relates (see "About the Funds -- Distribution and Service Plans" above);

·      shareholder servicing payments for providing omnibus accounting, recordkeeping, networking, sub-transfer agency or other administrative or shareholder services, including retirement plan and 529 plan administrative services fees, which are paid from the assets of a Fund as reimbursement to the Manager or Distributor for expenses they incur on behalf of the Funds.

·      Payments made by the Manager or Distributor out of their respective resources and assets, which may include profits the Manager derives from investment advisory fees paid by the Funds . These payments are made at the discretion of the Manager and/or the Distributor. These payments, often referred to as "revenue sharing" payments, may be in addition to the payments by the Funds listed above.

·      These types of payments may reflect compensation for marketing support, support provided in offering the Funds or other Oppenheimer funds through certain trading platforms and programs, transaction processing or other services;

·      The Manager and Distributor each may also pay other compensation to the extent the payment is not prohibited by law or by any self-regulatory agency, such as FINRA. Payments are made based on the guidelines established by the Manager and Distributor, subject to applicable law.

These payments may provide an incentive to financial intermediaries to actively market or promote the sale of shares of the Funds or other Oppenheimer funds, or to support the marketing or promotional efforts of the Distributor in offering shares of the Funds or other Oppenheimer funds. In addition, some types of payments may provide a financial intermediary with an incentive to recommend the Fund or a particular share class. Financial intermediaries may earn profits on these payments, since the amount of the payment may exceed the cost of providing the service. Certain of these payments are subject to limitations under applicable law. Financial intermediaries may categorize and disclose these arrangements to their clients and to members of the public in a manner different from the disclosures in the Funds Prospectuses and this SAI. You should ask your financial intermediary for information about any payments it receives from the Funds, the Manager or the Distributor and any services it provides, as well as the fees and commissions it charges.

Although brokers or dealers that sell Fund shares may also act as a broker or dealer in connection with the execution of the purchase or sale of portfolio securities by the Fund or other Oppenheimer funds, a financial intermediary's sales of shares of the Fund or such other Oppenheimer funds is not a consideration for the Manager when choosing brokers or dealers to effect portfolio transactions for the Funds or such other Oppenheimer funds.

Revenue sharing payments can pay for distribution-related or asset retention items including, without limitation,

·      transactional support, one-time charges for setting up access for the Fund or other Oppenheimer funds on particular trading systems, and paying the intermediary' s networking fees;

·      program support, such as expenses related to including the Oppenheimer funds in retirement plans, college savings plans, fee-based advisory or wrap fee programs, fund "supermarkets," bank or trust company products or insurance companies' variable annuity or variable life insurance products;

·      placement on the dealer's list of offered funds and providing representatives of the Distributor with access to a financial intermediary's sales meetings, sales representatives and management representatives.

Additionally, the Manager or Distributor may make payments for firm support, such as business planning assistance, advertising, and educating a financial intermediary's sales personnel about the Oppenheimer funds and shareholder financial planning needs.

For the year ended December 31, 2008, the following financial intermediaries and/or their respective affiliates offered shares of the Oppenheimer funds and received revenue sharing or similar distribution-related payments from the Manager or the Distributor for marketing or program support:

1st Global Capital Company	Lincoln Benefit National Life
Advantage Capital Corporation	Lincoln Financial Advisors Corporation
Aegon USA	Lincoln Investment Planning, Inc.
Aetna Life Insurance & Annuity Company	Linsco Private Ledger Financial
AG Edwards & Sons, Inc.	Massachusetts Mutual Life Insurance Company
AIG Financial Advisors	Merrill Lynch Pierce Fenner & Smith Incorporated
AIG Life Variable Annuity Company	Merrill Lynch Insurance Group
Allianz Life Insurance Company	MetLife Investors Insurance Company
Allmerica Financial Life Insurance & Annuity Company	MetLife Investors Insurance Company - Security First
Allstate Life Insurance Company	MetLife Securities, Inc.
American General Annuity Insurance Company	Minnesota Life Insurance Company
American Enterprise Life Insurance Company	MML Investor Services, Inc.
American Portfolios Financial Services, Inc.	Mony Life Insurance Company
Ameritas Life Insurance Company	Morgan Stanley & Company, Inc.
Ameriprise Financial Services, Inc.	Multi-Financial Securities Corporation
Annuity Investors Life Insurance Company	Mutual Service Corporation
Associated Securities Corporation	NFP Securities, Inc.
AXA Advisors LLC	NRP Financial, Inc.
AXA Equitable Life Insurance Company	Nathan & Lewis Securities, Inc.
Banc of America Investment Services	National Planning Holdings, Inc.
CCO Investment Services Corporation	National Planning Corporation
Cadaret Grant & Company, Inc.	Nationwide Investment Services, Inc.
Charles Schwab & Company, Inc.	New England Securities, Inc.
Chase Investment Services Corporation	New York Life Insurance & Annuity Company
Citigroup Global Markets Inc.	Oppenheimer & Company, Inc.
CitiStreet Advisors LLC	PFS Investments, Inc.
Citizen's Bank of Rhode Island	Park Avenue Securities LLC
Columbus Life Insurance Company	Pershing LLC
Commonwealth Financial Network	Phoenix Life Insurance Company
Compass Group Investment Advisors	Plan Member Securities
CUNA Brokerage Services, Inc.	Prime Capital Services, Inc.
CUNA Mutual Insurance Society	Primevest Financial Services, Inc.
CUSO Financial Services, LLP	Protective Life Insurance Company
E*TRADE Clearing LLC	Prudential Investment Management Services LLC
Edward D. Jones & Company	Raymond James & Associates, Inc.
Essex National Securities, Inc.	Raymond James Financial Services, Inc.
Federal Kemper Life Assurance Company	RBC Dain Rauscher Inc.
Financial Network	Riversource Life Insurance Company
Financial Services Corporation	Royal Alliance Associates, Inc.
GE Financial Assurance	Securities America, Inc.
GE Life & Annuity Company	Security Benefit Life Insurance Company
Genworth Financial, Inc.	Signator Investments, Inc.
GlenBrook Life and Annuity Company	SII Investments, Inc.
Great West Life Insurance Company	Sorrento Pacific Financial LLC
GWFS Equities, Inc.	State Farm VP Management Corporation
Hartford Life Insurance Company	Sun Life Annuity Company Ltd.
HD Vest Investment Services, Inc.	Sun Life Assurance Company of Canada
Hewitt Associates LLC	Sun Life Insurance & Annuity Company of New York
HSBC Securities USA, Inc.	Sun Life Insurance Company
IFMG Securities, Inc.	Sun Trust Securities, Inc.
ING Financial Advisers LLC	Thrivent Financial Services, Inc.
ING Financial Partners, Inc.	UBS Financial Services, Inc.
Invest Financial Corporation	Union Central Life Insurance Company
Investment Centers of America	Uvest
Jefferson Pilot Life Insurance Company	Valic
Jefferson Pilot Securities Corporation	Wachovia Securities, Inc.
John Hancock Life Insurance Company	Walnut Street Securities, Inc.
JP Morgan Securities, Inc.	Waterstone Financial Group
Kemper Investors Life Insurance Company	Wells Fargo Investments
Legend Equities Company	Wescom Financial Services

For the year ended December 31, 2008, the following firms, which in some cases are broker-dealers, received payments from the Manager or the Distributor for administrative or other services provided (other than revenue sharing arrangements), as described above:

1st Global Capital Company	Lincoln National Life Insurance Company
AG Edwards & Sons, Inc.	Linsco Private Ledger Financial
ACS HR Solutions	Marshall & Ilsley Trust Company, Inc.
ADP	Massachusetts Mutual Life Insurance Company
Administrative Management Group	Matrix Settlement & Clearance Services
Aetna Life Insurance & Annuity Company	Mercer HR Services
Alliance Benefit Group	Merrill Lynch Pierce Fenner & Smith Incorporated
American Diversified Distributors	Mesirow Financial, Inc.
American Funds	MetLife Securities, Inc.
American Stock & Transfer	MFS Investment Management
American United Life Insurance Company	Mid Atlantic Capital Company
Ameriprise Financial Services, Inc.	Milliman USA
Ameritrade, Inc.	Morgan Keegan & Company, Inc.
Ascensus	Morgan Stanley & Company, Inc.
AXA Equitable Life Insurance Company	Mutual of Omaha Life Insurance Company
Benefit Administration, Inc.	Nathan & Lewis Securities, Inc.
Benefit Plans Administration	National City Bank
Benetech, Inc.	National Deferred Company
Boston Financial Data Services	National Financial
Ceridian	National Planning Corporation
Charles Schwab & Company, Inc.	Nationwide Life Insurance Company
Citigroup Global Markets Inc	Newport Retirement Services, Inc.
CitiStreet	Northwest Plan Services, Inc.
City National Investments	NY Life Benefits
Clark Consulting	Oppenheimer & Co, Inc.
Columbia Management	Peoples Securities, Inc.
CPI Qualified Plan Consultants, Inc.	Pershing LLC
DA Davidson & Company	PFPC
Daily Access. Com, Inc.	Plan Administrators, Inc.
Davenport & Company, LLC	Plan Member Securities
David Lerner Associates, Inc.	Primevest Financial Services, Inc.
Digital Retirement Solutions, Inc.	Princeton Retirement Services
Diversified Investment Advisors Inc.	Principal Life Insurance Company
DR, Inc.	Prudential Investment Management Services LLC
Dyatech, LLC	PSMI Group, Inc.
E*TRADE Clearing LLC	Quads Trust Company
Edward D. Jones & Company	Raymond James & Associates, Inc.
ERISA Administrative Services, Inc.	Reliance Trust Company
ExpertPlan.com	Reliastar Life Insurance Company
FASCore, LLC	Robert W. Baird & Company
Ferris Baker Watts, Inc.	RSM McGladrey
Fidelity	Scott & Stringfellow, Inc.
First Clearing LLC	Scottrade, Inc.
First Southwest Company	SII Investments, Inc.
First Trust – Datalynx	Southwest Securities, Inc.
First Trust Corporation	Standard Insurance Company
Geller Group	Stanley, Hunt, Dupree & Rhine
Great West Life Insurance Company	Stanton Group, Inc.
H&R Block Financial Advisors, Inc.	Sterne Agee & Leach, Inc.
Hartford Life Insurance Company	Stifel Nicolaus & Company, Inc.
HD Vest Investment Services	Sun Trust Securities, Inc.
Hewitt Associates LLC	Symetra Financial Corporation
HSBC Brokerage USA, Inc.	T. Rowe Price
ICMA - RC Services	The 401k Company
Independent Plan Coordinators	The Retirement Plan Company, LLC
Ingham Group	Transamerica Retirement Services
Interactive Retirement Systems	TruSource Union Bank of CA
Intuition	UBS Financial Services, Inc.
Invesmart	Unified Fund Services
Invest Financial Corporation	Union Bank
Janney Montgomery Scott, Inc.	US Clearing Company
JJB Hillard W. L. Lyons, Inc.	USAA Investment Management Company
John Hancock Life Insurance Company	USI Consulting Group
JP Morgan Securities, Inc.	Valic Retirement Services
July Business Services	Vanguard Group
Kaufman & Goble	Wachovia Securities, Inc.
Legend Equities Company	Wedbush Morgan Securities
Lehman Brothers, Inc.	Wells Fargo Investments
Liberty Funds Distributor, Inc.	Wilmington Trust
Lincoln Investment Planning, Inc.

Performance of the Funds

Explanation of Performance Terminology. The Funds use a variety of terms to illustrate their investment performance. Those terms include "cumulative total return," "average annual total return," "average annual total return at net asset value" and "total return at net asset value." An explanation of how total returns are calculated is set forth below. The charts below show the Funds' performance as of the Funds' most recent fiscal year end. You can obtain current performance information by calling the Funds' Transfer Agent at 1.800.981.2871 or by visiting the OppenheimerFunds Internet website at www.oppenheimerfunds.com.

 

The Funds' illustrations of their performance data in advertisements must comply with rules of the SEC. Those rules describe the types of performance data that may be used and how it is to be calculated. In general, any advertisement by a Fund of its performance data must include the average annual total returns for the advertised class of shares of that Fund.

Use of standardized performance calculations enables an investor to compare the Funds' performance to the performance of other funds for the same periods. However, a number of factors should be considered before using the Funds' performance information as a basis for comparison with other investments:

·      Yields and total returns measure the performance of a hypothetical account in a Fund over various periods and do not show the performance of each shareholder's account. Your account's performance will vary from the model performance data if the participating insurance company selects to have dividends paid in cash, or you buy or sell shares during the period, or you bought your shares at a different time and price than the shares used in the model.

·      The Funds' performance does not reflect the charges deducted from an investor's separate account by the insurance company or other sponsor of that separate account, which vary from product to product. If these charges were deducted, performance will be lower than as described in the Funds' Prospectus and Statement of Additional Information. In addition, the separate accounts may have inception dates different from those of the Funds. The sponsor for your insurance product can provide performance information that reflects those charges and inception dates.

·      The Funds' performance returns may not reflect the effect of taxes on dividends and capital gains distributions.

·      An investment in the Funds is not insured by the FDIC or any other government agency.

·      The principal value of the Funds' shares, its yields and total returns are not guaranteed and normally will fluctuate on a daily basis.

·      The preceding statement does not apply to Money Fund/VA, which seeks to maintain a stable net asset value of $1.00 per share. There can be no assurance that Money Fund/VA will be able to do so.

·      When an investor's shares are redeemed, they may be worth more or less than their original cost.

·      Oppenheimer MidCap Fund/VA did not adopt its investment policy on investing in mid-cap stocks (see page 40) until April 30, 2006.

·      Yields and total returns for any given past period represent historical performance information and are not, and should not be considered, a prediction of future yields or returns. The Funds' total returns should not be expected to be the same as the returns of other Oppenheimer funds, whether or not such other funds have the same portfolio managers and/or similar names.

The performance of each class of shares is shown separately, because the performance of each class of shares will usually be different. That is because of the different kinds of expenses each class bears. The yields and total returns of each class of shares of the Funds are affected by market conditions, the quality of that Fund's investments, the maturity of debt investments, the types of investments that Fund holds, and its operating expenses that are allocated to the particular class.

n      Yields. The Fixed Income Funds use a variety of different yields to illustrate their current returns. Each class of shares calculates its yield separately because of the different expenses that affect each class.

·      Standardized Yield. The "standardized yield" (sometimes referred to just as "yield") is shown for a class of shares for a stated 30-day period. It is not based on actual distributions paid by the Fixed Income Funds to shareholders in the 30-day period, but is a hypothetical yield based upon the net investment income from the Fixed Income Funds' portfolio investments for that period. It may therefore differ from the "dividend yield" for the same class of shares, described below.

Standardized yield is calculated using the following formula set forth in rules adopted by the SEC, designed to assure uniformity in the way that all funds calculate their yields:

Standardized Yield	= 2[(	a - b	+1)6	-1 ]
		cd

The symbols above represent the following factors:

a =     dividends and interest earned during the 30-day period.

b =     expenses accrued for the period (net of any expense assumptions).

c =     the average daily number of shares of that class outstanding during the 30-day period that were entitled to receive dividends.

d =     the maximum offering price per share of that class on the last day of the period, adjusted for undistributed net investment income.

The standardized yield for a particular 30-day period may differ from the yield for other periods. The SEC formula assumes that the standardized yield for a 30-day period occurs at a constant rate for a six-month period and is annualized at the end of the six-month period. Additionally, because each class of shares is subject to different expenses, it is likely that the standardized yields of the Fixed Income Funds' classes of shares will differ for any 30-day period.

·      Dividend Yield. The Fixed Income Funds may quote a "dividend yield" for each class of its shares. Dividend yield is based on the dividends paid on a class of shares during the actual dividend period. To calculate dividend yield, the dividends of a class declared during a stated period are added together, and the sum is multiplied by 12 (to annualize the yield) and divided by the maximum offering price on the last day of the dividend period. Because the Fixed Income Funds pay their annual dividend in March of each year, dividend yield is shown for the 30 days ended March 31, 2008. The formula is shown below:

Dividend Yield = Distribution Paid ÷ No. of Days in the Period x No. of Days in the Calendar Year

Maximum Offering Price (payment date)

Fund	Standardized Yield for the 30-Day Period Ended 12/31/08	Dividend Yield for the 30-Day Period Ended 3/31/08
Core Bond Fund/VA Non-Service Shares	9.36%	4.53%
Core Bond Fund/VA Service Shares	9.13%	4.38%
High Income Fund/VA Non-Service Shares	19.50%	7.39%
High Income Fund/VA Class 2 Shares	21.30%	7.07%
High Income Fund/VA Class 3 Shares	21.74%	7.36%
High Income Fund/VA Class 4 Shares	20.99%	7.19%
Strategic Bond Fund/VA Non-Service Shares	5.24%	5.07%
Strategic Bond Fund/VA Service Shares	4.96%	4.81%

·      Money Fund/VA Yields. The current yield for Money Fund/VA is calculated for a seven-day period of time as follows. First, a base period return is calculated for the seven-day period by determining the net change in the value of a hypothetical pre-existing account having one share at the beginning of the seven-day period. The change includes dividends declared on the original share and dividends declared on any shares purchased with dividends on that share, but such dividends are adjusted to exclude any realized or unrealized capital gains or losses affecting the dividends declared. Next, the base period return is multiplied by 365/7 to obtain the current yield to the nearest hundredth of one percent.

The compounded effective yield for a seven-day period is calculated by

(1)     adding 1 to the base period return (obtained as described above),

(2)     raising the sum to a power equal to 365 divided by 7, and

(3)     subtracting 1 from the result.

The yield as calculated above may vary for accounts less than approximately $100 in value due to the effect of rounding off each daily dividend to the nearest full cent. The calculation of yield under either procedure described above does not take into consideration any realized or unrealized gains or losses on the Funds' portfolio securities which may affect dividends. Therefore, the return on dividends declared during a period may not be the same on an annualized basis as the yield for that period.

|X|     Total Return Information. There are different types of "total returns" to measure the Funds' performance. Total return is the change in value of a hypothetical investment in a Fund over a given period, assuming that all dividends and capital gains distributions are reinvested in additional shares and that the investment is redeemed at the end of the period. Because of differences in expenses for each class of shares, the total returns for each class are separately measured. The cumulative total return measures the change in value over the entire period (for example, ten years). An average annual total return shows the average rate of return for each year in a period that would produce the cumulative total return over the entire period. However, average annual total returns do not show actual year-by-year performance. Each Fund uses standardized calculations for its total returns as prescribed by the SEC. The methodology is discussed below.

·      Average Annual Total Return. The "average annual total return" of each class is an average annual compounded rate of return for each year in a specified number of years. It is the rate of return based on the change in value of a hypothetical initial investment of $1,000 ("P" in the formula below) held for a number of years ("n" in the formula) to achieve an Ending Redeemable Value ("ERV" in the formula) of that investment, according to the following formula:

                                                                                                                                       1/n

                                                                                                                      ERV      - 1 = Average Annual Total Return

P

·      Cumulative Total Return. The "cumulative total return" calculation measures the change in value of a hypothetical investment of $1,000 over an entire period of years. Its calculation uses some of the same factors as average annual total return, but it does not average the rate of return on an annual basis. Cumulative total return is determined as follows:

ERV - P

                                                                                                                _________  = Total Return

P

The Funds' Total Returns for the Periods Ended 12/31/08
Fund and Class/Inception Date	1 Year	5 Years (or life-of-class)	10 Years (or life-of-class)
Balanced Fund/VA Non-Service Shares (2/9/87)	-43.47%	-5.70%	0.16%
Balanced Fund/VA Service Shares (5/1/02)	-43.62%	-5.94%	-2.73%
Capital Appreciation Fund/VA Non-Service Shares (4/3/85)	-45.52%	-5.48%	-1.13%
Capital Appreciation Fund/VA Service Shares (9/18/01)	-45.66%	-5.72%	-2.69%
Core Bond Fund/VA Non-Service Shares (4/3/85)	-39.05%	-6.23%	-0.50%
Core Bond Fund/VA Service Shares (5/1/02)	-39.07%	-6.45%	-2.85%
Global Securities Fund/VA Non-Service Shares (11/12/90)	-40.19%	0.39%	5.22%
Global Securities Fund/VA Class 2 Shares (7/13/00)	-40.33%	0.15%	-1.10%
Global Securities Fund/VA Class 3 shares (5/1/03)	-40.19%	0.40%	6.96%
Global Securities Fund/VA Class 4 shares (5/3/04)	-40.35%	-0.30%	N/A
High Income Fund/VA Non-Service Shares (4/30/86)	-78.67%	-23.62%	-10.72%
High Income Fund/VA Service Shares (9/18/01)	-78.57%	-23.71%	-14.61%
High Income Fund/VA Class 3 Shares ( 5/1/07)	-78.89%	-61.48%	N/A
High Income Fund/VA Class 4 Shares (5/1/07 )	-78.63%	-61.22%	N/A
Main Street Fund®/VA Non-Service Shares (7/5/95)	-38.47%	-3.03%	-1.27%
Main Street Fund®/VA Service Shares (7/13/00)	-38.63%	-3.28%	-4.33%
Main Street Small Cap Fund®/VA Non-Service Shares (5/1/98)	-37.83%	-1.50%	3.01%
Main Street Small Cap Fund®/VA Service Shares (7/16/01)	-38.00%	-1.73%	1.98%
MidCap Fund/VA Non-Service Shares (8/15/86)	-49.07%	-5.59%	-2.68%
MidCap Fund/VA Service Shares (10/16/00)	-49.21%	-5.85%	-12.57%
Money Fund/VA (4/3/85)	2.78%	3.25%	3.35%
Strategic Bond Fund/VA Non-Service Shares (5/3/93)	-14.21%	2.45%	4.71%
Strategic Bond Fund/VA Service Shares (3/19/01)	-14.49%	2.23%	4.67%
Value Fund/VA Service Shares (1/2/03)	-36.43%	-1.43%	3.09%
Value Fund/VA Non-Service Shares (9/15/06)	-41.62%	-16.67%	N/A

Other Performance Comparisons. The Funds compare their performance annually to that of an appropriate broadly-based market index in its Annual Report to shareholders. You can obtain that information by contacting the Transfer Agent at the addresses or telephone numbers shown on the cover of this SAI. The Funds may also compare their performance to that of other investments, including other mutual funds, or use rankings of its performance by independent ranking entities. Examples of these performance comparisons are set forth below.

     |X|     Lipper Rankings. From time to time the Funds may publish the ranking of their performance of each class of shares by Lipper, Inc. ("Lipper"). Lipper is a widely-recognized independent mutual fund monitoring service. Lipper monitors the performance of regulated investment companies, including the Funds, and ranks their performance for various periods in categories based on investment styles. The Lipper performance rankings are based on total returns that include the reinvestment of capital gain distributions and income dividends but do not take sales charges or taxes into consideration. Lipper also publishes "peer-group" indices of the performance of all mutual funds in a category that it monitors and averages of the performance of the funds in particular categories.
 

|X|     Performance Rankings and Comparisons by Other Entities and Publications. From time to time the Funds may include in advertisements and sales literature performance information about the Funds cited in newspapers and other periodicals such as The New York Times, The Wall Street Journal, Barron's, or similar publications. That information may include performance quotations from other sources, including Lipper and Morningstar. The performance of the Funds' classes of shares may be compared in publications to the performance of various market indices or other investments, and averages, performance rankings or other benchmarks prepared by recognized mutual fund statistical services.

Investors may also wish to compare the returns on the Funds' share classes to the return on fixed-income investments available from banks and thrift institutions. Those include certificates of deposit, ordinary interest-paying checking and savings accounts, and other forms of fixed or variable time deposits, and various other instruments such as Treasury bills. However, the Funds' returns and share price are not guaranteed or insured by the FDIC or any other agency and will fluctuate daily, while bank depository obligations may be insured by the FDIC and may provide fixed rates of return. Repayment of principal and payment of interest on Treasury securities is backed by the full faith and credit of the U.S. government.

From time to time, the Funds may publish rankings or ratings of the Manager or Transfer Agent, and of the investor services provided by them to shareholders of the Oppenheimer funds, other than performance rankings of the Oppenheimer funds themselves. Those ratings or rankings of shareholder and investor services by third parties may include comparisons of their services to those provided by other mutual fund families selected by the rating or ranking services. They may be based upon the opinions of the rating or ranking service itself, using its research or judgment, or based upon surveys of investors, brokers, insurance sponsors, shareholders or others.

From time to time the Funds may include in its advertisements and sales literature the total return performance of a hypothetical investment account that includes shares of the Funds and other Oppenheimer funds. The combined account may be part of an illustration of an asset allocation model or similar presentation. The account performance may combine total return performance of the Funds and the total return performance of other Oppenheimer funds included in the account. Additionally, from time to time, the Funds' advertisements and sales literature may include, for illustrative or comparative purposes, statistical data or other information about general or specific market and economic conditions. That may include, for example,

·      information about the performance of certain securities or commodities markets or segments of those markets,

·      information about the performance of the economies of particular countries or regions,

·      the earnings of companies included in segments of particular industries, sectors, securities markets, countries or regions,

·      the availability of different types of securities or offerings of securities,

·      information relating to the gross national or gross domestic product of the United States or other countries or regions,

·      comparisons of various market sectors or indices to demonstrate performance, risk, or other characteristics of the Funds.

about your account

How to Buy and Sell Shares

Shares of the Funds are sold to provide benefits under variable life insurance policies and variable annuity and other insurance company separate accounts, as explained in the Prospectuses of the Funds and of the insurance product you have selected. Instructions from an investor to buy or sell shares of a Fund should be directed to the insurance sponsor for the investor's separate account, or that insurance sponsor's agent.

|X|     Allocation of Expenses. Each Fund pays expenses related to its daily operations, such as custodian fees, Trustees' fees, transfer agency fees, legal fees and auditing costs. Those expenses are paid out of each Fund's assets and are not paid directly by shareholders. However, those expenses reduce the net asset values of shares, and therefore are indirectly borne by shareholders through their investment.

For each Fund that has more than one class of shares outstanding, methodology for calculating the net asset value, dividends and distributions of each Fund's share classes recognizes two types of expenses. General expenses that do not pertain specifically to any one class are allocated pro rata to the shares of all classes. The allocation is based on the percentage of a Fund's total assets that is represented by the assets of each class, and then equally to each outstanding share within a given class. Such general expenses include management fees, legal, bookkeeping and audit fees, printing and mailing costs of shareholder reports, Prospectuses, Statements of Additional Information and other materials for current shareholders, fees to unaffiliated Trustees, custodian expenses, share issuance costs, organization and start-up costs, interest, taxes and brokerage commissions, and non-recurring expenses, such as litigation costs.

Other expenses that are directly attributable to a particular class are allocated equally to each outstanding share within that class. Examples of such expenses include distribution and service plan (12b-1) fees, transfer and shareholder servicing agent fees and expenses, and shareholder meeting expenses (to the extent that such expenses pertain only to a specific class).

Determination of Net Asset Values Per Share. The net asset values per share of each class of shares of the Funds are determined as of the close of business of the NYSE on each day that the NYSE is open. The calculation is done by dividing the value of a Fund's net assets attributable to a class by the number of shares of that class that are outstanding. The NYSE normally closes at 4:00 p.m., Eastern time, but may close earlier on some other days (for example, in case of weather emergencies or on days falling before a U.S. holiday). All references to time in this SAI mean "Eastern time." The NYSE's most recent annual announcement (which is subject to change) states that it will close on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.
 
     Dealers other than NYSE members may conduct trading in certain securities on days on which the NYSE is closed (including weekends and holidays) or after 4:00 p.m. on a regular business day. Because the Funds' net asset values will not be calculated on those days, the Funds' net asset values per share may be significantly affected on such days when shareholders may not purchase or redeem shares. Additionally, trading on many foreign stock exchanges and over-the-counter markets normally is completed before the close of the NYSE.
 

Changes in the values of securities traded on foreign exchanges or markets as a result of events that occur after the prices of those securities are determined, but before the close of the NYSE, will not be reflected in the Funds' calculation of its net asset values that day unless the Manager determines that the event is likely to effect a material change in the value of the security. The Manager, or an internal valuation committee established by the Manager, as applicable, may establish a valuation, under procedures established by the Board and subject to the approval, ratification and confirmation by the Board at its next ensuing meeting.

n     Securities Valuation. The Funds' Board of Trustees has established procedures for the valuation of the Funds' securities. In general those procedures for all Funds other than Money Fund/VA are as follows:

·      Equity securities traded on a U.S. securities exchange are valued as follows:

(1)      if last sale information is regularly reported, they are valued at the last reported sale price on the principal exchange on which they are traded, on that day, or

(2)      if last sale information is not available on a valuation date, they are valued at the last reported sale price preceding the valuation date if it is within the spread of the closing "bid" and "asked" prices on the valuation date or, if not, at the closing "bid" price on the valuation date.

·      Equity securities traded on a foreign securities exchange generally are valued in one of the following ways:

(1)      at the last sale price available to the pricing service approved by the Board of Trustees, or

(2)      at the last sale price obtained by the Manager from the report of the principal exchange on which the security is traded at its last trading session on or immediately before the valuation date, or

(3)      at the mean between the "bid" and "asked" prices obtained from the principal exchange on which the security is traded or, on the basis of reasonable inquiry, from two market makers in the security.

·      Long-term debt securities having a remaining maturity in excess of 60 days are valued based on the mean between the "bid" and "asked" prices determined by a portfolio pricing service approved by the Funds' Board of Trustees or obtained by the Manager from two active market makers in the security on the basis of reasonable inquiry.

·      The following securities are valued at the mean between the "bid" and "asked" prices determined by a pricing service approved by the Funds' Board of Trustees or obtained by the Manager from two active market makers in the security on the basis of reasonable inquiry:

(1)      debt instruments that have a maturity of more than 397 days when issued,

(2)      debt instruments that had a maturity of 397 days or less when issued and have a remaining maturity of more than 60 days, and

(3)      non-money market debt instruments that had a maturity of 397 days or less when issued and which have a remaining maturity of 60 days or less.

·      The following securities are valued at cost, adjusted for amortization of premiums and accretion of discounts:

(1)      money market debt securities held by a non-money market fund that had a maturity of less than 397 days when issued that have a remaining maturity of 60 days or less, and

(2)      debt instruments held by a money market fund that have a remaining maturity of 397 days or less.

·      Securities (including restricted securities) not having readily-available market quotations are valued at fair value determined under the Board's procedures. If the Manager is unable to locate two market makers willing to give quotes, a security may be priced at the mean between the "bid" and "asked" prices provided by a single active market maker (which in certain cases may be the "bid" price if no "asked" price is available).

In the case of U.S. government securities, mortgage-backed securities, corporate bonds and foreign government securities, when last sale information is not generally available, the Manager may use pricing services approved by the Board of Trustees. The pricing service may use "matrix" comparisons to the prices for comparable instruments on the basis of quality, yield and maturity. Other special factors may be involved (such as the tax-exempt status of the interest paid by municipal securities). The Manager will monitor the accuracy of the pricing services. That monitoring may include comparing prices used for portfolio valuation to actual sales prices of selected securities.

The closing prices in the New York foreign exchange market on a particular business day that are provided to the Manager by a bank, dealer or pricing service that the Manager has determined to be reliable are used to value foreign currency, including forward contracts, and to convert to U.S. dollars securities that are denominated in foreign currency.

Puts, calls, and futures are valued at the last sale price on the principal exchange on which they are traded, as determined by a pricing service approved by the Board of Trustees or by the Manager. If there were no sales that day, they shall be valued at the last sale price on the preceding trading day if it is within the spread of the closing "bid" and "asked" prices on the principal exchange on the valuation date. If not, the value shall be the closing bid price on the principal exchange on the valuation date. If the put, call or future is not traded on an exchange, it shall be valued by the mean between "bid" and "asked" prices obtained by the Manager from two active market makers. In certain cases that may be at the "bid" price if no "asked" price is available.

When a Fund writes an option, an amount equal to the premium received is included in that Fund's Statement of Assets and Liabilities as an asset. An equivalent credit is included in the liability section. The credit is adjusted ("marked-to-market") to reflect the current market value of the option. In determining the Funds' gain on investments, if a call or put written by a Fund is exercised, the proceeds are increased by the premium received. If a call or put written by a Fund expires, that Fund has a gain in the amount of the premium. If a Fund enters into a closing purchase transaction, it will have a gain or loss, depending on whether the premium received was more or less than the cost of the closing transaction. If a Fund exercises a put it holds, the amount that Fund receives on its sale of the underlying investment is reduced by the amount of premium paid by that Fund.

Money Fund/VA Net Asset Valuation Per Share. Money Fund/VA will seek to maintain a net asset value of $1.00 per share for purchases and redemptions. There can be no assurance it will be able to do so. Money Fund/VA operates under Rule 2a-7 under which it may use the amortized cost method of valuing their shares. The Funds' Board of Trustees has adopted procedures for that purpose. The amortized cost method values a security initially at its cost and thereafter assumes a constant amortization of any premium or accretion of any discount, regardless of the impact of fluctuating interest rates on the market value of the security. This method does not take into account unrealized capital gains or losses.
 

The Funds' Board of Trustees has established procedures intended to stabilize Money Fund/VA's net asset value at $1.00 per share. If Money Fund/VA's net asset value per share were to deviate from $1.00 by more than 0.5%, Rule 2a-7 requires the Board promptly to consider what action, if any, should be taken. If the Trustees find that the extent of any such deviation may result in material dilution or other unfair effects on shareholders, the Board will take whatever steps it considers appropriate to eliminate or reduce such dilution or unfair effects, including, without limitation, selling portfolio securities prior to maturity, shortening the average portfolio maturity, withholding or reducing dividends, reducing the outstanding number of shares of that Fund without monetary consideration, or calculating net asset value per share by using available market quotations.

As long as Money Fund/VA uses Rule 2a-7, it must abide by certain conditions described in the Prospectus which limit the maturity of securities that Fund buys. Under Rule 2a-7, the maturity of an instrument is generally considered to be its stated maturity (or in the case of an instrument called for redemption, the date on which the redemption payment must be made), with special exceptions for certain variable rate demand and floating rate instruments. Repurchase agreements and securities loan agreements are, in general, treated as having maturity equal to the period scheduled until repurchase or return, or if subject to demand, equal to the notice period.

While amortized cost method provides certainty in valuation, there may be periods during which the value of an instrument, as determined by amortized cost, is higher or lower than the price Money Fund/VA would receive if it sold the instrument. During periods of declining interest rates, the daily yield on shares of that Fund may tend to be lower (and net investment income and daily dividends higher) than market prices or estimates of market prices for its portfolio. Thus, if the use of amortized cost by the funds resulted in a lower aggregate portfolio value on a particular day, a prospective investor in Money Fund/VA would be able to obtain a somewhat higher yield than would result from investment in a fund utilizing solely market values, and existing investors in that Fund would receive less investment income than if Money Fund/VA were priced at market value. Conversely, during periods of rising interest rates, the daily yield on shares of that Fund will tend to be higher and its aggregate value lower than that of a portfolio priced at market value. A prospective investor would receive a lower yield than from an investment in a portfolio priced at market value, while existing investors in Money Fund/VA would receive more investment income than if that Fund were priced at market value.

Payments "In Kind". The Prospectus states that payment for shares tendered for redemption is ordinarily made in cash. However, under certain circumstances, the Board of Trustees of the Global Securities Fund/VA, Main Street Fund^®/VA and Strategic Bond Fund/VA may determine that it would be detrimental to the best interests of the remaining shareholders of those Funds to make payment of a redemption order wholly or partly in cash. In that case, the Funds may pay the redemption proceeds in whole or in part by a distribution "in kind" of liquid portfolio securities from the portfolio of the Funds, in lieu of cash. The Board of Trustees of the Fund has adopted procedures for "in kind" redemptions. In accordance with the procedures, the Board of Trustees of a Fund may be required to approve an "in kind" redemption paid to a shareholder that holds 5% or more of the shares of any class, or of all outstanding shares, of that Fund, or to any other shareholder that may be deemed to be an "affiliated person" under section 2(a)(3) of the Investment Company Act.

Each of Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund^®/VA and Oppenheimer Strategic Bond Fund/VA has elected to be governed by Rule 18f-1 under the Investment Company Act. Under that rule, each of Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund^®/VA and Oppenheimer Strategic Bond Fund/VA is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net assets of such Fund redeemed during any 90-day period for any one shareholder. As of the date of this SAI, those Funds intend to redeem shares in kind only under certain limited circumstances (such as redemptions of substantial amounts by shareholders that have consented to such in kind redemptions). If shares are redeemed in kind, the redeeming shareholder may incur brokerage or other costs in selling the securities. Each of Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund^®/VA and Oppenheimer Strategic Bond Fund/VA will value securities used to pay redemptions in kind using the same method it uses to value its portfolio securities described above under "Determination of Net Asset Values Per Share." That valuation will be made as of the time the redemption price is determined.

Dividends, Capital Gains and Taxes

Dividends and Distributions. The Funds have no fixed dividend rate and there can be no assurance as to the payment of any dividends or the realization of any capital gains. The dividends and distributions paid by a class of shares will vary from time to time depending on market conditions, the composition of the Funds' portfolio, and expenses borne by the Fund or borne separately by a class (if more than one class of shares is outstanding). Dividends are calculated in the same manner, at the same time, and on the same day for each class of shares. Dividends on Service shares and Class 4 Shares are expected to be lower because of the additional expenses for those shares. Dividends will also differ in amount as a consequence of any difference in the net asset values of the different classes of shares.

     Taxes. Each Fund is treated as a separate entity for federal income tax purposes. Each Fund intends to qualify as a "regulated investment company" under the provisions of Subchapter M of the Code. As a regulated investment company, each Fund is required to distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income, net short-term capital gain, and net gains from certain foreign currency transactions). To qualify for treatment as a regulated investment company, a Fund must meet certain income source, asset diversification and income distribution requirements. If each Fund qualifies as a "regulated investment company" and complies with the relevant provisions of the Code, each Fund will be relieved of federal income tax on the part of its net ordinary income and realized net capital gain which it distributes to the separate accounts. If a Fund fails to qualify as a regulated investment company, the Fund will be subject to federal, and possibly state, corporate taxes on its taxable income and gains. Furthermore, distributions to its shareholders will constitute ordinary dividend income to the extent of such Fund's available earnings and profits, and insurance policy and product holders could be subject to current tax on distributions received with respect to Fund shares.

Each Fund supports variable life insurance, variable annuity contracts and other insurance company separate accounts and therefore must, and intends to, comply with the diversification requirements imposed by section 817(h) of the Code and the regulations hereunder. These requirements place certain limitations on the proportion of each Fund's assets that may be represented by any single investment (which includes all securities of the issuer) and are in addition to the diversification requirements applicable to such Fund's status as a regulated investment company. For these purposes, each U.S. Government agency or instrumentality is treated as a separate issuer, while a particular foreign government and its agencies, instrumentalities, and political subdivisions are all considered the same issuer.

Generally, a regulated investment company must distribute substantially all of its ordinary income and capital gains in accordance with a calendar year distribution requirement in order to avoid a nondeductible 4% federal excise tax. However, the excise tax does not apply to a Fund whose only shareholders are certain tax-exempt trusts or segregated asset accounts of life insurance companies held in connection with variable contracts. The Funds intend to qualify for this exemption or to make distributions in accordance with the calendar year distribution requirements and therefore do not expect to be subject to this excise tax.

Foreign Taxes. Investment income received from sources within foreign countries may be subject to foreign income taxes. In this regard, withholding tax rates in countries with which the United States does not have a tax treaty are often as high as 30% or more. The United States has entered into tax treaties with many foreign countries that entitle certain investors to a reduced rate of tax (generally 10-15%) or to certain exemptions from tax. Each Fund will operate so as to qualify for such reduced tax rates or tax exemptions whenever possible. While insurance policy and product holders will bear the cost of any foreign tax withholding, they will not be able to claim a foreign tax credit or deduction for taxes paid by the Fund.
 

The Funds that may invest in foreign securities, may invest in securities of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the following tests: (1) at least 75% of the its gross income is passive; or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. A Fund investing in securities of PFICs may be subject to U.S. federal income taxes and interest charges, which would reduce the investment return of a Fund making such investments. The owners of variable annuities, variable life insurance products and other insurance company separate accounts investing in such Fund would effectively bear the cost of these taxes and interest charges. In certain cases, a Fund may be eligible to make certain elections with respect to securities of PFICs that could reduce taxes and interest charges payable by the Fund. However, no assurance can be given that such elections can or will be made.

This is a general and abbreviated summary of the applicable provisions of the Code and Treasury Regulations currently in effect as interpreted by the Courts and the Internal Revenue Service. For further information, consult the prospectus and/or statement of additional information for your particular insurance product, as well as your own tax advisor.

Additional Information About the Funds

The Transfer Agent. OppenheimerFunds Services, the Funds' Transfer Agent, is a division of the Manager. It serves as the Transfer Agent for an annual per account fee. The Transfer Agent has voluntarily agreed to limit transfer and shareholder servicing agent fees to 0.35% per annum of shares of any class of any Fund. That undertaking may be amended or withdrawn at any time. The Transfer Agent acts as shareholder servicing agent for other Oppenheimer funds. Information about your investment in the Funds through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Funds' Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Funds should be given to your insurance company or its servicing agent, not directly to the Funds or its Transfer Agent.

The Custodian. J.P. Morgan Chase Bank is the custodian of the Funds' assets. The custodian's responsibilities include safeguarding and controlling the Funds' portfolio securities and handling the delivery of such securities to and from the Funds. It is the practice of the Funds to deal with the custodian in a manner uninfluenced by any banking relationship the custodian may have with the Manager and its affiliates. The Funds' cash balances with the custodian in excess of $100,000 are not protected by federal deposit insurance. Those uninsured balances at times may be substantial.

Independent Registered Public Accounting Firm. At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

KPMG LLP serves as the independent registered public accounting firm for the Fund. KPMG LLP audits the Fund's financial statements and performs other related audit and tax services. KPMG LLP also acts as the independent registered public accounting firm for the Manager and certain other funds advised by the Manager and its affiliates. Audit and non-audit services provided by KPMG LLP to the Fund must be pre-approved by the Audit Committee.

EX-99

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer MidCap Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer MidCap Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Shares		Value
Common Stocks—90.6%
Consumer Discretionary—15.8%
Diversified Consumer Services—3.8%
DeVry, Inc.		80,900	$	4,644,469
New Oriental Education & Technology Group, Inc., Sponsored ADR1		164,700		9,043,677
Strayer Education, Inc.		22,200		4,759,902
				18,448,048
Hotels, Restaurants & Leisure—3.6%
Burger King Holdings, Inc.		730,300		17,439,564
Media—4.6%
Cablevision Systems Corp.
New York Group, Cl. A		737,800		12,424,552
Liberty Global, Inc., Series C1		355,704		5,399,587
Liberty Media Corp.-Entertainment, Series A1		257,100		4,494,108
				22,318,247
Multiline Retail—1.4%
Dollar Tree, Inc.1		158,100		6,608,580
Specialty Retail—1.2%
GameStop Corp., Cl. A1		269,500		5,837,370
Textiles, Apparel & Luxury Goods—1.2%
Polo Ralph Lauren Corp., Cl. A		130,400		5,921,464
Consumer Staples—2.2%
Beverages—0.4%
Central European Distribution Corp.1		98,900		1,948,330
Food Products—1.2%
Flowers Foods, Inc.		241,000		5,870,760
Personal Products—0.6%
Chattem, Inc.1		36,100		2,582,233
Energy—7.7%
Energy Equipment & Services—2.9%
Cameron International Corp.1		235,400		4,825,700
IHS, Inc., Cl. A1		250,800		9,384,936
				14,210,636
Oil, Gas & Consumable Fuels—4.8%
Cabot Oil & Gas Corp., Cl. A		112,300		2,919,800
Petrohawk Energy Corp.1		483,500		7,557,105
Range Resources Corp.		335,800		11,548,162
SandRidge Energy, Inc.1		166,440		1,023,606
				23,048,673
Financials—8.2%
Capital Markets—3.7%
Affiliated Managers Group, Inc.1		125,200		5,248,384
Eaton Vance Corp.		202,500		4,254,525
Lazard Ltd., Cl. A		277,800		8,261,772
				17,764,681
Diversified Financial Services—3.0%
IntercontinentalExchange, Inc.1		98,500		8,120,340
MSCI, Inc., Cl. A1		351,500		6,242,640
				14,362,980
Insurance—0.7%
RenaissanceRe Holdings Ltd.		70,600		3,640,136
Real Estate Investment Trusts—0.8%
Boston Properties, Inc.		69,900		3,844,500
Health Care—16.9%
Biotechnology—2.2%
Alexion Pharmaceuticals, Inc.1		220,000		7,961,800
Myriad Genetics, Inc.1		38,000		2,517,880
				10,479,680
Health Care Equipment & Supplies—7.3%
Bard (C.R.), Inc.		163,900		13,810,214
Edwards Lifesciences Corp.1		164,600		9,044,770
Haemonetics Corp.1		44,600		2,519,900
IDEXX Laboratories, Inc.1		141,300		5,098,104
NuVasive, Inc.1		135,100		4,681,215
				35,154,203
Health Care Providers & Services—1.0%
Schein (Henry), Inc.1		133,800		4,909,122
Life Sciences Tools & Services—3.1%
Covance, Inc.1		88,200		4,059,846
Illumina, Inc.1		256,500		6,681,825
Waters Corp.1		120,000		4,398,000
				15,139,671
Pharmaceuticals—3.3%
Perrigo Co.		187,700		6,064,587
Shire Ltd., ADR		226,400		10,138,192
				16,202,779

STATEMENT OF INVESTMENTS Continued

	Shares			Value
Industrials—15.9%
Aerospace & Defense—2.7%
Alliant Techsystems, Inc.1		55,700		$	4,776,832
Curtiss-Wright Corp.		148,400			4,955,076
Rockwell Collins, Inc.		86,700			3,389,103
					13,121,011
Air Freight & Logistics—3.4%
C.H. Robinson Worldwide, Inc.		169,900			9,349,597
Expeditors International of Washington, Inc.		209,600			6,973,392
					16,322,989
Commercial Services & Supplies—6.9%
Clean Harbors, Inc.1		101,500			6,439,160
FTI Consulting, Inc.1		156,100			6,974,548
Stericycle, Inc.1		274,100			14,275,128
Waste Connections, Inc.1		176,200			5,562,634
					33,251,470
Construction & Engineering—2.3%
Foster Wheeler Ltd.1		100,200			2,342,676
Quanta Services, Inc.1		458,000			9,068,400
					11,411,076
Machinery—0.6%
Bucyrus International, Inc., Cl. A		151,000			2,796,520
Information Technology—19.1%
Computers & Peripherals—1.1%
NetApp, Inc.1		390,200			5,451,094
Electronic Equipment & Instruments—3.1%
Amphenol Corp., Cl. A		347,500			8,333,050
FLIR Systems, Inc.1		82,600			2,534,168
Trimble Navigation Ltd.1		195,600			4,226,916
					15,094,134
Internet Software & Services—1.7%
Equinix, Inc.1		150,200			7,989,138
IT Services—5.0%
Cognizant Technology Solutions Corp.1		311,200			5,620,272
SAIC, Inc.1		946,400			18,435,872
					24,056,144
Software—8.2%
Ansys, Inc.1		356,400			9,939,996
Autodesk, Inc.1		249,100			4,894,815
FactSet Research Systems, Inc.		253,850			11,230,324
Macrovision Solutions Corp.1		576,509			7,292,839
Salesforce.com, Inc.1		201,300			6,443,613
					39,801,587
Materials—2.4%
Chemicals—2.4%
Intrepid Potash, Inc.1		126,920			2,636,128
Lubrizol Corp. (The)		242,400			8,820,936
					11,457,064
Telecommunication Services—1.2%
Wireless Telecommunication Services—1.2%
American Tower Corp.1		193,200			5,664,624
Utilities—1.2%
Gas Utilities—1.2%
Questar Corp.		178,600			5,838,434
Total Common Stocks (Cost $547,027,310)					437,986,942
Investment Company—5.9%
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%2,3 (Cost $28,742,391)		28,742,391			28,742,391
Total Investments, at Value (Cost $575,769,701)		96.5	%		466,729,333
Other Assets Net of Liabilities		3.5			16,906,522
Net Assets		100.0	%	$	483,635,855

Industry classifications are unaudited.

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
Oppenheimer Institutional Money Market Fund, Cl. E		35,791,815		295,082,029		302,131,453		28,742,391
					Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E						$28,742,391		$368,202

3. Rate shown is the 7-day yield as of December 31, 2008.

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments in		Other Financial
Valuation Description	Securities		Instruments*
Level 1—Quoted Prices	$	466,729,333	$	—
Level 2—Other Significant Observable Inputs		—		—
Level 3—Significant Unobservable Inputs		—		—
Total	$	466,729,333	$	—

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $ 547,027,310)	$	437,986,942
Affiliated companies (cost $28,742,391)		28,742,391
		466,729,333
Cash		306,249
Receivables and other assets:
Shares of beneficial interest sold		16,208,249
Investments sold		542,845
Dividends		153,408
Due from Manager		79
Other		18,542
Total assets		483,958,705
Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed		243,634
Legal, auditing and other professional fees		29,420
Shareholder communications		18,237
Distribution and service plan fees		13,525
Trustees’ compensation		10,110
Transfer and shareholder servicing agent fees		1,720
Other		6,204
Total liabilities		322,850
Net Assets	$	483,635,855
Composition of Net Assets
Par value of shares of beneficial interest	$	17,575
Additional paid-in capital		1,274,620,037
Accumulated net investment income		80,204
Accumulated net realized loss on investments		(682,041,593	)
Net unrealized depreciation on investments		(109,040,368	)
Net Assets	$	483,635,855
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $461,684,362 and 16,763,350 shares of beneficial interest outstanding)	$	27.54
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $21,951,493 and 812,009 shares of beneficial interest outstanding)	$	27.03

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $14,130)	$	2,676,265
Affiliated companies		368,202
Interest		9,313
Total investment income		3,053,780
Expenses
Management fees		5,532,191
Distribution and service plan fees—Service shares		89,039
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,994
Trustees’ compensation		23,861
Custodian fees and expenses		4,996
Other		13,186
Total expenses		5,683,261
Less reduction to custodian expenses		(1,361	)
Less waivers and reimbursements of expenses		(198,509	)
Net expenses		5,483,391
Net Investment Loss		(2,429,611	)
Realized and Unrealized Loss
Net realized loss on investments from unaffiliated companies		(219,835,993	)
Net change in unrealized depreciation on investments		(251,402,010	)
Net Decrease in Net Assets Resulting from Operations	$	(473,667,614	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment loss	$	(2,429,611	)	$	(570,739	)
Net realized gain (loss)		(219,835,993	)		186,877,254
Net change in unrealized appreciation (depreciation)		(251,402,010	)		(117,202,651	)
Net increase (decrease) in net assets resulting from operations		(473,667,614	)		69,103,864
Beneficial Interest Transactions
Net decrease in net assets resulting from beneficial interest transactions:
Non-Service shares		(88,752,649	)		(118,530,501	)
Service shares		(3,655,383	)		(2,801,818	)
		(92,408,032	)		(121,332,319	)
Net Assets
Total decrease		(566,075,646	)		(52,228,455	)
Beginning of period		1,049,711,501			1,101,939,956
End of period (including accumulated net investment income (loss) of $80,204 and $(16,629), respectively)	$	483,635,855		$	1,049,711,501

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares     Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	54.07		$	50.85		$	49.39		$	43.97		$	36.71
Income (loss) from investment operations:
Net investment loss1		(.13	)		(.02	)		(.02	)		(.12	)		(.15	)
Net realized and unrealized gain (loss)		(26.40	)		3.24			1.48			5.54			7.41
Total from investment operations		(26.53	)		3.22			1.46			5.42			7.26
Net asset value, end of period	$	27.54		$	54.07		$	50.85		$	49.39		$	43.97
Total Return, at Net Asset Value2		(49.07	)%		6.33	%		2.96	%		12.33	%		19.78	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	461,684		$	1,002,442		$	1,054,809		$	1,227,881		$	1,209,459
Average net assets (in thousands)	$	754,170		$	1,045,592		$	1,135,831		$	1,177,979		$	1,124,874
Ratios to average net assets:3
Net investment loss		(0.30	)%		(0.04	)%		(0.04	)%		(0.26	)%		(0.39	)%
Total expenses		0.71	%4		0.69	%4		0.69	%4		0.69	%		0.69	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.68	%		0.69	%		0.69	%		0.69	%		0.69	%
Portfolio turnover rate		78	%		112	%		56	%		32	%		53	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.71	%
Year Ended December 31, 2007	0.69	%
Year Ended December 31, 2006	0.69	%

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares     Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	53.22		$	50.19		$	48.87		$	43.64		$	36.54
Income (loss) from investment operations:
Net investment loss1		(.24	)		(.17	)		(.16	)		(.25	)		(.27	)
Net realized and unrealized gain (loss)		(25.95	)		3.20			1.48			5.48			7.37
Total from investment operations		(26.19	)		3.03			1.32			5.23			7.10
Net asset value, end of period	$	27.03		$	53.22		$	50.19		$	48.87		$	43.64
Total Return, at Net Asset Value2		(49.21	)%		6.04	%		2.70	%		11.99	%		19.43	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	21,952		$	47,270		$	47,131		$	36,551		$	24,151
Average net assets (in thousands)	$	35,815		$	49,421		$	44,273		$	28,798		$	17,579
Ratios to average net assets:3
Net investment loss		(0.57	)%		(0.31	)%		(0.33	)%		(0.54	)%		(0.68	)%
Total expenses		0.98	%4		0.96	%4		0.97	%4		0.97	%		0.99	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.95	%		0.96	%		0.97	%		0.97	%		0.99	%
Portfolio turnover rate		78	%		112	%		56	%		32	%		53	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.98	%
Year Ended December 31, 2007	0.96	%
Year Ended December 31, 2006	0.97	%

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer MidCap Fund/VA (the “Fund”), is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek capital appreciation by investing in “growth type” companies. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net

realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation
					Based on Cost of
Undistributed	Undistributed		Accumulated		Securities and Other
Net Investment	Long-Term		Loss		Investments for Federal
Income	Gain		Carryforward1,2,3,4		Income Tax Purposes
$—	$	—		$673,554,628		$117,437,028

1. As of December 31, 2008, the Fund had $455,557,670 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2008, details of the capital loss carryforwards were as follows:

Expiring
2009	$	225,332,848
2010		230,224,822
Total	$	455,557,670

2.	As of December 31, 2008, the Fund had $217,996,958 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
3.	During the fiscal year ended December 31, 2008, the Fund utilized $4,134,778 of capital loss carryforward to offset capital gains realized in that fiscal year.
4.	During the fiscal year ended December 31, 2007, the Fund utilized $189,103,306 of capital loss carryforward to offset capital gains realized in that fiscal year.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Reduction to
	Accumulated Net
Reduction	Investment
to Paid-in Capital	Loss
$2,526,444		$2,526,444

No distributions were paid during the years ended December 31, 2008 and December 31, 2007.

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	584,166,361
Gross unrealized appreciation	$	23,103,445
Gross unrealized depreciation		(140,540,473	)
Net unrealized depreciation	$	(117,437,028	)

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		1,670,583		$	61,944,000			1,842,068		$	99,805,796
Redeemed		(3,445,654	)		(150,696,649	)		(4,045,787	)		(218,336,297	)
Net decrease		(1,775,071	)	$	(88,752,649	)		(2,203,719	)	$	(118,530,501	)
Service Shares
Sold		131,251		$	5,180,963			158,587		$	8,425,522
Redeemed		(207,366	)		(8,836,346	)		(209,531	)		(11,227,340	)
Net decrease		(76,115	)	$	(3,655,383	)		(50,944	)	$	(2,801,818	)

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	616,640,852	$	718,329,116

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Next $700 million	0.60
Over $1.5 billion	0.58

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $20,028 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

NOTES TO FINANCIAL STATEMENTS Continued

4. Fees and Other Transactions with Affiliates Continued

Waivers and Reimbursements of Expenses. Effective September 1, 2008 through August 31, 2009 (the “waiver period”), the Manager has voluntarily agreed to reduce its advisory fee rate by 0.10% of the Fund’s average daily net assets if the Fund’s trailing one-year total return performance is in the fourth or fifth quintile of the Fund’s Lipper peer group as of August 31, 2008. However, if the Fund’s trailing one-year total return performance, as measured at the end of any subsequent calendar quarter during the waiver period, improves to the third or higher quintile of the Fund’s Lipper peer group, the advisory fee reduction will be terminated effective the following business day. During the year ended December 31, 2008, OFI waived $186,318. The advisory fee reduction is a voluntary undertaking and may be terminated by the Manager at any time.

     OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $12,191 for IMMF management fees.

5. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

6. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Balanced Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Balanced Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Shares		Value
Common Stocks—65.1%
Consumer Discretionary—10.5%
Hotels, Restaurants & Leisure—1.1%
Las Vegas Sands Corp.1		440,320	$	2,611,098
Media—9.4%
Cablevision Systems Corp.
New York Group, Cl. A		193,360		3,256,182
Comcast Corp., Cl. A Special, Non-Vtg.		244,090		3,942,054
Jupiter Telecommunications Co. Ltd.		4,088		4,257,100
Liberty Global, Inc., Series A1		257,738		4,103,189
Liberty Global, Inc., Series C1		171,460		2,602,763
National CineMedia, Inc.		233,260		2,365,256
Time Warner Cable, Inc., Cl. A1		87,407		1,874,880
				22,401,424
Consumer Staples—5.9%
Food Products—1.4%
Nestle SA		87,780		3,453,633
Tobacco—4.5%
Altria Group, Inc.		83,010		1,250,131
Lorillard, Inc.		50,660		2,854,691
Philip Morris International, Inc.		151,010		6,570,445
				10,675,267
Energy—3.9%
Oil, Gas & Consumable Fuels—3.9%
Alpha Natural Resources, Inc.1		25,310		409,769
Exxon Mobil Corp.		96,370		7,693,217
Petroleo Brasileiro SA, ADR		52,490		1,285,480
				9,388,466
Financials—6.3%
Capital Markets—2.6%
Credit Suisse Group AG, ADR		54,070		1,528,018
Julius Baer Holding AG		123,317		4,735,493
				6,263,511
Consumer Finance—1.5%
SLM Corp.1		390,890		3,478,921
Insurance—2.2%
Everest Re Group Ltd.		68,430		5,210,260
Health Care—7.0%
Biotechnology—0.9%
Amicus Therapeutics, Inc.1		95,449		761,683
Human Genome Sciences, Inc.1		256,420		543,610
Orexigen Therapeutics, Inc.1		153,170		854,689
				2,159,982
Health Care Equipment & Supplies—0.6%
Beckman Coulter, Inc.		32,120		1,411,353
Health Care Providers & Services—2.4%
Aetna, Inc.		51,240		1,460,340
Health Net, Inc.1		142,240		1,548,994
Medco Health Solutions, Inc.1		53,320		2,234,641
Skilled Healthcare Group, Inc., Cl. A1		46,060		388,746
				5,632,721
Life Sciences Tools & Services—0.9%
Thermo Fisher Scientific, Inc.1		63,710		2,170,600
Pharmaceuticals—2.2%
Abbott Laboratories		48,410		2,583,642
Wyeth		69,000		2,588,190
				5,171,832
Industrials—4.1%
Aerospace & Defense—0.5%
Orbital Sciences Corp.1		65,404		1,277,340
Industrial Conglomerates—2.4%
Siemens AG, Sponsored ADR		74,840		5,669,130
Machinery—0.9%
Joy Global, Inc.		57,780		1,322,584
Navistar International Corp.1		35,050		749,369
				2,071,953
Trading Companies & Distributors—0.3%
Aircastle Ltd.		168,100		803,518
Information Technology—25.6%
Communications Equipment—5.4%
QUALCOMM, Inc.		184,560		6,612,785
Research in Motion Ltd.1		154,780		6,280,972
				12,893,757
Computers & Peripherals—1.2%
International Business Machines Corp.		33,760		2,841,242
Electronic Equipment & Instruments—0.0%
CalAmp Corp.1		19		9
Internet Software & Services—5.3%
eBay, Inc.1		271,900		3,795,724
Google, Inc., Cl. A1		21,510		6,617,552
Yahoo!, Inc.1		193,370		2,359,114
				12,772,390

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Semiconductors & Semiconductor Equipment—1.5%
Applied Materials, Inc.		245,390	$	2,485,801
Varian Semiconductor Equipment Associates, Inc.1		54,720		991,526
				3,477,327
Software—12.2%
Electronic Arts, Inc.1		151,000		2,422,040
Microsoft Corp.		344,800		6,702,912
Novell, Inc.1		337,980		1,314,742
Synopsys, Inc.1		114,640		2,123,133
Take-Two Interactive Software, Inc.		1,714,376		12,960,683
THQ, Inc.1		853,300		3,575,327
				29,098,837
Materials—1.3%
Chemicals—1.3%
Lubrizol Corp. (The)		44,140		1,606,255
Mosaic Co. (The)		42,010		1,453,546
				3,059,801
Telecommunication Services—0.0%
Diversified Telecommunication Services—0.0%
XO Holdings, Inc.1		85		14
Utilities—0.5%
Energy Traders—0.5%
NRG Energy, Inc.1		50,540		1,179,098
Total Common Stocks
(Cost $191,452,153)				155,173,484
Preferred Stocks—3.2%
Mylan, Inc., 6.50% Cv., Non-Vtg.		4,800		3,163,344
Petroleo Brasileiro SA, Preference		120,540		1,223,055
Schering-Plough Corp., 6% Cv.		18,800		3,280,600
Total Preferred Stocks
(Cost $6,066,144)				7,666,999

	Units
Rights, Warrants and Certificates—0.0%
XO Communications, Inc.:
Series A Wts., Strike Price $6.25, Exp. 1/16/101,2		171	1
Series B Wts., Strike Price $7.50, Exp. 1/16/101,2		128	1
Series C Wts., Strike Price $10, Exp. 1/16/101,2		128	—
Total Rights, Warrants and Certificates (Cost $0)			2

	Principal
	Amount		Value
Asset-Backed Securities—2.4%
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.951%, 5/25/343	$	830,484	$	641,424
Capital One Prime Auto Receivables Trust, Automobile Asset-Backed Certificates, Series 2005-1, Cl. A4, 1.215%, 4/15/113		1,354,945		1,315,474
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series 2003-C4, Cl. C4, 5%, 6/10/15		180,000		97,743
Countrywide Home Loans, Asset-Backed Certificates:
Series 2002-4, Cl. A1, 1.211%, 2/25/333		18,836		8,782
Series 2005-11, Cl. AF2, 4.657%, 2/25/36		85,643		84,377
Series 2005-16, Cl. 2AF2, 5.382%, 5/25/363		360,000		287,909
Series 2005-17, Cl. 1AF2, 5.363%, 5/25/363		223,831		193,021
CWABS, Inc. Asset-Backed Certificates Trust, Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.591%, 12/5/293		480,000		369,061
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Nts., Series 2005-3, Cl. A1, 0.768%, 1/20/353		293,512		208,659
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.618%, 3/20/363		180,000		150,818
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-2, Cl. 2A1B, 5.18%, 8/25/353		110,498		108,427
MBNA Credit Card Master Note Trust, Credit Card Receivables, Series 2003-C7, Cl. C7, 2.545%, 3/15/163		1,710,000		665,119
Option One Mortgage Loan Trust, Asset-Backed Certificates, Series 2006-2, Cl. 2A2, 0.571%, 7/1/363		910,060		801,961
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass-Through Certificates, Series 2006-KS7, Cl. A2, 0.571%, 9/25/363		665,152		605,196
Structured Asset Investment Loan Trust, Mtg. Pass-Through Certificates, Series 2006-BNC3, Cl. A2, 0.511%, 9/25/363		188,309		176,291
Total Asset-Backed Securities
(Cost $7,654,859)				5,714,262

	Principal
	Amount		Value
Mortgage-Backed Obligations—33.6%
Government Agency—23.5%
FHLMC/FNMA/Sponsored—23.3%
Federal Home Loan Mortgage Corp., 6.50%, 1/1/244	$	1,110,000	$	1,151,625
Federal Home Loan Mortgage Corp.,Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 2006-11, Cl. PS, 22.839%, 3/25/363		318,633		363,264
Series 3025, Cl. SJ, 20.368%, 8/15/353		102,496		117,184
Series 3094, Cl. HS, 20.002%, 6/15/343		195,832		218,120
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 176, Cl. IO, 3.205%, 6/1/265		171,080		33,825
Series 183, Cl. IO, 1.189%, 4/1/275		273,554		40,597
Series 184, Cl. IO, 7.51%, 12/1/265		299,662		59,663
Series 192, Cl. IO, 4.855%, 2/1/285		81,532		11,519
Series 200, Cl. IO, 4.491%, 1/1/295		100,250		17,097
Series 2130, Cl. SC, 35.774%, 3/15/295		215,198		32,570
Series 216, Cl. IO, 2.681%, 12/1/315		161,020		20,364
Series 224, Cl. IO, (0.528)%, 3/1/335		509,627		75,981
Series 243, Cl. 6, 15.224%, 12/15/325		304,809		39,862
Series 2527, Cl. SG, 31.83%, 2/15/325		208,322		13,348
Series 2531, Cl. ST, 35.211%, 2/15/305		240,175		15,606
Series 2796, Cl. SD, 45.683%, 7/15/265		309,171		29,689
Series 2802, Cl. AS, 99.999%, 4/15/335		448,100		42,633
Series 2920, Cl. S, 54.664%, 1/15/355		1,700,651		167,142
Series 3000, Cl. SE, 99.999%, 7/15/255		1,765,318		141,242
Series 3110, Cl. SL, 99.999%, 2/15/265		259,125		18,628
Series 3146, Cl. SA, 38.014%, 4/15/365		1,611,418		191,529
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security:
Series 176, Cl. PO, 6.166%, 6/1/266		75,291		63,842
Series 192, Cl. PO, 8.464%, 2/1/286		81,532		73,282
Federal National Mortgage Assn.:
4.50%, 1/1/224		4,057,000		4,147,017
5%, 1/1/24-1/1/394		11,094,000		11,351,289
5.50%, 9/25/20		19,835		20,483
5.50%, 1/1/24-1/1/394		9,264,000		9,504,359
6%, 1/1/24-1/1/394		11,292,000		11,646,682
6.50%, 1/1/24-1/1/394		6,480,000		6,728,684
7%, 1/1/394		2,705,000		2,832,644
7%, 11/1/177		414,783		430,356
7.50%, 1/1/337		303,388		321,711
8.50%, 7/1/32		13,025		14,166
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1998-61, Cl. PL, 6%, 11/25/28		279,524		289,643
Trust 2001-70, Cl. LR, 6%, 9/25/30		7,043		7,030
Trust 2003-130, Cl. CS, 13.158%, 12/25/333		177,323		178,176
Trust 2006-46, Cl. SW, 22.471%, 6/25/363		237,240		265,125
Trust 2006-50, Cl. KS, 22.472%, 6/25/363		624,000		701,269
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-65, Cl. S, 40.848%, 11/25/315		816,463		111,862
Trust 2001-81, Cl. S, 24.811%, 1/25/325		172,699		24,371
Trust 2002-47, Cl. NS, 22.828%, 4/25/325		383,101		51,966
Trust 2002-51, Cl. S, 23.117%, 8/25/325		351,777		47,863
Trust 2002-52, Cl. SD, 23.975%, 9/25/325		390,175		54,059
Trust 2002-77, Cl. SH, 29.712%, 12/18/325		233,714		29,369
Trust 2002-84, Cl. SA, 42.181%, 12/25/325		723,859		103,708
Trust 2002-9, Cl. MS, 23.539%, 3/25/325		259,084		32,619
Trust 2003-118, Cl. S, 32.829%, 12/25/335		1,565,319		189,069
Trust 2003-33, Cl. SP, 22.276%, 5/25/335		813,547		108,061
Trust 2003-4, Cl. S, 37.987%, 2/25/335		468,196		60,055
Trust 2003-46, Cl. IH, (5.771)%, 6/1/335		2,706,545		366,899
Trust 2003-89, Cl. XS, 20.272%, 11/25/325		388,157		30,326
Trust 2004-54, Cl. DS, 33.428%, 11/25/305		331,381		36,981
Trust 2005-40, Cl. SA, 55.764%, 5/25/355		960,653		98,612
Trust 2005-6, Cl. SE, 67.902%, 2/25/355		1,275,120		117,236
Trust 2005-71, Cl. SA, 73.083%, 8/25/255		1,112,596		83,422
Trust 2005-87, Cl. SE, 99.999%, 10/25/355		2,291,731		162,705
Trust 2005-87, Cl. SG, 98.88%, 10/25/355		2,278,394		193,116
Trust 2006-33, Cl. SP, 65.426%, 5/25/365		2,545,444		265,198
Trust 222, Cl. 2, 7.132%, 6/1/235		626,955		170,730
Trust 233, Cl. 2, 14.075%, 8/1/235		518,872		124,723
Trust 240, Cl. 2, 11.408%, 9/1/235		997,831		154,850
Trust 252, Cl. 2, 12.742%, 11/1/235		470,043		107,800
Trust 273, Cl. 2, 4.64%, 8/1/265		130,292		23,276
Trust 319, Cl. 2, (1.176)%, 2/1/325		173,065		24,396
Trust 321, Cl. 2, (5.624)%, 4/1/325		1,800,435		250,387
Trust 331, Cl. 9, 22.162%, 2/1/335		491,652		55,556
Trust 333, Cl. 2, (12.058)%, 4/1/335		423,442		51,787
Trust 334, Cl. 17, 29.34%, 2/1/335		283,066		48,444
Trust 334, Cl. 3, 13.538%, 7/1/335		75,036		8,419
Trust 338, Cl. 2, (13.036)%, 7/1/335		390,562		47,139
Trust 339, Cl. 12, 13.466%, 7/1/335		506,390		65,038
Trust 339, Cl. 7, 11.167%, 7/1/335		1,918,575		212,402
Trust 339, Cl. 8, 12.211%, 8/1/335		41,905		4,703
Trust 342, Cl. 2, (1.109)%, 9/1/335		16,333		2,335
Trust 343, Cl. 13, 12.001%, 9/1/335		408,736		43,227
Trust 345, Cl. 9, 13.48%, 1/1/345		714,329		78,019
Trust 346, Cl. 2, (12.874)%, 12/1/335		409,372		49,177
Trust 351, Cl. 10, 14.256%, 4/1/345		70,261		7,613
Trust 351, Cl. 11, 12.86%, 11/1/345		71,211		7,906
Trust 351, Cl. 8, 12.789%, 4/1/345		215,225		23,318
Trust 356, Cl. 10, 13.15%, 6/1/355		183,704		20,170
Trust 356, Cl. 12, 13.355%, 2/1/355		99,862		10,796
Trust 362, Cl. 12, 12.979%, 8/1/355		1,187,328		158,191
Trust 362, Cl. 13, 12.965%, 8/1/355		657,004		87,443
Trust 364, Cl. 16, 14.77%, 9/1/355		520,060		82,712
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 1993-184, Cl. M, 6.795%, 9/25/236		222,423		189,115
				55,654,415

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
GNMA/Guaranteed—0.2%
Government National Mortgage Assn., 8%, 4/15/23	$	134,100	$	142,564
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 2001-21, Cl. SB, 66.825%, 1/16/275		356,086		51,056
Series 2002-15, Cl. SM, 58.098%, 2/16/325		419,891		62,078
Series 2002-76, Cl. SY, 58.175%, 12/16/265		900,302		138,177
Series 2004-11, Cl. SM, 39.538%, 1/17/305		284,001		31,153
				425,028
Non-Agency—10.1%
Commercial—3.7%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2006-1, Cl. AM, 5.421%, 9/1/45		1,800,000		922,563
Banc of America Funding Corp., Mtg. Pass-Through Certificates, Series 2004-2, Cl. 2A1, 6.50%, 7/20/32		473,691		453,528
ChaseFlex Trust 2006-2, Multiclass Mtg. Pass-Through Certificates, Series 2006-2, Cl. A1B, 1.495%, 9/25/363		107,032		102,549
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates, Series 2008-C7, Cl. AM, 6.096%, 12/1/493		780,000		368,596
Citigroup Mortgage Loan Trust, Inc. 2006-WF1, Asset-Backed Pass-Through Certificates, Series 2006-WF1, Cl. A2B, 5.536%, 3/1/36		29,882		29,635
CitiMortgage Alternative Loan Trust 2006-A5, Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Series 2006-A5, Cl. 1A1, 0.871%, 10/25/363		1,346,226		581,956
Series 2006-A5, Cl. 1A13, 0.921%, 10/25/363		709,695		289,956
CWALT Alternative Loan Trust 2006-HY13, Mtg. Pass-Through Certificates, Series 2006-HY13, Cl. 3A1, 5.97%, 1/1/473		157,235		104,591
Deutsche Alt-A Securities Mortgage Loan Trust, Mtg. Pass-Through Certificates:
Series 2006-AB2, Cl. A7, 5.961%, 6/25/36		190,644		175,475
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36		648,457		519,568
Series 2006-AB3, Cl. A7, 6.36%, 7/1/36		74,183		71,495
First Horizon Alternative Mortgage Securities Trust 2004-FA2, Mtg. Pass-Through Certificates, Series 2004-FA2, Cl. 3A1, 6%, 1/25/35		354,834		259,423
First Horizon Alternative Mortgage Securities Trust 2007-FA2, Mtg. Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37		413,790		389,011
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 2005-LDP4, Cl. AM, 4.999%, 10/1/42		450,000		265,876
JPMorgan Chase Commercial Mortgage Securities Trust, Commercial Mtg. Pass-Through Certificates:
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		235,000		185,773
Series 2007-LD11, Cl. A2, 5.804%, 6/15/493		270,000		207,218
LB-UBS Commercial Mortgage Trust 2006-C1, Commercial Mtg. Pass-Through Certificates:
Series 2006-C1, Cl. A2, 5.084%, 2/11/31		345,000		301,293
Series 2006-C1, Cl. AM, 5.217%, 2/11/313		1,010,000		509,580
Mastr Adjustable Rate Mortgages Trust 2004-13, Mtg. Pass-Through Certificates, Series 2004-13, Cl. 2A2, 4.555%, 4/1/343		372,288		285,045
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		753,256		550,725
Merrill Lynch/Countrywide Commercial Mortgage Trust 2007-9, Commercial Mtg. Pass-Through Certificates, Series 2007-9, Cl. A4, 5.70%, 9/1/17		900,000		626,506
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30		10,115		10,102
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A114, 5.75%, 4/25/37		604,462		263,961
Residential Asset Securitization Trust 2006-A9CB, Mtg. Pass-Through Certificates, Series 2006-A9CB, Cl. A5, 6%, 9/25/36		792,300		387,593
Wachovia Mortgage Loan Trust LLC, Mtg. Pass-Through Certificates, Series 2007-A, Cl. 1A1, 5.981%, 3/1/373		259,944		140,235
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates, Series 2007-HY1, Cl. 1A2, 5.706%, 2/25/372,3		341,592		78,566
WaMu Mortgage Pass-Through Certificates 2007-HY3 Trust, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 2A2, 5.668%, 3/1/373		856,356		221,331
WaMu Mortgage Pass-Through Certificates 2007-HY4 Trust, Mtg. Pass-Through Certificates, Series 2007-HY4, Cl. 5A1, 5.548%, 11/1/363		226,594		148,907

	Principal
	Amount		Value
Commercial Continued
WaMu Mortgage Pass-Through Certificates 2007-HY5 Trust, Mtg. Pass-Through Certificates, Series 2007-HY5, Cl. 2A3, 5.647%, 5/1/373	$	232,600	$	148,739
Wells Fargo Mortgage-Backed Securities 2004-U Trust, Mtg. Pass-Through Certificates, Series 2004-U, Cl. A1, 5.245%, 10/1/343		72,327		61,756
				8,661,552
Manufactured Housing—0.4%
Wells Fargo Mortgage-Backed Securities 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 6.099%, 9/25/363		1,386,950		891,596
Multifamily—2.5%
Banc of America Mortgage Securities, Inc., Mtg. Pass-Through Certificates, Series 2003-E, Cl. 2A2, 4.71%, 6/25/333		781,643		617,800
CHL Mortgage Pass-Through Trust 2005-HYB1, Mtg. Pass-Through Certificates, Series 2005-HYB1, Cl. 1A2, 4.982%, 3/25/353		1,221,635		764,858
Citigroup Mortgage Loan Trust, Inc. 2006-AR5, Asset-Backed Pass-Through Certificates, Series 2006-AR5, Cl. 1A3A, 5.89%, 7/25/363		557,279		292,211
CWALT Alternative Loan Trust 2005-85CB, Mtg. Pass-Through Certificates, Series 2005-85CB, Cl. 2A3, 5.50%, 2/25/36		860,000		658,896
GMAC Mortgage Corp. Loan Trust, Mtg. Pass-Through Certificates, Series 2004-J4, Cl. A7, 5.50%, 9/25/34		800,000		639,580
GSR Mortgage Loan Trust 2005-AR7, Mtg. Pass-Through Certificates, Series 2005-AR7, Cl. 3A1, 5.14%, 11/25/353		1,945,351		1,230,814
Wells Fargo Mortgage-Backed Securities 2004-AA Trust, Mtg. Pass-Through Certificates, Series 2004-AA, Cl. 2A, 4.992%, 12/25/343		400,986		310,463
Wells Fargo Mortgage-Backed Securities 2004-S Trust, Mtg. Pass-Through Certificates, Series 2004-S, Cl. A1, 3.742%, 9/25/343		329,933		241,462
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates:
Series 2006-AR10, Cl. 4A1, 5.557%, 7/25/363		826,442		542,072
Series 2006-AR10, Cl. 2A1, 5.628%, 7/25/363		643,979		344,967
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through Certificates, Series 2006-AR2, Cl. 2A6, 5.093%, 3/25/363		329,516		91,812
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.093%, 3/25/363		415,887		298,692
				6,033,627
Residential—3.5%
CWALT Alternative Loan Trust 2004-24CB, Mtg. Pass-Through Certificates, Series 2004-24CB, Cl. 1A1, 6%, 11/1/34		650,123		572,900
CWALT Alternative Loan Trust 2004-28CB, Mtg. Pass-Through Certificates, Series 2004-28CB, Cl. 3A1, 6%, 1/1/35		526,826		358,925
CWALT Alternative Loan Trust 2005-18CB, Mtg. Pass-Through Certificates, Series 2005-18CB, Cl. A8, 5.50%, 5/25/36		1,170,000		864,628
CWALT Alternative Loan Trust 2005-J1, Mtg. Pass-Through Certificates, Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32		969,805		621,137
LB-UBS Commercial Mortgage Trust 2007-C7, Commercial Mtg. Pass- Through Certificates, Series 2007-C7, Cl. AM, 6.166%, 9/11/453		550,000		260,181
Morgan Stanley Mortgage Loan Trust 2006-AR, Mtg. Pass-Through Certificates, Series 2006-AR, Cl. 5A3, 5.416%, 6/25/363		530,000		367,333
RALI Series 2003-QS1 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2003-QS1, Cl. A2, 5.75%, 1/25/33		300,087		299,135
RALI Series 2004-QS10 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2004-QS10, Cl. A3, 0.971%, 7/25/343		111,702		94,078
RALI Series 2006-QS13 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		377,968		363,789
RALI Series 2006-QS5 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS5, Cl. 2A2, 6%, 5/1/36		198,296		193,893

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Residential Continued
WaMu Mortgage Pass-Through Certificates 2003-AR9 Trust, Mtg. Pass-Through Certificates, Series 2003-AR9, Cl. 2A, 4.491%, 9/25/333	$	490,334	$	422,839
WaMu Mortgage Pass-Through Certificates 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 5.75%, 10/25/363		1,719,504		974,827
WaMu Mortgage Pass-Through Certificates 2006-AR8 Trust, Mtg. Pass- Through Certificates, Series 2006-AR8, Cl. 2A1, 6.127%, 8/25/363		1,591,462		1,058,645
WaMu Mortgage Pass-Through Certificates 2007-HY2 Trust, Mtg. Pass-Through Certificates, Series 2007-HY2, Cl. 2A1, 6.615%, 11/1/363		94,656		54,037
Washington Mutual Mortgage Pass-Through Certificates, Mtg. Pass-Through Certificates, Series 2007-1, Cl. 1A8, 6%, 2/25/37		1,796,633		1,571,810
Wells Fargo Mortgage-Backed Securities 2004-R Trust, Mtg. Pass-Through Certificates, Series 2004-R, Cl. 2A1, 4.368%, 9/1/343		90,473		64,768
Wells Fargo Mortgage-Backed Securities 2006-AR5 Trust, Mtg. Pass-Through Certificates, Series 2006-AR5, Cl. 2A2, 5.545%, 4/1/362,3		694,776		180,642
				8,323,567
Total Mortgage-Backed Obligations (Cost $91,093,083)				79,989,785
Non-Convertible Corporate Bonds and Notes—11.4%
ABN Amro Bank NV (NY Branch), 7.125% Sub. Nts., Series B, 10/15/93		400,000		329,268
Albertson’s, Inc., 8% Sr. Unsec. Debs., 5/1/31		880,000		532,400
American International Group, Inc., 6.25% Jr. Sub. Bonds, 3/15/37		560,000		209,636
Axa SA, 6.379% Sub. Perpetual Bonds8,9		2,135,000		956,734
Bank of America Corp.:
8% Unsec. Perpetual Bonds, Series K9		1,025,000		738,328
8.125% Perpetual Bonds, Series M9		225,000		168,581
Barclays Bank plc, 6.278% Perpetual Bonds9		2,600,000		1,505,062
Buckeye Partners LP, 4.625% Sr. Nts., 7/15/13		310,000		263,817
Capmark Financial Group, Inc.:
3.038% Sr. Unsec. Nts., 5/10/103		375,000		191,431
5.875% Sr. Unsec. Nts., 5/10/12		585,000		199,596
Centex Corp., 5.80% Sr. Unsec. Nts., 9/15/09		485,000		463,175
CIT Group Funding Co. of Canada, 4.65% Sr. Unsec. Nts., 7/1/10		670,000		588,373
Citigroup, Inc.:
8.30% Jr. Sub. Bonds, 12/21/573		1,520,000		1,174,925
8.40% Perpetual Bonds, Series E9		760,000		502,770
Clear Channel Communications, Inc., 6.25% Nts., 3/15/11		710,000		216,550
Coca-Cola Co. (The), 7.375% Unsec. Debs., 7/29/93		360,000		422,745
Energy Transfer Partners LP, 5.65% Sr. Unsec. Unsub. Nts., 8/1/12		195,000		174,229
Ford Motor Credit Co., 9.75% Sr. Unsec. Nts., 9/15/10		2,030,000		1,624,564
General Motors Acceptance Corp., 8% Bonds, 11/1/31		1,400,000		820,625
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34		1,850,000		1,345,962
HBOS plc, 6.413% Sub. Perpetual Bonds, Series A8,9		3,100,000		1,204,245
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/353		2,530,000		1,059,746
JPMorgan Chase & Co., 7.90% Perpetual Bonds, Series 19		1,205,000		1,005,001
Kaneb Pipe Line Operating Partnership LP, 5.875% Sr. Unsec. Nts., 6/1/13		830,000		699,228
Lehman Brothers Holdings, Inc., 7.50% Sub. Nts., 5/11/3810		2,910,000		291
Lennar Corp., 7.625% Sr. Unsec. Nts., 3/1/09		170,000		169,150
Macy’s Retail Holdings, Inc., 4.80% Sr. Nts., 7/15/09		535,000		507,155
MBIA, Inc., 5.70% Sr. Unsec. Unsub. Nts., 12/1/34		565,000		229,882
Merrill Lynch & Co., Inc., 7.75% Jr. Sub. Bonds, 5/14/38		1,335,000		1,475,258
MetLife Capital Trust X, 9.25% Sec. Bonds, 4/8/383		300,000		209,665
MetLife, Inc., 6.40% Jr. Unsec. Sub. Bonds, 12/15/363		1,710,000		1,028,372
MGM Mirage, Inc., 6% Sr. Sec. Nts., 10/1/09		925,000		888,000
Monongahela Power Co., 7.36% Unsec. Nts., Series A, 1/15/10		680,000		665,833
NCR Corp., 7.125% Sr. Unsec. Unsub. Nts., 6/15/09		565,000		566,718

	Principal
	Amount			Value
Non-Convertible Corporate Bonds and Notes Continued
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/138	$	244,572		$	260,005
Popular North America, Inc., 4.70% Nts., 6/30/09		845,000			825,967
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/238		1,285,000			1,240,868
Prudential Insurance Co. of America, 8.30% Nts., 7/1/258		1,110,000			750,067
TEPPCO Partners LP, 6.125% Nts., 2/1/13		490,000			436,334
Valero Logistics Operations LP, 6.05% Nts., 3/15/13		210,000			179,902
Washington Mutual Bank NV, 3.337% Sr. Unsec. Nts., 5/1/0910		970,000			286,150
Westar Energy, Inc., 7.125% Sr. Unsec. Nts., 8/1/09		685,000			682,196
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14		565,000			429,400
Total Non-Convertible Corporate Bonds and Notes (Cost $41,637,125)					27,228,204
Convertible Corporate Bonds and Notes—0.6%
Theravance, Inc., 3% Cv. Sub. Nts., 1/15/15 (Cost $1,850,149)	$	2,247,000		$	1,387,523
	Shares
Investment Company—3.6%
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%11,12 (Cost $8,646,429)		8,646,429			8,646,429
Total Investments, at Value (Cost $348,399,942)		119.9	%		285,806,688
Liabilities in Excess of Other Assets		(19.9	)		(47,387,415	)
Net Assets		100.0	%	$	238,419,273

Industry classifications are unaudited.

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2008 was $259,210, which represents 0.11% of the Fund’s net assets. See Note 8 of accompanying Notes.
3.	Represents the current interest rate for a variable or increasing rate security.
4.	When-issued security or delayed delivery to be delivered and settled after December 31, 2008. See Note 1 of accompanying Notes.
5.	Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. These securities amount to $5,321,813 or 2.23% of the Fund’s net assets as of December 31, 2008.
6.	Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. These securities amount to $326,239 or 0.14% of the Fund’s net assets as of December 31, 2008.
7.	All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures contracts. The aggregate market value of such securities is $752,067. See Note 6 of accompanying Notes.
8.	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 $4,411,919 or 1.85% of the Fund’s net assets as of December 31, 2008.
9.	This bond has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest. Rate reported represents the current interest rate for this variable rate security.
10.	Issue is in default. See Note 1 of accompanying Notes.
11.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
OFI Liquid Assets Fund, LLC		—		667,850		667,850		—
Oppenheimer Institutional Money Market Fund, Cl. E		16,578,809		165,592,548		173,524,928		8,646,429
					Value		Income
OFI Liquid Assets Fund, LLC					$	—	$	96	a
Oppenheimer Institutional Money Market Fund, Cl. E						8,646,429		172,114
					$	8,646,429	$	172,210

a.	Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.
12.	Rate shown is the 7-day yield as of December 31, 2008.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments in		Other Financial
Valuation Description	Securities		Instruments*
Level 1—Quoted Prices	$	154,537,033	$	(393,056	)
Level 2—Other Significant Observable Inputs		131,269,655		(535,629	)
Level 3—Significant Unobservable Inputs		—		—
Total	$	285,806,688	$	(928,685	)

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

Futures Contracts as of December 31, 2008 are as follows:

								Unrealized
		Number of		Expiration				Appreciation
Contract Description	Buy/Sell	Contracts		Date		Value		(Depreciation)
U.S. Treasury Bonds, 10 yr.	Buy		85		3/20/09	$	10,688,750	$	110,843
U.S. Treasury Bonds, 20 yr.	Buy		81		3/20/09		11,181,797		978,929
U.S. Treasury Nts., 2 yr.	Sell		171		3/31/09		37,288,688		(143,074	)
								$	946,698

Credit Default Swap Contracts as of December 31, 2008 are as follows:

		Buy/Sell	Notional		Pay/					Upfront
		Credit	Amount		Receive			Termination		Payment
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		Received/(Paid)		Value
ABX.HE.AA.06-2 Index:
	Barclays Bank plc	Sell	$	350		0.170	%		5/25/46	$	270,766	$	(307,387	)
	Deutsche Bank AG	Sell		240		0.170			5/25/46		28,798		(210,780	)
	Goldman Sachs Bank USA	Sell		85		0.170			5/25/46		7,003		(74,651	)
	Goldman Sachs Bank USA	Sell		330		0.170			5/25/46		130,342		(289,822	)
	Morgan Stanley Capital Services, Inc.	Sell		85		0.170			5/25/46		6,791		(74,651	)
	Morgan Stanley Capital Services, Inc.	Sell		160		0.170			5/25/46		15,999		(140,520	)
		Total		1,250							459,699		(1,097,811	)
Allied Waste North America, Inc.:
	Deutsche Bank AG	Sell		340		2.000			9/20/09		—		2,625
	Deutsche Bank AG	Sell		530		2.000			9/20/09		—		4,092
		Total		870							—		6,717
American International Group, Inc.:
	Barclays Bank plc	Sell		180		3.000			3/20/09		—		(1,055	)
	Barclays Bank plc	Sell		695		4.000			3/20/09		—		(2,396	)
	Barclays Bank plc	Sell		595		5.350			3/20/09		—		(112	)
	Deutsche Bank AG	Sell		870		4.000			3/20/09		—		(2,999	)
	Morgan Stanley Capital Services, Inc.	Sell		520		4.000			3/20/09		—		(1,792	)
		Total		2,860							—		(8,354	)

Credit Default Swap Contracts: Continued

		Buy/Sell	Notional		Pay/					Upfront
		Credit	Amount		Receive			Termination		Payment
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		Received/(Paid)			Value
Capmark Financial Group, Inc.:
	Barclays Bank plc	Sell	$	520		1.000	%		6/20/12	$	—		$	(272,564	)
	Goldman Sachs Bank USA	Sell		535		0.950			6/20/12		—			(280,786	)
	Morgan Stanley Capital Services, Inc.	Sell		50		5.000			6/20/12		13,500			(23,523	)
		Total		1,105							13,500			(576,873	)
CDX North America High Yield Index, Series 7	Deutsche Bank AG	Buy		4,587		0.400			12/20/11		(483	)		167,165
		Total		4,587							(483	)		167,165
Cemex SAB de CV	Deutsche Bank AG	Sell		300		2.000			3/20/09		—			(4,388	)
		Total		300							—			(4,388	)
Centex Corp.	Deutsche Bank AG	Sell		135		1.550			9/20/09		—			(3,231	)
		Total		135							—			(3,231	)
CIT Group, Inc.	Barclays Bank plc	Sell		115		10.500			6/20/09		—			1,520
		Total		115							—			1,520
Countrywide Home Loans, Inc.	Morgan Stanley Capital Services, Inc.	Sell		1,615		0.420			6/20/09		—			(6,136	)
		Total		1,615							—			(6,136	)
Energy Future Holdings Corp.:
	Credit Suisse International	Sell		175		5.910			12/20/12		—			(48,030	)
	Credit Suisse International	Sell		170		6.050			12/20/12		—			(46,109	)
	Credit Suisse International	Sell		175		6.000			12/20/12		—			(47,667	)
		Total		520							—			(141,806	)
Ford Motor Co.:
	Deutsche Bank AG	Sell		150		5.000			12/20/18		81,000			(105,941	)
	Morgan Stanley Capital Services, Inc.	Sell		1,100		7.150			12/20/16		—			(715,769	)
	Morgan Stanley Capital Services, Inc.	Sell		525		7.050			12/20/16		—			(345,617	)
		Total		1,775							81,000			(1,167,327	)
General Electric Capital Corp.:
	Barclays Bank plc	Sell		347		8.000			12/20/09		—			10,224
	Barclays Bank plc	Sell		410		5.750			12/20/09		—			3,209
	Credit Suisse International	Sell		325		8.000			12/20/09		—			9,575
		Total		1,082							—			23,008
General Motors Corp.:
	Deutsche Bank AG	Sell		210		5.000			12/20/18		140,700			(166,259	)
	Morgan Stanley Capital Services, Inc.	Sell		545		5.800			12/20/16		—			(431,098	)
	Morgan Stanley Capital Services, Inc.	Sell		535		5.750			12/20/16		—			(423,420	)
		Total		1,290							140,700			(1,020,777	)
Goldman Sachs Group, Inc. (The):
	Barclays Bank plc	Sell		520		5.750			12/20/09		—			10,597
	Deutsche Bank AG	Sell		525		5.500			12/20/09		—			9,424
	Deutsche Bank AG	Sell		420		5.450			12/20/09		—			7,335
		Total		1,465							—			27,356
Hartford Financial Services Group, Inc.	Morgan Stanley Capital Services, Inc.	Sell		300		2.400			3/20/09		—			(2,997	)
		Total		300							—			(2,997	)
HCP, Inc.	Barclays Bank plc	Sell		455		4.600			3/20/09		—			522
		Total		455							—			522
Idearc, Inc.	Credit Suisse International	Sell		60		5.000			12/20/09		12,300			(43,404	)
		Total		60							12,300			(43,404	)
Inco Ltd.:
	Morgan Stanley Capital Services, Inc.	Buy		545		0.700			3/20/17		—			86,986
	Morgan Stanley Capital Services, Inc.	Buy		550		0.630			3/20/17		—			90,175
		Total		1,095							—			177,161
	Morgan Stanley Capital Services, Inc.	Sell		545		1.170			3/20/17		—			(69,265	)
	Morgan Stanley Capital Services, Inc.	Sell		550		1.100			3/20/17		—			(72,382	)
		Total		1,095							—			(141,647	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap Contracts: Continued

		Buy/Sell	Notional		Pay/					Upfront
		Credit	Amount		Receive			Termination		Payment
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		Received/(Paid)		Value
iStar Financial, Inc.:
	Barclays Bank plc	Sell	$	480		4.400	%		12/20/12	$	—	$	(260,245	)
	Credit Suisse International	Sell		65		4.000			12/20/12		—		(35,405	)
	Credit Suisse International	Sell		160		12.000			3/20/09		—		(17,497	)
	Deutsche Bank AG	Sell		75		4.320			12/20/12		—		(40,701	)
	Deutsche Bank AG	Sell		400		12.000			3/20/09		—		(43,741	)
	Goldman Sachs Bank USA	Sell		75		3.950			12/20/12		—		(40,876	)
		Total		1,255							—		(438,465	)
J.C. Penney Corp., Inc.:
	Morgan Stanley Capital Services, Inc.	Sell		525		1.070			12/20/17		—		(102,264	)
	Morgan Stanley Capital Services, Inc.	Sell		545		1.300			12/20/17		—		(98,390	)
		Total		1,070							—		(200,654	)
Jones Apparel Group, Inc.:
	Deutsche Bank AG	Buy		290		2.635			6/20/18		—		64,768
	Morgan Stanley Capital Services, Inc.	Buy		575		2.970			6/20/18		—		117,956
		Total		865							—		182,724
	Deutsche Bank AG	Sell		290		2.720			6/20/13		—		(57,512	)
	Morgan Stanley Capital Services, Inc.	Sell		575		3.200			6/20/13		—		(105,184	)
		Total		865							—		(162,696	)
Kohl’s Corp.:
	Barclays Bank plc	Buy		285		1.180			6/20/18		—		25,444
	Barclays Bank plc	Buy		285		1.040			6/20/18		—		28,345
	Deutsche Bank AG	Buy		280		1.300			6/20/18		—		22,555
	Morgan Stanley Capital Services, Inc.	Buy		785		0.660			12/20/17		—		95,759
	Morgan Stanley Capital Services, Inc.	Buy		820		0.870			12/20/17		—		87,983
		Total		2,455							—		260,086
	Barclays Bank plc	Sell		285		1.080			6/20/13		—		(19,174	)
	Barclays Bank plc	Sell		285		0.900			6/20/13		—		(21,205	)
	Deutsche Bank AG	Sell		280		1.180			6/20/13		—		(17,729	)
		Total		850							—		(58,108	)
Liz Claiborne, Inc.:
	Morgan Stanley Capital Services, Inc.	Buy		560		2.900			6/20/18		—		173,389
		Total		560							—		173,389
	Deutsche Bank AG	Sell		1,095		3.250			6/20/09		—		(32,151	)
	Morgan Stanley Capital Services, Inc.	Sell		560		3.100			6/20/13		—		(148,646	)
		Total		1,655							—		(180,797	)
Louisiana-Pacific Corp.	Morgan Stanley Capital Services, Inc.	Sell		550		6.250			9/20/09		—		(46,997	)
		Total		550							—		(46,997	)
Merrill Lynch & Co., Inc.:
	Barclays Bank plc	Sell		1,080		4.150			9/20/09		—		1,440
	Credit Suisse International	Sell		540		4.150			9/20/09		—		720
		Total		1,620							—		2,160
Morgan Stanley	Credit Suisse International	Sell		715		7.800			12/20/13		—		106,944
		Total		715							—		106,944
Prudential Financial, Inc.	Deutsche Bank AG	Sell		385		2.050			6/20/09		—		(12,290	)
		Total		385							—		(12,290	)
Pulte Homes, Inc.	Goldman Sachs Bank USA	Sell		800		2.750			9/20/09		—		(1,125	)
		Total		800							—		(1,125	)
Reliant Energy, Inc.:
	Credit Suisse International	Sell		280		9.000			12/20/09		—		(7,027	)
	Credit Suisse International	Sell		285		9.000			12/20/09		—		(7,152	)
		Total		565							—		(14,179	)
R.H. Donnelley Corp.	Goldman Sachs International	Sell		655		9.000			3/20/09		—		(28,240	)
		Total		655							—		(28,240	)
Rite Aid Corp.:
	Credit Suisse International	Sell		115		7.500			3/20/09		—		(5,885	)
	Credit Suisse International	Sell		305		5.000			9/20/09		18,300		(54,205	)
		Total		420							18,300		(60,090	)

Credit Default Swap Contracts: Continued

		Buy/Sell	Notional		Pay/					Upfront
		Credit	Amount		Receive			Termination		Payment
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		Received/(Paid)			Value
Sprint Nextel Corp.:
	Credit Suisse International	Sell	$	1,300		6.300	%		3/20/09	$	—		$	(18,104	)
	Goldman Sachs Bank USA	Sell		470		6.300			3/20/09		—			(6,545	)
		Total		1,770							—			(24,649	)
Temple-Inland, Inc.	Deutsche Bank AG	Sell		135		3.000			9/20/09		—			(8,026	)
		Total		135							—			(8,026	)
Tenet Healthcare Corp.	Deutsche Bank AG	Sell		870		1.600			3/20/09		—			(20,156	)
		Total		870							—			(20,156	)
Tribune Co.:
	Credit Suisse International	Sell		50		5.000			1/16/09		11,000			(46,881	)
	Credit Suisse International	Sell		255		5.000			1/16/09		58,650			(239,094	)
	Credit Suisse International	Sell		15		5.000			1/16/09		4,800			(14,064	)
	Credit Suisse International	Sell		150		5.000			1/16/09		52,500			(140,643	)
	Credit Suisse International	Sell		195		5.000			1/16/09		76,050			(182,836	)
		Total		665							203,000			(623,518	)
Univision Communications, Inc.:
	Goldman Sachs Bank USA	Sell		155		5.000			6/20/09		15,500			(51,242	)
	Goldman Sachs Bank USA	Sell		60		5.000			6/20/09		6,600			(19,836	)
	Goldman Sachs Bank USA	Sell		160		5.000			6/20/09		9,600			(52,895	)
	Morgan Stanley Capital Services, Inc.	Sell		110		5.000			12/20/09		7,700			(37,775	)
	Morgan Stanley Capital Services, Inc.	Sell		120		5.000			12/20/09		15,600			(41,209	)
		Total		605							55,000			(202,957	)
Vornado Realty LP:
	Credit Suisse International	Sell		300		3.600			3/20/09		—			(2,607	)
	Deutsche Bank AG	Sell		605		3.875			6/20/09		—			(4,851	)
		Total		905							—			(7,458	)
XL Capital Ltd.:
	Barclays Bank plc	Sell		610		3.550			9/20/09		—			(45,272	)
	Deutsche Bank AG	Sell		690		3.550			9/20/09		—			(51,210	)
		Total		1,300							—			(96,482	)
		Grand Total Buys		9,562							(483	)		960,525
		Grand Total Sells		33,947							983,499			(6,233,411	)
			Total Credit Default Swaps							$	983,016		$	(5,272,886	)

The table that follows shows the undiscounted maximum potential payment by the Fund related to selling credit protection in credit default swaps:

Type of Reference	Total Maximum Potential
Asset on which the	Payments for Selling Credit				Reference Asset
Fund Sold Protection	Protection (Undiscounted)		Amount Recoverable*		Rating Range**
Asset-Backed Indexes	$	1,250,000	$	—	AA
Single Name Corporate Debt		19,497,000		850,000	AAA to BBB-
Single Name Corporate Debt		13,200,000		1,425,000	BB+ to D
Total	$	33,947,000	$	2,275,000

*	Amounts recoverable includes potential payments from related purchased protection for instances where the Fund is the seller of protection. In addition, the Fund has no recourse provisions under the credit derivatives and holds no collateral which can offset or reduce potential payments under a triggering event.
**	The reference asset security rating, as rated by any rating organization, are included in the equivalent Standard & Poor’s rating category. The reference asset rating represents the likelihood of a potential payment by the Fund if the reference asset experiences a credit event as of period end.

Interest Rate Swap Contracts as of December 31, 2008 are as follows:

		Notional
		Amount		Paid by	Received by			Termination
Reference Entity	Swap Counterparty	(000’s)		the Fund	the Fund			Date		Value
USD BBA LIBOR	Deutsche Bank AG	$	4,300	Three-Month USD BBA LIBOR		5.529	%		8/10/17	$	1,133,699

Abbreviation/Definition is as follows:

BBA LIBOR             British Bankers’ Association London-Interbank Offered Rate

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Total Return Swap Contracts as of December 31, 2008 are as follows:

	Notional
	Amount		Paid by		Received by		Termination
Reference Entity/Swap Counterparty	(000’s)		the Fund		the Fund		Date		Value
Banc of America Securities LLC AAA 10 yr.
CMBS Daily Index*:
Goldman Sachs Group, Inc. (The)	$	16,370		A		D		3/31/09	$	3,526,234
Goldman Sachs Group, Inc. (The)		12,980		A		D		1/31/09		(3,083,724	)
							Reference Entity Total			442,510
Barclays Capital U.S. CMBS AAA Index*:
Morgan Stanley		3,200		A		D		2/1/09		350,027
Morgan Stanley		6,100		A		D		3/1/09		668,445
							Reference Entity Total			1,018,472
Barclays Capital U.S. CMBS AAA 8.5+ Index*:
Goldman Sachs Group, Inc. (The)		1,100		A		D		3/1/09		187,820
Goldman Sachs Group, Inc. (The)		1,440		A		D		3/1/09		245,291
Goldman Sachs Group, Inc. (The)		1,880		A		D		2/1/09		321,002
Morgan Stanley		1,070		A		D		3/1/09		182,450
Morgan Stanley		2,900		A		D		3/1/09		490,858
Morgan Stanley		180		A		D		2/1/09		30,305
Morgan Stanley		1,530		A		D		2/1/09		260,367
Morgan Stanley		1,590		A		D		2/1/09		271,828
Morgan Stanley		900		A		D		2/1/09		152,655
							Reference Entity Total			2,142,576
							Total of Total Return Swaps		$	3,603,558

* The CMBS Indexes are representative indexes of segments of the commercial mortgage backed securities market. These indexes are measured by movements in the credit spreads of the underlying holdings. As the credit market perceives an improvement in the credit quality of an Index’s underlying holdings and reduced probability of default, the spread of an index narrows. As the credit market perceives a decrease in credit quality and an increased probability of default on an Index’s underlying holdings, the spread widens.

Abbreviation is as follows:

CMBS                Commercial Mortgage Backed Securities

A — The Fund makes periodic payments when credit spreads, as represented by the Reference Entity, widen.

B — The Fund makes periodic payments when credit spreads, as represented by the Reference Entity, narrow.

C — The Fund receives periodic payments when credit spreads, as represented by the Reference Enitiy, widen.

D — The Fund receives periodic payments when credit spreads, as represented by the Reference Enitiy, narrow.

The following table aggregates, as of period end, the amount receivable from/(payable to) each counterparty with whom the Fund has entered into a swap agreement. Swaps are individually disclosed in the preceding tables.

Swap Summary as of December 31, 2008 is as follows:

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)		Value
Barclays Bank plc:
	Credit Default Buy Protection	$	570	$	53,789
	Credit Default Sell Protection		6,927		(901,898	)
					(848,109	)
Credit Suisse International	Credit Default Sell Protection		5,635		(839,371	)
Deutsche Bank AG:
	Credit Default Buy Protection		5,157		254,488
	Credit Default Sell Protection		8,545		(758,489	)
	Interest Rate		4,300		1,133,699
					629,698
Goldman Sachs Bank USA	Credit Default Sell Protection		2,670		(817,778	)
Goldman Sachs Group, Inc. (The)	Total Return		33,770		1,196,623
Goldman Sachs International	Credit Default Sell Protection		655		(28,240	)
Morgan Stanley	Total Return		17,470		2,406,935
Morgan Stanley Capital Services, Inc.:
	Credit Default Buy Protection		3,835		652,248
	Credit Default Sell Protection		9,515		(2,887,635	)
					(2,235,387	)
		Total Swaps		$	(535,629	)

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $339,753,513)	$	277,160,259
Affiliated companies (cost $8,646,429)		8,646,429
		285,806,688
Cash		583,454
Swaps, at value (upfront payment paid $483)		8,949,733
Receivables and other assets:
Interest, dividends and principal paydowns		1,202,325
Shares of beneficial interest sold		222,975
Investments sold		31,041
Terminated investment contracts		20,836
Due from Manager		48
Other		12,554
Total assets		296,829,654
Liabilities
Swaps, at value (upfront payment received $983,499)		9,485,362
Payables and other liabilities:
Investments purchased (including $46,852,956 purchased on a when-issued or delayed delivery basis)		48,157,988
Futures margins		393,056
Shares of beneficial interest redeemed		128,054
Terminated investment contracts		126,740
Distribution and service plan fees		44,085
Shareholder communications		18,025
Trustees’ compensation		6,798
Transfer and shareholder servicing agent fees		1,720
Other		48,553
Total liabilities		58,410,381
Net Assets	$	238,419,273
Composition of Net Assets
Par value of shares of beneficial interest	$	28,279
Additional paid-in capital		361,723,545
Accumulated net investment income		657,969
Accumulated net realized loss on investments and foreign currency transactions		(62,802,368	)
Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies		(61,188,152	)
Net Assets	$	238,419,273
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $169,621,580 and 20,071,377 shares of beneficial interest outstanding)	$	8.45
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $68,797,693 and 8,207,865 shares of beneficial interest outstanding)	$	8.38

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Interest	$	11,890,092
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $101,430)		3,012,437
Affiliated companies		172,114
Income from investment of securities lending cash collateral, net—affiliated companies		96
Total investment income		15,074,739
Expenses
Management fees		2,905,296
Distribution and service plan fees—Service shares		250,142
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,994
Custodian fees and expenses		17,253
Trustees’ compensation		13,460
Other		54,492
Total expenses		3,260,631
Less waivers and reimbursements of expenses		(363,511	)
Net expenses		2,897,120
Net Investment Income		12,177,619
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies		(46,686,226	)
Closing and expiration of futures contracts		(3,712,632	)
Foreign currency transactions		1,865,139
Short positions		311
Swap contracts		(36,620,419	)
Net realized loss		(85,153,827	)
Net change in unrealized appreciation (depreciation) on:
Investments		(122,673,038	)
Translation of assets and liabilities denominated in foreign currencies		(897,338	)
Futures contracts		1,048,047
Short positions		1,220
Swap contracts		989,805
Net change in unrealized depreciation		(121,531,304	)
Net Decrease in Net Assets Resulting from Operations	$	(194,507,512	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	12,177,619		$	13,368,547
Net realized gain (loss)		(85,153,827	)		19,935,422
Net change in unrealized appreciation (depreciation)		(121,531,304	)		(13,245,008	)
Net increase (decrease) in net assets resulting from operations		(194,507,512	)		20,058,961
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(8,878,080	)		(10,919,746	)
Service shares		(2,607,795	)		(2,568,291	)
		(11,485,875	)		(13,488,037	)
Distributions from net realized gain:
Non-Service shares		(21,412,945	)		(34,150,478	)
Service shares		(7,011,379	)		(8,836,795	)
		(28,424,324	)		(42,987,273	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(42,030,701	)		(21,014,578	)
Service shares		7,520,395			17,776,612
		(34,510,306	)		(3,237,966	)
Net Assets
Total decrease		(268,928,017	)		(39,654,315	)
Beginning of period		507,347,290			547,001,605
End of period (including accumulated net investment income of $657,969 and $12,343,063, respectively)	$	238,419,273		$	507,347,290

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares     Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	16.41		$	17.69		$	17.07		$	17.35		$	15.92
Income (loss) from investment operations:
Net investment income1		.41			.43			.40			.33			.26
Net realized and unrealized gain (loss)		(7.03	)		.19			1.38			.31			1.33
Total from investment operations		(6.62	)		.62			1.78			.64			1.59
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.39	)		(.46	)		(.36	)		(.30	)		(.16	)
Distributions from net realized gain		(.95	)		(1.44	)		(.80	)		(.62	)		—
Total dividends and/or distributions to shareholders		(1.34	)		(1.90	)		(1.16	)		(.92	)		(.16	)
Net asset value, end of period	$	8.45		$	16.41		$	17.69		$	17.07		$	17.35
Total Return, at Net Asset Value2		(43.47	)%		3.79	%		11.15	%		3.89	%		10.10	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	169,621		$	385,948		$	435,639		$	503,753		$	547,290
Average net assets (in thousands)	$	295,669		$	418,103		$	456,513		$	522,754		$	528,655
Ratios to average net assets:3
Net investment income		3.14	%		2.55	%		2.42	%		1.98	%		1.59	%
Total expenses		0.76	%4		0.75	%4		0.75	%4		0.74	%		0.74	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.67	%		0.73	%		0.75	%		0.74	%		0.74	%
Portfolio turnover rate5		67	%		68	%		76	%		67	%		68	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.76	%
Year Ended December 31, 2007	0.75	%
Year Ended December 31, 2006	0.75	%

5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	474,582,075	$	434,587,487
Year Ended December 31, 2007	$	296,201,319	$	315,527,720
Year Ended December 31, 2006	$	612,825,833	$	666,549,894
Year Ended December 31, 2005	$	1,224,652,741	$	1,250,455,539
Year Ended December 31, 2004	$	1,460,076,994	$	1,473,590,963

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares     Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	16.28		$	17.57		$	16.97		$	17.26		$	15.87
Income (loss) from investment operations:
Net investment income1		.37			.38			.36			.29			.23
Net realized and unrealized gain (loss)		(6.97	)		.19			1.37			.31			1.31
Total from investment operations		(6.60	)		.57			1.73			.60			1.54
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.35	)		(.42	)		(.33	)		(.27	)		(.15	)
Distributions from net realized gain		(.95	)		(1.44	)		(.80	)		(.62	)		—
Total dividends and/or distributions to shareholders		(1.30	)		(1.86	)		(1.13	)		(.89	)		(.15	)
Net asset value, end of period	$	8.38		$	16.28		$	17.57		$	16.97		$	17.26
Total Return, at Net Asset Value2		(43.62	)%		3.49	%		10.86	%		3.67	%		9.79	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	68,798		$	121,399		$	111,363		$	88,156		$	59,650
Average net assets (in thousands)	$	100,164		$	117,012		$	100,010		$	72,977		$	39,851
Ratios to average net assets:3
Net investment income		2.90	%		2.30	%		2.17	%		1.74	%		1.41	%
Total expenses		1.01	%4		1.00	%4		1.01	%4		1.00	%		1.02	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.92	%		0.98	%		1.01	%		1.00	%		1.02	%
Portfolio turnover rate5		67	%		68	%		76	%		67	%		68	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	1.01	%
Year Ended December 31, 2007	1.00	%
Year Ended December 31, 2006	1.01	%

5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	474,582,075	$	434,587,487
Year Ended December 31, 2007	$	296,201,319	$	315,527,720
Year Ended December 31, 2006	$	612,825,833	$	666,549,894
Year Ended December 31, 2005	$	1,224,652,741	$	1,250,455,539
Year Ended December 31, 2004	$	1,460,076,994	$	1,473,590,963

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Balanced Fund/VA (the “Fund”), is a separate series of Oppenheimer Variable Account Funds, an open end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek a high total investment return, which includes current income and capital appreciation in the value of its shares. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Securities on a When-Issued or Delayed Delivery Basis. The Fund may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis. “When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis normally takes place within six months and possibly as long as two years or more after the 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 purchase of securities on a when-issued basis may increase the volatility of the Fund’s net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. When the Fund engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain or dispose of the security at a price and yield it considers advantageous. The Fund maintains internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase.

As of December 31, 2008, the Fund had purchased securities issued on a when-issued or delayed delivery basis and sold securities issued on a delayed delivery basis as follows:

	When-Issued or Delayed Delivery
	Basis Transactions
Purchased securities	$	46,852,956

The Fund may enter into “forward roll” transactions with respect to mortgage-related securities. In this type of transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security (same type, coupon and maturity) at a later date at a set price. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. The Fund records the incremental difference between the forward purchase and sale of each forward roll as realized gain (loss) on investments or as fee income in the case of such transactions that have an associated fee in lieu of a difference in the forward purchase and sale price.

     Risks of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Fund to receive inferior securities at redelivery as compared to the securities sold to the counterparty; counterparty credit risk. To assure its future payment of the purchase price, the Fund maintains internally designated assets with a market value equal to or greater than the payment obligation under the roll.

Securities Sold Short. The Fund may short sell when-issued securities for future settlement. The value of the open short position is recorded as a liability, and the Fund records an unrealized gain or loss for the change in value of the open short position. The Fund records a realized gain or loss when the short position is closed out.

     As of December 31, 2008, the Fund had no securities sold short.

Credit Risk. The Fund invests in high-yield, non-investment-grade bonds, which may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of December 31, 2008, securities with an aggregate market value of $286,441, representing 0.12% of the Fund’s net assets, were in default.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments in OFI Liquid Assets Fund, LLC. The Fund is permitted to invest cash collateral received in connection with its securities lending activities. Pursuant to the Fund’s Securities Lending Procedures, the Fund may invest cash collateral in, among other investments, an affiliated money market fund. OFI Liquid Assets Fund, LLC (“LAF”) is a limited liability company whose investment objective is to seek current income and stability of principal. The Manager is also the investment adviser of LAF. LAF is not registered under the Investment Company Act of 1940. However, LAF does comply with the investment restrictions applicable to registered money market funds set forth in Rule 2a-7 adopted under the Investment Company Act. The Fund’s investment in LAF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends. The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation
					Based on Cost of
					Securities and
Undistributed	Undistributed		Accumulated		Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3,4,5,6		Tax Purposes
$—	$	—	$	60,472,103	$	62,853,657

1. As of December 31, 2008, the Fund had $44,402,106 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2008, details of the capital loss carryforward were as follows:

Expiring
2016	$	44,402,106

2.	As of December 31, 2008, the Fund had $15,792,384 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
3.	The Fund had $526 of post-October foreign currency losses which were deferred.
4.	The Fund had $277,087 of straddle losses which were deferred.
5.	During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.
6.	During the fiscal year ended December 31, 2007, the Fund did not utilize any capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Reduction		Reduction
	to Accumulated		to Accumulated Net
Reduction	Net Investment		Realized Loss
to Paid-in Capital	Income		on Investments
$20,496,805	$	12,376,838	$	32,873,643

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	16,601,502	$	14,806,317
Long-term capital gain		23,308,697		41,668,993
Total	$	39,910,199	$	56,475,310

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	349,782,510
Federal tax cost of other investments		(17,064,917	)
Total federal tax cost	$	332,717,593
Gross unrealized appreciation	$	29,038,573
Gross unrealized depreciation		(91,892,230	)
Net unrealized depreciation	$	(62,853,657	)

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		908,475		$	11,841,885			999,612		$	16,748,816
Dividends and/or distributions reinvested		2,214,256			30,291,025			2,818,651			45,070,224
Redeemed		(6,571,367	)		(84,163,611	)		(4,921,045	)		(82,833,618	)
Net decrease		(3,448,636	)	$	(42,030,701	)		(1,102,782	)	$	(21,014,578	)
Service Shares
Sold		1,716,888		$	19,475,736			1,507,547		$	25,038,747
Dividends and/or distributions reinvested		707,292			9,619,174			717,301			11,405,086
Redeemed		(1,673,753	)		(21,574,515	)		(1,107,184	)		(18,667,221	)
Net increase		750,427		$	7,520,395			1,117,664		$	17,776,612

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LCC, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	234,240,565	$	310,538,658
U.S. government and government agency obligations		—		1,031,793
To Be Announced (TBA) mortgage-related securities		474,582,075		434,587,487

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $20,022 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net

4. Fees and Other Transactions with Affiliates Continued

assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. Effective September 1, 2007, the Manager voluntarily agreed to waive a portion of the advisory fee and/or reimburse certain expenses so the “Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses” will not exceed 0.67% of average net assets for Non-Service shares and 0.92% of average annual net assets for Service shares. During the year ended December 31, 2008, OFS waived $263,110 and $95,094 for Non-Service and Service shares, respectively. This voluntary waiver and/or reimbursement may be withdrawn at any time.

     OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $5,307 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into foreign currency exchange contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

     Risks to the Fund include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received.

     As of December 31, 2008, the Fund had no outstanding forward contracts.

NOTES TO FINANCIAL STATEMENTS Continued

6. Futures Contracts

A futures contract is a commitment to buy or sell a specific amount of a financial instrument at a negotiated price on a stipulated future date. The Fund may buy and sell futures contracts and may also buy or write put or call options on these futures contracts.

     Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund’s assets are valued.

     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.

     Futures contracts are reported on a schedule following the Statement of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted in the Statement of Assets and Liabilities. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. Realized gains (losses) are reported in the Statement of Operations at the closing or expiration of futures contracts.

     Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market where the Fund is unable to liquidate the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities.

7. Swap Contracts

The Fund may enter into privately negotiated agreements with a counterparty to exchange or “swap” payments at specified future intervals based on the return of an asset (such as a stock, bond or currency) or non-asset reference (such as an interest rate or index). The swap agreement will specify the “notional” amount of the asset or non-asset reference to which the contract relates. As derivative contracts, swaps typically do not have an associated cost at contract inception. At initiation, contract terms are typically set at market value such that the value of the swap is $0. If a counterparty specifies terms that would result in the contract having a value other than $0 at initiation, one counterparty will pay the other an upfront payment to equalize the contract. Subsequent changes in market value are calculated based upon changes in the performance of the asset or non-asset reference multiplied by the notional value of the contract. Contract types may include credit default, interest rate, total return, and currency swaps.

     Swaps are marked to market daily using quotations primarily from pricing services, counterparties or brokers. Swap contracts are reported on a schedule following the Statement of Investments. The value of the contracts is separately disclosed on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) is comprised of the change in the valuation of the swap combined with the accrued interest due to (owed by) the Fund at termination or settlement. The net change in this amount during the period is included on the Statement of Operations. Any payment received or paid to initiate a contract is recorded as a cost of the swap in the Statement of Assets and Liabilities and as a component of unrealized gain or loss on the Statement of Operations until contract termination; upon contract termination, this amount is recorded as realized gain or loss on the Statement of Operations. Excluding amounts paid at contract initiation as described above, the Fund also records any periodic payments received from (paid to) the counterparty, including at termination, as realized gain (loss) on the Statement of Operations.

     Risks of entering into swap contracts include credit, market and liquidity risk. Credit risk arises from the possibility that the counterparty fails to make a payment when due or otherwise defaults under the terms of the contract. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received. Market risk is the risk that the value of the contract will depreciate due to unfavorable changes in the performance of the asset or non-asset reference. Liquidity risk is the risk that the Fund may be unable to close the contract prior to its termination.

Credit Default Swap Contracts. A credit default swap is a bilateral contract that enables an investor to buy or sell protection on a debt security against a defined-issuer credit event, such as the issuer’s failure to make timely payments of interest or principal on the debt security, bankruptcy or restructuring. The Fund may enter into credit default swaps either by buying or selling protection on a single security or a basket of securities (the “reference asset”).

     The buyer of protection pays a periodic fee to the seller of protection based on the notional amount of debt securities underlying the swap contract. The seller of protection agrees to compensate the buyer of protection for future potential losses as a result of a credit event on the reference asset. The contract effectively transfers the credit event risk of the reference asset from the buyer of protection to the seller of protection.

     The ongoing value of the contract will fluctuate throughout the term of the contract based primarily on the credit risk of the reference asset. If the credit quality of the reference asset improves relative to the credit quality at contract initiation, the buyer of protection may have an unrealized loss greater than the anticipated periodic fee owed. This unrealized loss would be the result of current credit protection being cheaper than the cost of credit protection at contract initiation. If the buyer elects to terminate the contract prior to its maturity, and there has been no credit event, this unrealized loss will become realized. If the contract is held to maturity, and there has been no credit event, the realized loss will be equal to the periodic fee paid over the life of the contract.

     If there is a credit event, the buyer of protection can exercise its rights under the contract and receive a payment from the seller of protection equal to the notional amount of the reference asset less the market value of the reference asset. Upon exercise of the contract the difference between the value of the underlying reference asset and the notional amount is recorded as realized gain (loss) and is included on the Statement of Operations.

     Risks of credit default swaps include credit, market and liquidity risk. Additional risks include but are not limited to: the cost of paying for credit protection if there are no credit events or the cost of selling protection when a credit event occurs (paying the notional amount to the protection buyer); and pricing transparency when assessing the value of a credit default swap.

     As of the period end, the Fund has sold credit protection through credit default swaps to gain exposure to the credit risk of individual securities and/or indexes that are either unavailable or considered to be less attractively priced in the bond market. The Fund has also engaged in pairs trades by purchasing protection through a credit default swap referenced to the debt of an issuer, and simultaneously selling protection through a credit default swap referenced to the debt of a different issuer with the intent to realize gains from the pricing differences of the two issuers who are expected to have similar market risks. Pairs trades attempt to gain exposure to credit risk while hedging or offsetting the effects of overall market movements. In addition, the Fund has engaged in spread curve trades by simultaneously purchasing and selling protection through credit default swaps referenced to the same issuer but with different maturities. Spread curve trades attempt to gain exposure to credit risk on a forward basis by realizing gains on the expected differences in spreads.

Interest Rate Swap Contracts. An interest rate swap is an agreement between counterparties to exchange periodic payments based on interest rates. One cash flow stream will typically be a floating rate payment based upon a specified interest rate while the other is typically a fixed interest rate.

     Risks of interest rate swaps include credit, market and liquidity risk. Additional risks include but are not limited to, interest rate risk. There is a risk, based on future movements of interest rates that the payments made by the Fund under a swap agreement will be greater than the payments it received.

Total Return Swap Contracts. A total return swap is an agreement between counterparties to exchange periodic payments based on asset or non-asset references. One cash flow is typically based on a non-asset reference (such as an interest rate or index) and the other on the total return of a reference asset (such as a security or a basket of securities). The total return of the reference asset typically includes appreciation or depreciation on the reference asset, plus any interest or dividend payments.

     Risks of total return swaps include credit, market and liquidity risk.

NOTES TO FINANCIAL STATEMENTS Continued

8. Illiquid Securities

As of December 31, 2008, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

9. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

     As of December 31, 2008, the Fund had no securities on loan.

10. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

11. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Capital Appreciation Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Capital Appreciation Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Shares		Value
Common Stocks—96.1%
Consumer Discretionary—4.9%
Hotels, Restaurants & Leisure—0.6%
Burger King Holdings, Inc.		270,820	$	6,467,182
Media—2.0%
Cablevision Systems Corp. New York Group, Cl. A		578,790		9,746,824
Focus Media Holding Ltd., ADR1		435,900		3,962,331
McGraw-Hill Cos., Inc. (The)		275,900		6,398,121
Walt Disney Co. (The)		152,100		3,451,149
				23,558,425
Specialty Retail—0.5%
Staples, Inc.		310,710		5,567,923
Textiles, Apparel & Luxury Goods—1.8%
Coach, Inc.1		384,540		7,986,896
Polo Ralph Lauren Corp., Cl. A		282,200		12,814,702
				20,801,598
Consumer Staples—8.4%
Beverages—2.0%
PepsiCo, Inc.		415,500		22,756,935
Food & Staples Retailing—2.0%
Wal-Mart Stores, Inc.		401,400		22,502,484
Food Products—3.9%
Cadbury plc		1,957,050		17,379,417
Nestle SA		700,387		27,556,158
				44,935,575
Household Products—0.5%
Colgate-Palmolive Co.		82,300		5,640,842
Energy—9.1%
Energy Equipment & Services—2.5%
Cameron International Corp.1		277,700		5,692,850
Schlumberger Ltd.		431,500		18,265,395
Transocean Ltd.1		91,100		4,304,475
				28,262,720
Oil, Gas & Consumable Fuels—6.6%
Devon Energy Corp.		187,900		12,346,909
Occidental Petroleum Corp.		409,900		24,589,901
Range Resources Corp.		468,380		16,107,588
XTO Energy, Inc.		640,430		22,587,966
				75,632,364
Financials—7.9%
Capital Markets—3.8%
Charles Schwab Corp. (The)		315,700		5,104,869
Credit Suisse Group AG		338,023		9,248,879
Goldman Sachs Group, Inc. (The)		93,200		7,865,148
Julius Baer Holding AG		130,984		5,029,913
Northern Trust Corp.		209,390		10,917,595
T. Rowe Price Group, Inc.		151,900		5,383,336
				43,549,740
Diversified Financial Services—3.0%
BM&F BOVESPA SA		1,928,000		5,111,731
Intercontinental Exchange, Inc.1		247,200		20,379,168
MSCI, Inc., Cl. A1		504,899		8,967,006
				34,457,905
Insurance—0.6%
Aon Corp.		145,600		6,651,008
Real Estate Management & Development—0.5%
Jones Lang LaSalle, Inc.		229,510		6,357,427
Health Care—19.5%
Biotechnology—5.4%
Amgen, Inc.1		136,300		7,871,325
Celgene Corp.1		343,220		18,973,202
Genentech, Inc.1		101,300		8,398,783
Gilead Sciences, Inc.1		519,800		26,582,572
				61,825,882
Health Care Equipment & Supplies—5.1%
Bard (C.R.), Inc.		66,390		5,594,021
Baxter International, Inc.		466,700		25,010,453
Dentsply International, Inc.		349,800		9,878,352
Intuitive Surgical, Inc.1		37,800		4,800,222
Medtronic, Inc.		206,100		6,475,662
Stryker Corp.		159,700		6,380,015
				58,138,725
Health Care Providers & Services—2.7%
Express Scripts, Inc.1		405,300		22,283,394
Schein (Henry), Inc.1		230,290		8,449,340
				30,732,734
Life Sciences Tools & Services—3.3%
Covance, Inc.1		184,427		8,489,175
Illumina, Inc.1		349,800		9,112,290
Thermo Fisher Scientific, Inc.1		591,180		20,141,503
				37,742,968
Pharmaceuticals—3.0%
Allergan, Inc.		305,500		12,317,760
Roche Holding AG		81,755		12,563,013
Shire plc		693,500		10,287,960
				35,168,733

STATEMENT OF INVESTMENTS Continued

	Shares			Value
Industrials—7.5%
Aerospace & Defense—4.3%
General Dynamics Corp.		107,300		$	6,179,407
Lockheed Martin Corp.		290,020			24,384,882
United Technologies Corp.		344,600			18,470,560
					49,034,849
Construction & Engineering—0.4%
Quanta Services, Inc.1		211,000			4,177,800
Electrical Equipment—1.6%
ABB Ltd.		1,214,015			18,268,565
Machinery—0.5%
Joy Global, Inc.		267,400			6,120,786
Road & Rail—0.7%
Burlington Northern Santa Fe Corp.		102,800			7,782,988
Information Technology—29.9%
Communications Equipment—8.3%
Cisco Systems, Inc.1		1,389,200			22,643,960
F5 Networks, Inc.1		355,360			8,123,530
QUALCOMM, Inc.		1,142,910			40,950,465
Research in Motion Ltd.1		583,100			23,662,198
					95,380,153
Computers & Peripherals—3.3%
Apple, Inc.1		320,400			27,346,140
NetApp, Inc.1		748,930			10,462,552
					37,808,692
Electronic Equipment & Instruments—0.4%
FLIR Systems, Inc.1		163,400			5,013,112
Internet Software & Services—4.0%
eBay, Inc.1		737,000			10,288,520
Google, Inc., Cl. A1		116,100			35,718,165
					46,006,685
IT Services—4.9%
Affiliated Computer Services, Inc., Cl. A1		245,522			11,281,736
MasterCard, Inc., Cl. A		135,560			19,375,591
SAIC, Inc.1		381,300			7,427,724
Visa, Inc., Cl. A		340,930			17,881,779
					55,966,830
Semiconductors & Semiconductor Equipment—3.6%
Broadcom Corp., Cl. A1		824,900			13,998,553
Microchip Technology, Inc.		469,530			9,169,921
NVIDIA Corp. 1		1,029,400			8,307,258
Texas Instruments, Inc.		599,150			9,298,808
					40,774,540
Software—5.4%
Adobe Systems, Inc.1		581,900			12,388,651
Autodesk, Inc. 1		584,900			11,493,285
Microsoft Corp.		566,000			11,003,040
Nintendo Co. Ltd.		16,800			6,449,494
Oracle Corp.1		657,800			11,662,794
Salesforce.com, Inc.1		259,660			8,311,717
					61,308,981
Materials—6.3%
Chemicals—6.3%
Ecolab, Inc.		144,700			5,086,205
Monsanto Co.		481,200			33,852,420
Mosaic Co. (The)		216,400			7,487,440
Potash Corp. of Saskatchewan, Inc.		102,000			7,468,440
Praxair, Inc.		302,232			17,940,488
					71,834,993
Telecommunication Services—2.6%
Wireless Telecommunication Services—2.6%
Crown Castle International Corp.1		938,600			16,500,588
NII Holdings, Inc.1		702,470			12,770,905
					29,271,493
Total Common Stocks (Cost $1,240,594,659)					1,099,501,637
Other Securities—0.0%
Seagate Technology International, Inc.1,2,3(Cost $—)		325,000			32,500
Investment Company—2.0%
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%4,5 (Cost $22,383,442)		22,383,442			22,383,442
Total Investments, at Value (Cost $1,262,978,101)		98.1	%		1,121,917,579
Other Assets Net of Liabilities		1.9			21,944,634
Net Assets		100.0	%	$	1,143,862,213

Industry classifications are unaudited.

Footnotes to Statement of Investments
1.	Non-income producing security.
2.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2008 was $32,500, which represents less than 0.005% of the Fund’s net assets. See Note 6 of accompanying Notes.
3.	Escrow shares received as the result of issuer reorganization.
4.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
Oppenheimer Institutional Money Market Fund, Cl. E		24,161,830		325,338,559		327,116,947		22,383,442

	Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E	$	22,383,442	$	470,999

5. Rate shown is the 7-day yield as of December 31, 2008.

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.) 3)

Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments in		Other Financial
Valuation Description	Securities		Instruments*
Level 1—Quoted Prices	$	1,009,989,949	$	—
Level 2—Other Significant Observable Inputs		111,927,630		(3,757	)
Level 3—Significant Unobservable Inputs		—		—
Total	$	1,121,917,579	$	(3,757	)

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

Foreign Currency Exchange Contracts as of December 31, 2008 are as follows:

		Contract
		Amount	Expiration				Unrealized
Contract Description	Buy	(000s)	Date		Value		Depreciation
Japanese Yen (JPY)	Buy	87,635 JPY		1/7/09	$	966,131	$	3,757

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $1,240,594,659)	$	1,099,534,137
Affiliated companies (cost $22,383,442)		22,383,442
		1,121,917,579
Cash		2,067,950
Cash—foreign currencies (cost $1,053,483)		1,048,664
Receivables and other assets:
Shares of beneficial interest sold		14,968,791
Investments sold		12,279,834
Interest and dividends		2,025,178
Due from Manager		61
Other		27,401
Total assets		1,154,335,458
Liabilities
Unrealized depreciation on foreign currency exchange contracts		3,757
Payables and other liabilities:
Investments purchased		9,666,341
Shares of beneficial interest redeemed		452,312
Distribution and service plan fees		195,096
Shareholder communications		89,824
Trustees’ compensation		15,301
Transfer and shareholder servicing agent fees		1,720
Other		48,894
Total liabilities		10,473,245
Net Assets	$	1,143,862,213
Composition of Net Assets
Par value of shares of beneficial interest	$	44,679
Additional paid-in capital		1,687,264,770
Accumulated net investment income		1,288,398
Accumulated net realized loss on investments and foreign currency transactions		(403,693,868	)
Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies		(141,041,766	)
Net Assets	$	1,143,862,213
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $829,931,181 and 32,330,539 shares of beneficial interest outstanding)	$	25.67
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $313,931,032 and 12,348,907 shares of beneficial interest outstanding)	$	25.42

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $479,565)	$	15,197,599
Affiliated companies		470,999
Interest		22,380
Total investment income		15,690,978
Expenses
Management fees		11,123,637
Distribution and service plan fees — Service shares		1,131,349
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,994
Shareholder communications:
Non-Service shares		61,927
Service shares		22,304
Trustees’ compensation		42,605
Custodian fees and expenses		32,095
Other		71,052
Total expenses		12,504,957
Less reduction to custodian expenses		(2,455	)
Less waivers and reimbursements of expenses		(15,619	)
Net expenses		12,486,883
Net Investment Income		3,204,095
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies		(273,400,291	)
Foreign currency transactions		8,524,454
Net realized loss		(264,875,837	)
Net change in unrealized depreciation on:
Investments		(659,463,207	)
Translation of assets and liabilities denominated in foreign currencies		(17,301,633	)
Net change in unrealized depreciation		(676,764,840	)
Net Decrease in Net Assets Resulting from Operations	$	(938,436,582	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	3,204,095		$	1,866,225
Net realized gain (loss)		(264,875,837	)		148,525,993
Net change in unrealized appreciation (depreciation)		(676,764,840	)		130,279,389
Net increase (decrease) in net assets resulting from operations		(938,436,582	)		280,671,607
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(1,851,681	)		(3,712,463	)
Service shares		—			(46,654	)
		(1,851,681	)		(3,759,117	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(114,814,298	)		(179,103,584	)
Service shares		20,286,295			18,763,021
		(94,528,003	)		(160,340,563	)
Net Assets
Total increase (decrease)		(1,034,816,266	)		116,571,927
Beginning of period		2,178,678,479			2,062,106,552
End of period (including accumulated net investment income of $1,288,398 and $511,377, respectively)	$	1,143,862,213		$	2,178,678,479

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	47.18		$	41.43		$	38.52		$	36.99		$	34.70
Income (loss) from investment operations:
Net investment income1		.10			.07			.07			.18			.35	2
Net realized and unrealized gain (loss)		(21.55	)		5.78			2.98			1.68			2.05
Total from investment operations		(21.45	)		5.85			3.05			1.86			2.40
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.06	)		(.10	)		(.14	)		(.33	)		(.11	)
Net asset value, end of period	$	25.67		$	47.18		$	41.43		$	38.52		$	36.99
Total Return, at Net Asset Value3		(45.52	)%		14.15	%		7.95	%		5.10	%		6.93	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	829,931		$	1,631,791		$	1,598,967		$	1,652,282		$	1,770,273
Average net assets (in thousands)	$	1,256,525		$	1,631,686		$	1,615,352		$	1,658,910		$	1,708,511
Ratios to average net assets:4
Net investment income		0.25	%		0.15	%		0.17	%		0.47	%		0.99	%2
Total expenses		0.66	%5,6,7		0.65	%5,6,7		0.67	%5,6,7		0.66	%6		0.66	%6
Portfolio turnover rate		67	%		59	%		47	%		70	%		44	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Net investment income per share and the net investment income ratio include $.16 and 0.43%, respectively, resulting from a special dividend from Microsoft Corp. in November 2004.
3.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4.	Annualized for periods less than one full year.
5.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.66	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.67	%

6.	Reduction to custodian expenses less than 0.005%.
7.	Waiver or reimbursement of indirect management fees less than 0.005%.

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	46.78		$	41.09		$	38.23		$	36.73		$	34.53
Income (loss) from investment operations:
Net investment income (loss)1		—	2		(.05	)		(.03	)		.08			.29	3
Net realized and unrealized gain (loss)		(21.36	)		5.74			2.96			1.69			1.99
Total from investment operations		(21.36	)		5.69			2.93			1.77			2.28
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			—	2		(.07	)		(.27	)		(.08	)
Net asset value, end of period	$	25.42		$	46.78		$	41.09		$	38.23		$	36.73
Total Return, at Net Asset Value4		(45.66	)%		13.86	%		7.68	%		4.87	%		6.62	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	313,931		$	546,887		$	463,140		$	381,852		$	248,649
Average net assets (in thousands)	$	454,558		$	510,874		$	426,539		$	301,780		$	184,273
Ratios to average net assets:5
Net investment income (loss)		0.00	%6		(0.10	)%		(0.08	)%		0.20	%		0.85	%3
Total expenses		0.91	%7,8,9		0.91	%7,8,9		0.92	%7,8,9		0.91	%8		0.91	%8
Portfolio turnover rate		67	%		59	%		47	%		70	%		44	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
3.	Net investment income per share and the net investment income ratio include $.16 and 0.43%, respectively, resulting from a special dividend from Microsoft Corp. in November 2004.
4.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
5.	Annualized for periods less than one full year.
6.	Less than 0.005%.
7.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.91	%
Year Ended December 31, 2006	0.92	%

8.	Reduction to custodian expenses less than 0.005%.
9.	Voluntary waiver or reimbursement of indirect management fees less than 0.005%.

     See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Capital Appreciation Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek capital appreciation by investing in securities of well-known, established companies. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

     In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets

represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation
					Based on Cost of
Undistributed	Undistributed		Accumulated		Securities and Other
Net Investment	Long-Term		Loss		Investments for Federal
Income	Gain		Carryforward1,2,3,4,5		Income Tax Purposes
$2,994,641	$	—	$	382,458,902	$	162,785,069

1. As of December 31, 2008, the Fund had $243,920,551 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2008, details of the capital loss carryforwards were as follows:

Expiring
2011	$	96,270,872
2013		34,677,838
2016		112,971,841
Total	$	243,920,551

2.	As of December 31, 2008, the Fund had $138,475,074 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
3.	The Fund had $63,277 of post-October foreign currency losses which were deferred.
4.	During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.
5.	During the fiscal year ended December 31, 2007, the Fund utilized $151,992,802 of capital loss carryforward to offset capital gains realized in that fiscal year.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Reduction
Reduction	to Accumulated Net
to Accumulated Net	Realized Loss
Investment Income	on Investments
$575,393	$	575,393

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	1,851,681	$	3,759,117

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	1,284,725,161
Federal tax cost of other investments		2,019,614
Total federal tax cost	$	1,286,744,775
Gross unrealized appreciation	$	97,073,159
Gross unrealized depreciation		(259,858,228	)
Net unrealized depreciation	$	(162,785,069	)

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		5,158,989		$	168,163,089			3,540,352		$	160,454,788
Dividends and/or distributions reinvested		45,642			1,851,681			88,964			3,712,463
Redeemed		(7,457,105	)		(284,829,068	)		(7,638,575	)		(343,270,835	)
Net decrease		(2,252,474	)	$	(114,814,298	)		(4,009,259	)	$	(179,103,584	)
Service Shares
Sold		2,605,573		$	92,870,576			2,132,039		$	95,722,464
Dividends and/or distributions reinvested		—			—			1,121			46,477
Redeemed		(1,946,810	)		(72,584,281	)		(1,714,792	)		(77,005,920	)
Net increase		658,763		$	20,286,295			418,368		$	18,763,021

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	1,153,045,787	$	1,267,426,544

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to$200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

NOTES TO FINANCIAL STATEMENTS Continued

4. Fees and Other Transactions with Affiliates Continued

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $20,074 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $15,619 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into foreign currency exchange contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

     Risks to the Fund include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received.

6. Illiquid Securities

As of December 31, 2008, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

7. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

8. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Core Bond Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Core Bond Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Principal
	Amount		Value
Asset-Backed Securities—3.6%
Ace Securities Corp. Home Equity Loan Trust, Asset-Backed Pass- Through Certificates, Series 2005- HE7, Cl. A2B, 0.651%, 11/25/351	$	249	$	247
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.951%, 5/25/341		1,538,283		1,188,091
Argent Securities Trust 2006-M3, Asset-Backed Pass-Through Certificates, Series 2006-M3, Cl. A2B, 0.571%, 9/25/361		30,000		24,047
Argent Securities Trust 2006-W5, Asset-Backed Pass-Through Certificates, Series 2006-W5, Cl. A2B, 0.571%, 5/26/361		25,853		23,630
Centex Home Equity Loan Trust 2006-A, Asset-Backed Certificates, Series 2006-A, Cl. AV2, 0.571%, 5/16/361		23,410		22,428
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series 2003-C4, Cl. C4, 5%, 6/10/15		310,000		168,335
Countrywide Home Loans, Asset-Backed Certificates:		35,747		16,667
Series 2002-4, Cl. A1, 1.211%, 2/25/331
Series 2005-11, Cl. AF2, 4.657%, 2/25/36		171,286		168,753
Series 2005-16, Cl. 2AF2, 5.382%, 5/25/361		700,000		559,823
Series 2005-17, Cl. 1AF2, 5.363%,5/25/361		429,010		369,958
CWABS, Inc. Asset-Backed Certificates Trust, Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.591%, 12/5/291		40,000		30,755
First Franklin Mortgage Loan Trust 2005-FF10, Mtg. Pass-Through Certificates, Series 2005-FF10, Cl. A3, 0.681%, 11/25/351		8,236		8,129
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through Certificates, Series 2006-FF10, Cl. A3, 0.561%, 7/25/361		50,000		43,352
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through Certificates, Series 2006-FF9, Cl. 2A2, 0.581%, 7/7/361		30,000		25,572
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Nts., Series 2005-3, Cl. A1, 0.768%, 1/20/351		583,400		414,742
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.618%, 3/20/361		25,000		20,947
Lehman XS Trust, Mtg. Pass- Through Certificates:		7,997		7,847
Series 2005-2, Cl. 2A1B, 5.18%, 8/25/351
Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35		270,631		246,694
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates, Series 2001-1A, Cl. A1, 8.33%, 4/25/312		1,444,390		1,417,568
Mastr Asset-Backed Securities Trust 2006-WMC3, Mtg. Pass-Through Certificates, Series 2006-WMC3, Cl. A3, 0.571%, 8/25/361		70,000		20,848
NC Finance Trust, CMO Pass-Through Certificates, Series 1999-I, Cl. ECFD, 6.368%, 1/25/291,2		3,370,016		429,677
Option One Mortgage Loan Trust, Asset-Backed Certificates, Series 2006-2, Cl. 2A2, 0.571%, 7/1/361		1,034,159		911,319
Popular ABS Mortgage Pass-Through Trust 2005-6, Mtg. Pass-Through Certificates, Series 2005-6, Cl. A3, 5.68%, 1/25/361		710,159		645,521
RAMP Series 2006-RS4 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2006-RS4, Cl. A1, 0.551%, 7/25/361		763		756
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass- Through Certificates, Series 2006-KS7, Cl. A2, 0.571%, 9/25/361		49,886		45,390
Structured Asset Investment Loan Trust, Mtg. Pass-Through Certificates, Series 2006-BNC3, Cl. A2, 0.511%, 9/25/361		382,212		357,818
Tobacco Settlement Authority, Asset-Backed Securities, Series 2001-A, 6.79%, 6/1/10		660,000		670,197
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 0.571%, 7/25/361		41,953		39,593
Total Asset-Backed Securities (Cost $11,962,091)				7,878,704
Mortgage-Backed Obligations—100.5%
Government Agency—66.9%
FHLMC/FNMA/Sponsored—66.0%
Federal Home Loan Mortgage Corp.:
5%, 8/15/33-12/15/34		3,875,685		3,970,925
6%, 7/15/17-10/15/29		6,682,229		6,929,923
6.50%, 4/15/18-4/1/34		1,215,927		1,268,743
7%, 8/15/16-11/15/16		104,347		109,489
7%, 10/1/313		688,044		723,284
8%, 4/1/16		438,864		467,163

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
FHLMC/FNMA/Sponsored Continued
Federal Home Loan Mortgage Corp.:
Continued 9%, 8/1/22-5/1/25	$	126,048	$	137,482
10.50%, 11/14/20		5,021		5,764
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 151, Cl. F, 9%, 5/15/21		26,338		26,330
Series 1674, Cl. Z, 6.75%, 2/15/24		86,052		91,670
Series 2006-11, Cl. PS, 22.839%, 3/25/361		612,645		698,458
Series 2034, Cl. Z, 6.50%, 2/15/28		11,504		12,104
Series 2042, Cl. N, 6.50%, 3/15/28		32,543		33,763
Series 2043, Cl. ZP, 6.50%, 4/15/28		961,519		1,002,420
Series 2046, Cl. G, 6.50%, 4/15/28		96,978		101,297
Series 2053, Cl. Z, 6.50%, 4/15/28		14,178		14,841
Series 2066, Cl. Z, 6.50%, 6/15/28		1,862,728		1,958,272
Series 2195, Cl. LH, 6.50%, 10/15/29		1,087,229		1,141,737
Series 2220, Cl. PD, 8%, 3/15/30		4,671		5,010
Series 2326, Cl. ZP, 6.50%, 6/15/31		368,358		385,709
Series 2435, Cl. EQ, 6%, 5/15/31		38,906		39,463
Series 2461, Cl. PZ, 6.50%, 6/15/32		1,467,643		1,548,642
Series 2470, Cl. LF, 2.195%, 2/15/321		16,914		16,233
Series 2500, Cl. FD, 1.695%, 3/15/321		271,956		263,280
Series 2526, Cl. FE, 1.595%, 6/15/291		441,631		425,958
Series 2538, Cl. F, 1.795%, 12/15/321		2,678,285		2,573,827
Series 2551, Cl. FD, 1.595%, 1/15/331		332,218		323,280
Series 2641, Cl. CE, 3.50%, 9/15/25		18,076		18,062
Series 2727, Cl. UA, 3.50%, 10/15/22		4,829		4,827
Series 2736, Cl. DB, 3.30%, 11/15/26		88,444		88,243
Series 2750, Cl. XG, 5%, 2/1/34		130,000		134,455
Series 2777, Cl. PJ, 4%, 5/15/24		4,984		4,986
Series 2890, Cl. PE, 5%, 11/1/34		130,000		133,475
Series 2936, Cl. PE, 5%, 2/1/35		69,000		70,675
Series 2939, Cl. PE, 5%, 2/15/35		247,000		253,525
Series 3025, Cl. SJ, 20.368%, 8/15/351		129,828		148,433
Series 3035, Cl. DM, 5.50%, 11/15/25		55,760		56,529
Series 3094, Cl. HS, 20.002%, 6/15/341		361,535		402,683
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 176, Cl. IO, 3.283%, 6/1/264		462,005		91,344
Series 183, Cl. IO, 1.254%, 4/1/274		712,736		105,775
Series 184, Cl. IO, 7.574%, 12/1/264		788,765		157,044
Series 192, Cl. IO, 4.918%, 2/1/284		194,683		27,505
Series 200, Cl. IO, 4.55%, 1/1/294		239,241		40,801
Series 2003-26, Cl. DI, 1.284%,4/25/334		37,367		6,455
Series 202, Cl. IO, (6.238)%, 4/1/294		1,627,967		227,104
Series 205, Cl. IO, 0.538%, 9/1/294		36,598		8,172
Series 206, Cl. IO, (11.155)%, 12/1/294		452,042		83,629
Series 2074, Cl. S, 38.602%, 7/17/284		7,404		888
Series 2079, Cl. S, 45.314%, 7/17/284		12,066		1,426
Series 2130, Cl. SC, 35.774%, 3/15/294		504,179		76,306
Series 216, Cl. IO, 2.68%, 12/1/314		324,504		41,040
Series 224, Cl. IO, (0.549)%, 3/1/334		997,097		148,658
Series 243, Cl. 6, 15.224%, 12/15/324		595,440		77,869
Series 2526, Cl. SE, 31.293%, 6/15/294		19,945		2,716
Series 2527, Cl. SG, 31.83%, 2/15/324		609,629		39,063
Series 2531, Cl. ST, 35.211%, 2/15/304		704,395		45,769
Series 2796, Cl. SD, 45.618%, 7/15/264		805,528		77,353
Series 2802, Cl. AS, 99.999%, 4/15/334		879,450		83,673
Series 2819, Cl. S, 35.142%, 6/15/344		163,213		21,236
Series 2920, Cl. S, 54.737%, 1/15/354		3,035,790		298,360
Series 3000, Cl. SE, 99.999%, 7/15/254		3,649,355		291,982
Series 3004, Cl. SB, 99.999%, 7/15/354		183,684		19,141
Series 3110, Cl. SL, 99.999%, 2/15/264		518,251		37,255
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security:
Series 176, Cl. PO, 6.152%, 6/1/265		188,228		159,606
Series 192, Cl. PO, 8.464%, 2/1/285		194,683		174,984
Federal National Mortgage Assn.:
4.50%, 1/1/226		11,152,000		11,399,441
5%, 2/25/22-7/25/22		46,912		48,234
5%, 1/1/24-1/1/396		22,873,000		23,419,152
5.296%, 10/1/36		496,247		502,463
5.50%, 1/1/24-1/1/396		21,310,000		21,862,492
6%, 1/1/24-1/1/396		18,605,000		19,187,237
6.50%, 2/25/09-1/1/34		2,235,773		2,324,930
6.50%, 8/25/173		351,963		365,758
6.50%, 1/1/396		10,570,000		10,977,939
7%, 11/25/13-7/25/35		1,373,952		1,432,495
7%, 1/1/396		972,000		1,017,867
7.50%, 1/1/33		19,388		20,558
8%, 5/25/17		847		897
8.50%, 7/1/32		47,760		51,940
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1989-17, Cl. E, 10.40%, 4/25/19		37,445		40,507
Trust 1993-87, Cl. Z, 6.50%, 6/25/23		1,107,361		1,152,127
Trust 1998-58, Cl. PC, 6.50%, 10/25/28		940,047		980,079
Trust 1998-61, Cl. PL, 6%, 11/25/28		526,163		545,211
Trust 1999-54, Cl. LH, 6.50%, 11/25/29		738,506		764,111
Trust 2001-44, Cl. QC, 6%, 9/25/16		56,290		58,906
Trust 2001-51, Cl. OD, 6.50%, 10/25/31		53,397		56,203
Trust 2001-70, Cl. LR, 6%, 9/25/30		16,737		16,705
Trust 2001-74, Cl. QE, 6%, 12/25/31		1,574,730		1,630,769
Trust 2002-12, Cl. PG, 6%, 3/25/17		26,749		28,016
Trust 2003-130, Cl. CS, 13.158%, 12/25/331		355,150		356,859
Trust 2003-23, Cl. EQ, 5.50%, 4/25/23		137,000		141,787
Trust 2003-28, Cl. KG, 5.50%, 4/25/23		3,964,000		4,056,641
Trust 2004-101, Cl. BG, 5%, 1/25/20		1,975,000		2,002,706
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25		1,160,000		1,187,367
Trust 2005-117, Cl. LA, 5.50%, 12/25/27		127,811		130,205

	Principal
	Amount		Value
FHLMC/FNMA/Sponsored Continued
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Continued
Trust 2006-110, Cl. PW, 5.50%, 5/25/28	$	172,388	$	176,344
Trust 2006-46, Cl. SW, 22.471%, 6/25/361		462,353		516,697
Trust 2006-50, Cl. KS, 22.472%, 6/25/361		1,061,516		1,192,963
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-61, Cl. SH, 43%, 11/18/314		63,403		8,554
Trust 2001-63, Cl. SD, 29.194%, 12/18/314		18,774		2,660
Trust 2001-65, Cl. S, 40.848%, 11/25/314		1,590,783		217,950
Trust 2001-68, Cl. SC, 22.964%, 11/25/314		13,060		1,799
Trust 2001-81, Cl. S, 25.046%, 1/25/324		390,750		55,142
Trust 2002-28, Cl. SA, 27.288%, 4/25/324		10,021		1,330
Trust 2002-38, Cl. IO, 40.014%, 4/25/324		21,911		2,369
Trust 2002-39, Cl. SD, 25.927%, 3/18/324		14,488		2,023
Trust 2002-47, Cl. NS, 22.828%, 4/25/324		997,192		135,265
Trust 2002-48, Cl. S, 24.795%, 7/25/324		16,821		2,335
Trust 2002-51, Cl. S, 23.117%, 8/25/324		915,425		124,553
Trust 2002-52, Cl. SD, 23.596%, 9/25/324		1,019,734		141,285
Trust 2002-52, Cl. SL, 25.286%, 9/25/324		10,358		1,417
Trust 2002-53, Cl. SK, 24.486%, 4/25/324		50,482		6,604
Trust 2002-56, Cl. SN, 27.404%, 7/25/324		22,935		3,166
Trust 2002-60, Cl. SM, 42.196%, 8/25/324		219,386		22,800
Trust 2002-7, Cl. SK, 43.23%, 1/25/324		103,211		10,962
Trust 2002-77, Cl. BS, 32.357%, 12/18/324		130,519		17,330
Trust 2002-77, Cl. IS, 33.07%, 12/18/324		37,330		5,166
Trust 2002-77, Cl. JS, 31.551%, 12/18/324		222,733		29,612
Trust 2002-77, Cl. SA, 32.813%, 12/18/324		209,792		27,370
Trust 2002-77, Cl. SH, 29.746%, 12/18/324		487,842		61,303
Trust 2002-84, Cl. SA, 42.181%, 12/25/324		1,413,340		202,491
Trust 2002-9, Cl. MS, 23.832%, 3/25/324		19,249		2,424
Trust 2002-90, Cl. SN, 43.76%, 8/25/324		112,863		12,148
Trust 2002-90, Cl. SY, 45.591%, 9/25/324		70,735		7,495
Trust 2003-118, Cl. S, 32.844%, 12/25/334		3,138,813		379,125
Trust 2003-33, Cl. SP, 22.276%, 5/25/334		1,494,958		198,570
Trust 2003-4, Cl. S, 38.007%, 2/25/334		985,967		126,468
Trust 2003-89, Cl. XS, 20.272%, 11/25/324		1,138,915		88,981
Trust 2004-54, Cl. DS, 33.428%, 11/25/304		736,824		82,227
Trust 2005-40, Cl. SA, 55.787%, 5/25/354		1,731,644		177,755
Trust 2005-40, Cl. SB, 70.772%, 5/25/354		78,898		7,774
Trust 2005-6, Cl. SE, 68.059%, 2/25/354		2,227,425		204,792
Trust 2005-71, Cl. SA, 73.118%, 8/25/254		2,296,317		172,177
Trust 2005-87, Cl. SE, 99.999%, 10/25/354		4,450,093		315,941
Trust 2005-87, Cl. SG, 98.925%, 10/25/354		4,473,433		379,167
Trust 2006-33, Cl. SP, 65.623%, 5/25/364		3,789,404		394,800
Trust 2006-42, Cl. CI, 26.305%, 6/25/364		4,476,411		520,247
Trust 221, Cl. 2, 13.156%, 5/1/234		12,583		2,856
Trust 222, Cl. 2, 7.815%, 6/1/234		1,583,244		431,142
Trust 240, Cl. 2, 10.405%, 9/1/234		1,931,427		299,731
Trust 252, Cl. 2, 12.847%, 11/1/234		1,229,684		282,016
Trust 273, Cl. 2, 4.739%, 8/1/264		351,877		62,860
Trust 294, Cl. 2, (0.958)%, 2/1/284		137,645		21,810
Trust 301, Cl. 2, (6.398)%, 4/1/294		17,327		3,484
Trust 302, Cl. 2, (9.691)%, 6/1/294		573,432		81,118
Trust 303, Cl. IO, (6.686)%, 11/1/294		205,561		29,593
Trust 319, Cl. 2, (1.101)%, 2/1/324		348,871		49,179
Trust 321, Cl. 2, (5.704)%, 4/1/324		3,783,629		526,191
Trust 324, Cl. 2, (6.594)%, 7/1/324		65,243		9,237
Trust 331, Cl. 5, 15.598%, 2/1/334		54,253		7,460
Trust 331, Cl. 9, 22.242%, 2/1/334		867,090		97,980
Trust 333, Cl. 2, (11.692)%, 4/1/334		3,165,316		387,120
Trust 334, Cl. 12, 11.56%, 2/1/334		94,591		12,415
Trust 334, Cl. 17, 29.467%, 2/1/334		597,572		102,268
Trust 334, Cl. 3, 13.538%, 7/1/334		460,569		51,675
Trust 334, Cl. 5, 13.587%, 5/1/334		65,699		7,491
Trust 338, Cl. 2, (11.024)%, 7/1/334		1,874,644		226,261
Trust 339, Cl. 12, 13.466%, 7/1/334		1,214,459		155,980
Trust 339, Cl. 7, 12.218%, 7/1/334		3,228,097		357,377
Trust 339, Cl. 8, 12.211%, 8/1/334		254,426		28,552
Trust 342, Cl. 2, (3.317)%, 9/1/334		19,237		2,751
Trust 343, Cl. 13, 12.001%, 9/1/334		975,230		103,138
Trust 343, Cl. 18, 14.18%, 5/1/344		302,144		42,355
Trust 345, Cl. 9, 11.31%, 1/1/344		1,358,170		148,339
Trust 346, Cl. 2, (12.874)%, 12/1/334		671,881		80,711
Trust 351, Cl. 10, 14.256%, 4/1/344		425,470		46,100
Trust 351, Cl. 11, 12.86%, 11/1/344		218,083		24,213
Trust 351, Cl. 8, 12.789%, 4/1/344		655,197		70,985
Trust 355, Cl. 7, 9.047%, 11/1/334`		186,495		24,315
Trust 356, Cl. 10, 13.15%, 6/1/354		579,979		63,681
Trust 356, Cl. 12, 13.355%, 2/1/354		299,585		32,387
Trust 356, Cl. 6, 13.305%, 12/1/334		247,968		27,058
Trust 362, Cl. 12, 12.979%, 8/1/354		1,754,951		233,817
Trust 362, Cl. 13, 12.965%, 8/1/354		971,095		129,246
Trust 364, Cl. 15, 15.907%, 9/1/354		67,318		9,247
Trust 364, Cl. 16, 14.77%, 9/1/354		1,248,748		198,605
Trust 365, Cl. 16, 19.029%, 3/1/364		1,937,115		207,935

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
FHLMC/FNMA/Sponsored Continued
Federal National Mortgage Assn., Principal-Only Stripped. Mtg.-Backed Security:
Trust 1993-184, Cl. M, 6.775%, 9/25/235	$	470,622	$	400,145
Trust 324, Cl. 1, 9.919%, 7/1/325		16,292		14,561
				144,828,682
GNMA/Guaranteed—0.9%
Government National Mortgage Assn.:
7%, 5/29/09-3/15/26		51,209		54,258
8.50%, 8/1/17-12/15/17		198,349		211,967
Government National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Series 1999-32, Cl. ZB, 8%, 9/16/29		113,068		124,145
Series 2000-7, Cl. Z, 8%, 1/16/30		51,444		57,000
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 1998-19, Cl. SB, 34.451%, 7/16/284		24,329		3,311
Series 2001-21, Cl. SB, 67.288%, 1/16/274		918,902		131,752
Series 2002-15, Cl. SM, 58.098%, 2/16/324		973,438		143,917
Series 2004-11, Cl. SM, 39.547%, 1/17/304		648,514		71,139
Series 2006-47, Cl. SA, 79.219%, 8/16/364		8,923,139		1,069,769
				1,867,258
Non-Agency—33.6%
Commercial—15.1%
Asset Securitization Corp.,
Commercial Interest-Only Stripped Mtg.-Backed Security, Series 1997-D4, Cl. PS1, 2.105%, 4/14/294		12,432,340		295,263
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2006-1, Cl. AM, 5.421%, 9/1/45		4,070,000		2,086,017
Banc of America Funding Corp., Mtg. Pass-Through Certificates, Series 2004-2, Cl. 2A1, 6.50%, 7/20/32		1,080,987		1,034,975
Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed Pass-Through Certificates, Series 1997-CTL1, (6.348)%, 6/22/244		8,934,558		177,944
ChaseFlex Trust 2006-2, Multiclass Mtg. Pass-Through Certificates, Series 2006-2, Cl. A1B, 1.495%, 9/25/361		7,756		7,431
CHL Mortgage Pass-Through Trust 2005-17, Mtg. Pass-Through Certificates, Series 2005-17, Cl. 1A8, 5.50%, 9/1/35		80,000		60,462
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates, Series 2008-C7, Cl. AM, 6.096%, 12/1/491		1,920,000		907,314
Citigroup Mortgage Loan Trust, Inc. 2006-WF1, Asset-Backed Pass-Through Certificates, Series 2006-WF1, Cl. A2B, 5.536%, 3/1/36		52,868		52,432
Citigroup/Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-CD4, Cl. A2B, 5.205%, 12/11/49		1,630,000		1,355,983
CitiMortgage Alternative Loan Trust 2006-A5, Real Estate Mtg. Investment Conduit Pass-Through Certificates:		2,794,883		1,208,191
Series 2006-A5, Cl. 1A1, 0.871%, 10/25/361
Series 2006-A5, Cl. 1A13, 0.921%, 10/25/361		1,455,973		594,858
CWALT Alternative Loan Trust 2007-8CB, Mtg. Pass-Through Certificates, Series 2007-8CB, Cl. A1, 5.50%, 5/25/37		139,679		123,599
Deutsche Alt-A Securities
Mortgage Loan Trust, Mtg. Pass-Through Certificates:
Series 2006-AB2, Cl. A7, 5.961%, 6/25/36		364,266		335,283
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36		49,881		39,967
Series 2006-AB3, Cl. A7, 6.36%, 7/1/36		146,820		141,501
First Horizon Alternative Mortgage Securities Trust 2004-FA2, Mtg. Pass-Through Certificates, Series 2004-FA2, Cl. 3A1, 6%, 1/25/35		733,323		536,140
First Horizon Alternative Mortgage Securities Trust 2007-FA2, Mtg. Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37		799,527		751,649
First Horizon Mortgage Pass-Through Trust 2007-AR3, Mtg. Pass-Through Certificates, Series 2007-AR3, Cl. 1A1, 6.132%, 11/1/371		648,651		432,193
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2004-C3, Cl. A2, 4.433%, 7/10/39		50,000		49,217

	Principal
	Amount		Value
Commercial Continued
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2005-LDP4, Cl. AM, 4.999%, 10/1/42	$	1,110,000	$	655,827
Series 2008-C2, Cl. A4, 6.068%, 2/1/51		3,760,000		2,676,016
JPMorgan Chase Commercial Mortgage Securities Trust, Commercial Mtg. Pass-Through Certificates:
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		3,950,000		3,122,566
Series 2007-LD11, Cl. A2, 5.804%, 6/15/491		110,000		84,422
Series 2007-LD12, Cl. A2, 5.827%, 2/15/51		1,080,000		845,274
LB-UBS Commercial Mortgage Trust 2006-C1, Commercial Mtg. Pass-Through Certificates:
Series 2006-C1, Cl. A2, 5.084%, 2/11/31		2,320,000		2,026,085
Series 2006-C1, Cl. AM, 5.217%, 2/11/311		2,300,000		1,160,430
Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security, Series 1998-C1, Cl. IO, (0.425)%, 2/18/304		4,729,592		98,614
Lehman Structured Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 2002-GE1, Cl. A, 2.514%, 7/26/242		245,694		183,765
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		1,449,610		1,059,848
Mastr Asset Securitization Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 0.921%, 10/25/361		149,767		94,415
Merrill Lynch Mortgage Investors Trust 2005-A9, Mtg. Asset-Backed Certificates, Series 2005-A9, Cl. 4A1, 5.492%, 12/1/351		1,947,029		1,273,413
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30		778		777
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A114, 5.75%, 4/25/37		1,155,364		504,534
Residential Asset Securitization Trust 2006-A9CB, Mtg. Pass-Through Certificates, Series 2006-A9CB, Cl. A5, 6%, 9/25/36		1,562,894		764,568
Salomon Brothers Mortgage Securities VII, Inc., Interest-Only Commercial Mtg. Pass-Through Certificates, Series 1999-C1, Cl. X, 7.658%, 5/18/324		84,872,080		228,951
Structured Asset Securities Corp., Mtg. Pass-Through Certificates, Series 2002-AL1, Cl. B2, 3.45%, 2/25/32		2,177,430		1,024,444
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial Mtg. Pass-Through Certificates, Series 2006-C29, Cl. A2, 5.272%, 11/15/48		370,000		303,664
Wachovia Mortgage Loan Trust LLC, Mtg. Pass-Through Certificates, Series 2007-A, Cl. 1A1, 5.981%, 3/1/371		1,423,195		767,784
WaMu Mortgage Pass-Through Certificates 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 1A4, 5.871%, 8/1/461		3,593,218		2,000,203
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates, Series 2007-HY1, Cl. 1A2, 5.706%, 2/25/371,2		794,400		182,712
WaMu Mortgage Pass-Through Certificates 2007-HY3 Trust, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 2A2, 5.668%, 3/1/371		2,024,842		523,335
WaMu Mortgage Pass-Through Certificates 2007-HY4 Trust, Mtg. Pass-Through Certificates, Series 2007-HY4, Cl. 5A1, 5.548%, 11/1/361		1,125,156		739,399
WaMu Mortgage Pass-Through Certificates 2007-HY5 Trust, Mtg. Pass-Through Certificates, Series 2007-HY5, Cl. 2A3, 5.647%, 5/1/371		1,179,613		754,317
Wells Fargo Mortgage-Backed Securities 2004-EE Trust, Mtg. Pass-Through Certificates, Series 2004-EE, Cl. 3A2, 4.388%, 12/1/341		2,117,735		1,601,247
Wells Fargo Mortgage-Backed Securities 2004-U Trust, Mtg. Pass-Through Certificates, Series 2004-U, Cl. A1, 5.245%, 10/1/341		404,621		345,485
				33,212,514

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Manufactured Housing—1.9%
Wells Fargo Mortgage-Backed Securities 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 6.099%, 9/25/361	$	2,907,261	$	1,868,922
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through Certificates, Series 2006-AR2, Cl. 2A5, 5.093%, 3/25/361		3,545,876		2,207,239
				4,076,161
Multifamily—6.3%
CHL Mortgage Pass-Through Trust 2003-46, Mtg. Pass-Through Certificates, Series 2003-46, Cl. 1A2, 5.15%, 1/19/341		1,320,462		1,113,717
CHL Mortgage Pass-Through Trust 2005-HYB1, Mtg. Pass-Through Certificates, Series 2005-HYB1, Cl. 1A2, 4.982%, 3/25/351		2,494,437		1,561,752
Citigroup Mortgage Loan Trust, Inc. 2006-AR5, Asset-Backed Pass-Through Certificates, Series 2006-AR5, Cl. 1A3A, 5.89%, 7/25/361		1,459,192		765,131
CWALT Alternative Loan Trust 2005-85CB, Mtg. Pass-Through Certificates, Series 2005-85CB, Cl. 2A3, 5.50%, 2/25/36		1,790,000		1,371,423
GMAC Mortgage Corp. Loan Trust, Mtg. Pass-Through Certificates, Series 2004-J4, Cl. A7, 5.50%, 9/25/34		1,660,000		1,327,128
GSR Mortgage Loan Trust 2005-AR7, Mtg. Pass-Through Certificates, Series 2005-AR7, Cl. 3A1, 5.14%, 11/25/351		4,004,761		2,533,794
Merrill Lynch Mortgage Investors Trust 2007-2, Mtg. Pass-Through Certificates, Series 2007-2, Cl. 2A1, 5.972%, 6/25/371		3,073,834		2,153,618
Wells Fargo Mortgage-Backed Securities 2004-AA Trust, Mtg. Pass-Through Certificates, Series 2004-AA, Cl. 2A, 4.992%, 12/25/341		825,559		639,189
Wells Fargo Mortgage-Backed Securities 2004-S Trust, Mtg. Pass-Through Certificates, Series 2004-S, Cl. A1, 3.742%, 9/25/341		672,556		492,212
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 4A1, 5.557%, 7/25/361		1,711,916		1,122,862
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through Certificates, Series 2006-AR2, Cl. 2A6, 5.093%, 3/25/361		673,358		187,615
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.093%, 3/25/361		860,456		617,983
				13,886,424
Other—0.0%
JPMorgan Mortgage Trust 2005-S2, Mtg. Pass-Through Certificates, Series 2005-S2, Cl. 3A1, 6.719%, 2/25/321		73,634		54,972
Salomon Brothers Mortgage Securities VI, Inc., Interest-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. B, 68.718%, 10/23/174		4,410		539
Salomon Brothers Mortgage Securities VI, Inc., Principal-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. A, 4.493%, 10/23/175		6,528		6,072
				61,583
Residential—10.3%
CHL Mortgage Pass-Through Trust 2005-J4, Mtg. Pass-Through Certificates, Series 2005-J4, Cl. A7, 5.50%, 11/1/35		40,000		28,241
CWALT Alternative Loan Trust 2004-24CB, Mtg. Pass-Through Certificates, Series 2004-24CB, Cl. 1A1, 6%, 11/1/34		1,455,388		1,282,516
CWALT Alternative Loan Trust 2004-28CB, Mtg. Pass-Through Certificates, Series 2004-28CB, Cl. 3A1, 6%, 1/1/35		1,156,881		788,180
CWALT Alternative Loan Trust 2005-18CB, Mtg. Pass-Through Certificates, Series 2005-18CB, Cl. A8, 5.50%, 5/25/36		2,420,000		1,788,376
CWALT Alternative Loan Trust 2005-J1, Mtg. Pass-Through Certificates, Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32		1,942,209		1,243,939
CWALT Alternative Loan Trust 2005-J3, Mtg. Pass-Through Certificates, Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34		1,737,932		1,497,447
JP Morgan Mortgage Trust 2006-A2, Mtg. Pass-Through Certificates, Series 2006-A2, Cl. 5A3, 5.138%, 11/1/331		1,513,311		1,175,351
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-10, Cl. 2A3B, 5.55%, 1/25/36		601,025		553,920
Merrill Lynch Mortgage Investors Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 6.076%, 10/25/361		99,157		73,852

	Principal
	Amount		Value
Residential Continued
Morgan Stanley Mortgage Loan Trust 2006-AR, Mtg. Pass-Through Certificates, Series 2006-AR, Cl. 5A3, 5.416%, 6/25/361	$	1,110,000	$	769,319
RALI Series 2003-QS1 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2003-QS1, Cl. A2, 5.75%, 1/25/33		598,225		596,328
RALI Series 2004-QS10 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2004-QS10, Cl. A3, 0.971%, 7/25/341		1,409,857		1,187,414
RALI Series 2006-QS13 Trust:
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A5, 6%, 9/25/36		102,248		69,150
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		29,911		28,789
RALI Series 2006-QS5 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS5, Cl. 2A2, 6%, 5/1/36		385,987		377,417
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A28, 5.75%, 4/25/37		38,257		18,024
STARM Mortgage Loan Trust 2007-S1, Mtg. Pass-Through Certificates, Series 2007-S1, Cl. 3A1, 5.01%, 8/1/221,2		3,880,964		2,522,627
WaMu Mortgage Pass-Through Certificates 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 2A1, 6.127%, 8/25/361		3,308,565		2,200,867
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates, Series 2007-HY1, Cl. 4A1, 5.449%, 2/1/371		82,812		49,469
WaMu Mortgage Pass-Through Certificates 2007-HY2 Trust, Mtg. Pass-Through Certificates, Series 2007-HY2, Cl. 2A1, 6.615%, 11/1/361		1,174,842		670,696
Washington Mutual Mortgage Pass-Through Certificates, Mtg. Pass-Through Certificates, Series 2007-1, Cl. 1A8, 6%, 2/25/37		3,321,774		2,906,103
Wells Fargo Mortgage-Backed Securities 2003-6 Trust, Mtg. Pass-Through Certificates, Series 2003-6, Cl. 1A1, 5%, 6/25/18		1,288,218		1,259,475
Wells Fargo Mortgage-Backed Securities 2004-EE Trust, Mtg. Pass-Through Certificates, Series 2004-EE, Cl. 3A1, 4.388%, 12/1/341		883,087		688,369
Wells Fargo Mortgage-Backed Securities 2004-R Trust, Mtg. Pass-Through Certificates, Series 2004-R, Cl. 2A1, 4.368%, 9/1/341		452,363		323,841
Wells Fargo Mortgage-Backed Securities 2006-AR5 Trust, Mtg. Pass-Through Certificates, Series 2006-AR5, Cl. 2A2, 5.545%, 4/1/361,2		1,556,566		404,707
				22,504,417
Total Mortgage-Backed Obligations (Cost $253,425,354)				220,437,039
U.S. Government Obligations—0.2%
Resolution Funding Corp. Bonds, Residual Funding STRIPS, 2.827%, 1/15/217 (Cost $444,184)		825,000		520,068
Corporate Bonds and Notes—29.1%
Consumer Discretionary—5.6%
Automobiles—2.3%
Ford Motor Credit Co., 9.75% Sr. Unsec. Nts., 9/15/10		4,080,000		3,265,134
General Motors Acceptance Corp., 8% Bonds, 11/1/31		3,185,000		1,866,923
				5,132,057
Hotels, Restaurants & Leisure—1.6%
MGM Mirage, Inc., 6% Sr. Sec. Nts., 10/1/09		2,215,000		2,126,400
Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 3/15/10		350,000		232,750
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14		1,340,000		1,018,400
				3,377,550
Household Durables—0.6%
Centex Corp., 5.80% Sr. Unsec. Nts., 9/15/09		910,000		869,050
Lennar Corp., 7.625% Sr. Unsec. Nts., 3/1/09		400,000		398,000
				1,267,050
Media—0.2%
Clear Channel Communications, Inc., 6.25% Nts., 3/15/11		1,370,000		417,850
Multiline Retail—0.9%
Macy’s Retail Holdings, Inc., 4.80% Sr. Nts., 7/15/09		2,125,000		2,014,400
Consumer Staples—0.4%
Food & Staples Retailing—0.4%
Albertson’s, Inc., 8% Sr. Unsec. Debs., 5/1/31		1,675,000		1,013,375

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Energy—2.0%
Oil, Gas & Consumable Fuels—2.0%
Buckeye Partners LP, 4.625% Sr. Nts., 7/15/13	$	745,000	$	634,013
Energy Transfer Partners LP, 5.65% Sr. Unsec. Unsub. Nts., 8/1/12		430,000		384,197
Kaneb Pipe Line Operating Partnership LP, 5.875% Sr. Unsec. Nts., 6/1/13		1,560,000		1,314,211
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/138		876,612		931,928
TEPPCO Partners LP, 6.125% Nts., 2/1/13		900,000		801,429
Valero Logistics Operations LP, 6.05% Nts., 3/15/13		540,000		462,604
				4,528,382
Financials—18.6%
Capital Markets—1.2%
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34		3,595,000		2,615,531
Lehman Brothers Holdings, Inc., 7.50% Sub. Nts., 5/11/389		7,200,000		720
				2,616,251
Commercial Banks—4.9%
Barclays Bank plc, 6.278% Perpetual Bonds10		5,830,000		3,374,812
HBOS plc, 6.413% Sub. Perpetual Bonds, Series A8,10		6,600,000		2,563,876
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/351		5,920,000		2,479,722
Popular North America, Inc., 4.70% Nts., 6/30/09		2,485,000		2,429,028
				10,847,438
Diversified Financial Services—7.7%
Bank of America Corp.:
8% Unsec. Perpetual Bonds, Series K10		3,050,000		2,196,976
8.125% Perpetual Bonds, Series M10		515,000		385,864
Capmark Financial Group, Inc.:
3.038% Sr. Unsec. Nts., 5/10/101		700,000		357,338
5.875% Sr. Unsec. Nts., 5/10/12		1,470,000		501,548
CIT Group Funding Co. of Canada, 4.65% Sr. Unsec. Nts., 7/1/10		1,235,000		1,084,537
Citigroup, Inc.:
8.30% Jr. Sub. Bonds, 12/21/571		4,485,000		3,466,802
8.40% Perpetual Bonds, Series E10		1,730,000		1,144,464
JPMorgan Chase & Co., 7.90% Perpetual Bonds, Series 110		3,255,000		2,714,755
Merrill Lynch & Co., Inc., 7.75% Jr. Sub. Bonds, 5/14/38		4,490,000		4,961,728
				16,814,012
Insurance—4.5%
American International Group, Inc., 6.25% Jr. Sub. Bonds, 3/15/37		1,290,000		482,912
Axa SA, 6.379% Sub. Perpetual Bonds8,10		5,205,000		2,332,459
MBIA, Inc., 5.70% Sr. Unsec. Unsub. Nts., 12/1/34		1,055,000		429,248
MetLife Capital Trust X, 9.25% Sec. Bonds, 4/8/381		700,000		489,218
MetLife, Inc., 6.40% Jr. Unsec. Sub. Bonds, 12/15/361		3,875,000		2,330,375
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/238		2,400,000		2,317,574
Prudential Insurance Co. of America, 8.30% Nts., 7/1/258		2,035,000		1,375,123
				9,756,909
Thrifts & Mortgage Finance—0.3%
Washington Mutual Bank NV, 3.337% Sr. Unsec. Nts., 5/1/099		2,380,000		702,100
Information Technology—0.8%
Computers & Peripherals—0.8%
NCR Corp., 7.125% Sr. Unsec. Unsub. Nts., 6/15/09		1,700,000		1,705,170
Utilities—1.7%
Electric Utilities—1.7%
Monongahela Power Co., 7.36% Unsec. Nts., Series A, 1/15/10		1,925,000		1,884,895
Westar Energy, Inc., 7.125% Sr. Unsec. Nts., 8/1/09		1,820,000		1,812,571
				3,697,466
Total Corporate Bonds and Notes (Cost $96,373,886)				63,890,010

	Units
Rights, Warrants and Certificates—0.0%
Pathmark Stores, Inc. Wts., Strike Price $22.31, Exp. 9/19/102,11 (Cost $14,872)		5,408	189

	Shares
Investment Company—6.2%
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%12,13 (Cost $13,605,218)		13,605,218			13,605,218
Total Investments, at Value (Cost $375,825,605)		139.6	%		306,331,228
Liabilities in Excess of Other Assets		(39.6	)		(86,899,653	)
Net Assets		100.0	%	$	219,431,575

Industry classifications are unaudited.

Footnotes to Statement of Investments
1.	Represents the current interest rate for a variable or increasing rate security.
2.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2008 was $5,141,245, which represents 2.34% of the Fund’s net assets. See Note 8 of accompanying Notes.
3.	All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures contracts. The aggregate market value of such securities is $825,070. See Note 5 of accompanying Notes.
4.	Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. These securities amount to $13,064,019 or 5.95% of the Fund’s net assets as of December 31, 2008.
5.	Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. These securities amount to $755,368 or 0.34% of the Fund’s net assets as of December 31, 2008.
6.	When-issued security or delayed delivery to be delivered and settled after December 31, 2008. See Note 1 of accompanying Notes.
7.	Zero coupon bond reflects effective yield on the date of purchase.
8.	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 $9,520,960 or 4.34% of the Fund’s net assets as of December 31, 2008.
9.	Issue is in default. See Note 1 of accompanying Notes.
10.	This bond has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest. Rate reported represents the current interest rate for this variable rate security.
11.	Non-income producing security.
12.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
OFI Liquid Assets Fund, LLC		—		15,411,921		15,411,921		—
Oppenheimer Institutional Money Market Fund, Cl. E		4,105,793		260,480,009		250,980,584		13,605,218

	Value		Income
OFI Liquid Assets Fund, LLC	$	—	$	18,564	a
Oppenheimer Institutional Money		13,605,218		246,255
Market Fund, Cl. E	$	13,605,218	$	264,819

a.	Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.
13.	Rate shown is the 7-day yield as of December 31, 2008.

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments		Other Financial
Valuation Description	in Securities		Instruments*
Level 1—Quoted Prices	$	13,605,218	$	(509,885	)
Level 2—Other Significant Observable Inputs		292,725,821		(4,069,834	)
Level 3—Significant Unobservable Inputs		189		—
Total	$	306,331,228	$	(4,579,719	)

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Futures Contracts as of December 31, 2008 are as follows:

								Unrealized
		Number of		Expiration				Appreciation
Contract Description	Buy/Sell	Contracts		Date		Value		(Depreciation)
U.S. Treasury Bonds, 10 yr.	Buy		180		3/20/09	$	22,635,000	$	(91,824	)
U.S. Treasury Bonds, 20 yr.	Buy		70		3/20/09		9,663,281		14,450
U.S. Treasury Nts., 2 yr.	Sell		49		3/31/09		10,685,063		(16,096	)
								$	(93,470	)

Credit Default Swap Contracts as of December 31, 2008 are as follows:

										Upfront
		Buy/Sell	Notional		Pay/					Payment
		Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)			Value
ABX.HE.AA.06-2 Index:
	Barclays Bank plc	Sell	$	930		0.170	%		5/25/46	$	719,465		$	(816,772	)
	Deutsche Bank AG	Sell		450		0.170			5/25/46		53,996			(395,212	)
	Goldman Sachs Bank USA	Sell		155		0.170			5/25/46		12,771			(136,129	)
	Goldman Sachs Bank USA	Sell		760		0.170			5/25/46		300,182			(667,469	)
	Morgan Stanley Capital Services, Inc.	Sell		155		0.170			5/25/46		12,383			(136,129	)
	Morgan Stanley Capital Services, Inc.	Sell		300		0.170			5/25/46		29,999			(263,475	)
		Total		2,750							1,128,796			(2,415,186	)
ABX-HE-AAA 06-2 Index:
	Deutsche Bank AG	Sell		40		0.110			5/25/46		—			(20,371	)
	Deutsche Bank AG	Sell		40		0.110			5/25/46		—			(20,371	)
	Goldman Sachs Bank USA	Sell		20		0.110			5/25/46		—			(10,186	)
	Morgan Stanley Capital Services, Inc.	Sell		20		0.110			5/25/46		—			(10,186	)
		Total		120							—			(61,114	)
Allied Waste North America, Inc.:
	Deutsche Bank AG	Sell		630		2.000			9/20/09		—			4,864
	Deutsche Bank AG	Sell		990		2.000			9/20/09		—			7,644
		Total		1,620							—			12,508
American International Group, Inc.:
	Barclays Bank plc	Sell		495		3.000			3/20/09		—			(2,901	)
	Barclays Bank plc	Sell		2,600		5.350			3/20/09		—			(490	)
		Total		3,095							—			(3,391	)
Capmark Financial Group, Inc.:
	Barclays Bank plc	Sell		950		1.000			6/20/12		—			(497,954	)
	Goldman Sachs Bank USA	Sell		1,035		0.950			6/20/12		—			(543,202	)
	Morgan Stanley Capital Services, Inc.	Sell		405		5.000			6/20/12		109,350			(190,540	)
		Total		2,390							109,350			(1,231,696	)
CDX North America Investment
Grade Index, Series 7:	Deutsche Bank AG	Buy		3,514		0.400			12/20/11		(370	)		128,041
		Total		3,514							(370	)		128,041
Cemex SAB de CV	Deutsche Bank AG	Sell		665		2.000			3/20/09		—			(9,727	)
		Total		665							—			(9,727	)
Centex Corp.:
	Barclays Bank plc	Sell		280		4.650			9/20/09		—			(370	)
	Deutsche Bank AG	Sell		355		1.550			9/20/09		—			(8,497	)
		Total		635							—			(8,867	)
CIT Group, Inc.:
	Barclays Bank plc	Sell		195		10.500			6/20/09		—			2,577
	Deutsche Bank AG	Sell		125		5.000			3/20/09		14,375			(3,573	)
		Total		320							14,375			(996	)
Countrywide Home Loans, Inc.	Morgan Stanley Capital Services, Inc.	Sell		3,070		0.420			6/20/09		—			(11,664	)
		Total		3,070							—			(11,664	)
Energy Future Holdings Corp.:
	Credit Suisse International	Sell		365		5.910			12/20/12		—			(100,178	)
	Credit Suisse International	Sell		350		6.050			12/20/12		—			(94,930	)

Credit Default Swap Contracts: Continued

										Upfront
		Buy/Sell	Notional		Pay/					Payment
		Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)		Value
Energy Future Holdings Corp.:
Continued
	Credit Suisse International	Sell	$	365		6.000	%		12/20/12	$	—	$	(99,420	)
		Total		1,080							—		(294,528	)
First Data Corp.	Goldman Sachs International	Sell		110		4.700			3/20/09		—		(3,428	)
		Total		110							—		(3,428	)
Ford Motor Co.:
	Deutsche Bank AG	Sell		1,475		5.000			12/20/18		796,500		(1,041,756	)
	Morgan Stanley Capital Services, Inc.	Sell		2,065		7.150			12/20/16		—		(1,343,693	)
	Morgan Stanley Capital Services, Inc.	Sell		980		7.050			12/20/16		—		(645,151	)
		Total		4,520							796,500		(3,030,600	)
General Electric Capital Corp.:
	Barclays Bank plc	Sell		880		8.000			12/20/09		—		25,927
	Barclays Bank plc	Sell		1,320		5.750			12/20/09		—		10,332
	Credit Suisse International	Sell		770		8.000			12/20/09		—		22,687
		Total		2,970							—		58,946
General Motors Corp.:
	Deutsche Bank AG	Sell		960		5.000			12/20/18		643,200		(760,042	)
	Morgan Stanley Capital Services, Inc.	Sell		1,035		5.800			12/20/16		—		(818,691	)
	Morgan Stanley Capital Services, Inc.	Sell		1,000		5.750			12/20/16		—		(791,439	)
		Total		2,995							643,200		(2,370,172	)
Goldman Sachs Group, Inc. (The):
	Barclays Bank plc	Sell		1,285		5.750			12/20/09		—		26,187
	Deutsche Bank AG	Sell		1,290		5.500			12/20/09		—		23,157
	Deutsche Bank AG	Sell		930		5.450			12/20/09		—		16,242
		Total		3,505							—		65,586
Hartford Financial Services Group, Inc.
	Morgan Stanley Capital Services, Inc.	Sell		665		2.400			3/20/09		—		(6,644	)
		Total		665							—		(6,644	)
HCP, Inc.	Barclays Bank plc	Sell		1,005		4.600			3/20/09		—		1,153
		Total		1,005							—		1,153
Idearc, Inc.	Credit Suisse International	Sell		140		5.000			12/20/09		28,700		(101,276	)
		Total		140							28,700		(101,276	)
iStar Financial, Inc.:
	Barclays Bank plc	Sell		1,140		4.400			12/20/12		—		(618,082	)
	Credit Suisse International	Sell		165		4.000			12/20/12		—		(89,875	)
	Credit Suisse International	Sell		410		12.000			3/20/09		—		(44,835	)
	Deutsche Bank AG	Sell		180		4.320			12/20/12		—		(97,683	)
	Deutsche Bank AG	Sell		1,005		12.000			3/20/09		—		(109,900	)
	Goldman Sachs International	Sell		185		3.950			12/20/12		—		(100,827	)
	Morgan Stanley Capital Services, Inc.	Sell		170		4.860			12/20/12		—		(91,678	)
		Total		3,255							—		(1,152,880	)
J.C. Penney Corp., Inc.:
	Morgan Stanley Capital Services, Inc.	Sell		1,060		1.070			12/20/17		—		(206,475	)
	Morgan Stanley Capital Services, Inc.	Sell		1,095		1.300			12/20/17		—		(197,682	)
		Total		2,155							—		(404,157	)
Jones Apparel Group, Inc.:
	Deutsche Bank AG	Buy		675		2.635			6/20/18		—		150,753
	Morgan Stanley Capital Services, Inc.	Buy		1,370		2.970			6/20/18		—		281,043
		Total		2,045							—		431,796
	Deutsche Bank AG	Sell		675		2.720			6/20/13		—		(133,864	)
	Morgan Stanley Capital Services, Inc.	Sell		1,370		3.200			6/20/13		—		(250,612	)
		Total		2,045							—		(384,476	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued
Credit Default Swap Contracts: Continued

										Upfront
		Buy/Sell	Notional		Pay/					Payment
		Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)		Value
Kohl's Corp.:
	Barclays Bank plc	Buy	$	665		1.180	%		6/20/18	$	—	$	59,369
	Barclays Bank plc	Buy		665		1.040			6/20/18		—		66,139
	Deutsche Bank AG	Buy		675		1.300			6/20/18		—		54,373
	Morgan Stanley Capital Services, Inc.	Buy		1,590		0.660			12/20/17		—		193,958
	Morgan Stanley Capital Services, Inc.	Buy		1,640		0.870			12/20/17		—		175,965
		Total		5,235							—		549,804
	Barclays Bank plc	Sell		665		1.080			6/20/13		—		(44,740	)
	Barclays Bank plc	Sell		665		0.900			6/20/13		—		(49,479	)
	Deutsche Bank AG	Sell		675		1.180			6/20/13		—		(42,740	)
		Total		2,005							—		(136,959	)
Liz Claiborne, Inc.:
	Morgan Stanley Capital Services, Inc.	Buy		1,345		2.900			6/20/18		—		416,444
		Total		1,345							—		416,444
	Deutsche Bank AG	Sell		2,485		3.250			6/20/09		—		(72,964	)
	Morgan Stanley Capital Services, Inc.	Sell		1,345		3.100			6/20/13		—		(357,017	)
		Total		3,830							—		(429,981	)
Louisiana-Pacific Corp.	Morgan Stanley Capital Services, Inc.	Sell		1,345		6.250			9/20/09		—		(114,929	)
		Total		1,345							—		(114,929	)
Merrill Lynch & Co., Inc.:
	Barclays Bank plc	Sell		2,575		4.150			9/20/09		—		3,432
	Credit Suisse International	Sell		1,285		4.150			9/20/09		—		1,713
		Total		3,860							—		5,145
Morgan Stanley	Credit Suisse International	Sell		1,775		7.800			12/20/13		—		265,490
		Total		1,775							—		265,490
Prudential Financial, Inc.	Deutsche Bank AG	Sell		1,430		2.050			6/20/09		—		(45,649	)
		Total		1,430							—		(45,649	)
Pulte Homes, Inc.	Goldman Sachs International	Sell		1,625		2.750			9/20/09		—		(2,284	)
		Total		1,625							—		(2,284	)
Reliant Energy, Inc.:
	Credit Suisse International	Sell		655		9.000			12/20/09		—		(16,437	)
	Credit Suisse International	Sell		680		9.000			12/20/09		—		(17,064	)
		Total		1,335							—		(33,501	)
R.H. Donnelley Corp.	Goldman Sachs International	Sell		1,465		9.000			3/20/09		—		(63,164	)
		Total		1,465							—		(63,164	)
Rite Aid Corp.:
	Credit Suisse International	Sell		530		7.500			3/20/09		—		(27,121	)
	Credit Suisse International	Sell		615		5.000			9/20/09		36,900		(109,299	)
		Total		1,145							36,900		(136,420	)
Sprint Nextel Corp.:
	Credit Suisse International	Sell		2,940		6.300			3/20/09		—		(40,943	)
	Goldman Sachs International	Sell		1,060		6.300			3/20/09		—		(14,762	)
		Total		4,000							—		(55,705	)
Temple-Inland, Inc.	Deutsche Bank AG	Sell		335		3.000			9/20/09		—		(19,916	)
		Total		335							—		(19,916	)
Tenet Healthcare Corp.	Deutsche Bank AG	Sell		1,635		1.600			3/20/09		—		(37,879	)
		Total		1,635							—		(37,879	)
Tribune Co.:
	Credit Suisse International	Sell		120		5.000			1/16/09		26,400		(112,515	)
	Credit Suisse International	Sell		600		5.000			1/16/09		138,000		(562,573	)
	Credit Suisse International	Sell		45		5.000			1/16/09		14,400		(42,193	)

Credit Default Swap Contracts: Continued

										Upfront
		Buy/Sell	Notional		Pay/					Payment
		Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)			Value
Tribune Co.: Continued
	Credit Suisse International	Sell	$	430		5.000	%		1/16/09	$	150,500		$	(403,177	)
	Credit Suisse International	Sell		500		5.000			1/16/09		195,000			(468,811	)
		Total		1,695							524,300			(1,589,269	)
Univision Communications, Inc.:
	Credit Suisse International	Sell		25		14.600			3/20/09		—			(1,807	)
	Goldman Sachs International	Sell		350		5.000			6/20/09		35,000			(115,708	)
	Goldman Sachs International	Sell		140		5.000			6/20/09		15,400			(46,283	)
	Goldman Sachs International	Sell		360		5.000			6/20/09		21,600			(119,014	)
	Morgan Stanley Capital Services, Inc.	Sell		250		5.000			12/20/09		32,500			(85,853	)
	Morgan Stanley Capital Services, Inc.	Sell		300		5.000			12/20/09		21,000			(103,024	)
		Total		1,425							125,500			(471,689	)
Vale Overseas:
	Morgan Stanley Capital Services, Inc.	Buy		1,030		0.700			3/20/17		—			164,396
	Morgan Stanley Capital Services, Inc.	Buy		1,015		0.630			3/20/17		—			166,414
		Total		2,045							—			330,810
	Morgan Stanley Capital Services, Inc.	Sell		1,030		1.170			3/20/17		—			(130,905	)
	Morgan Stanley Capital Services, Inc.	Sell		1,015		1.100			3/20/17		—			(133,578	)
		Total		2,045							—			(264,483	)
Vornado Realty LP:
	Credit Suisse International	Sell		665		3.600			3/20/09		—			(5,780	)
	Deutsche Bank AG	Sell		1,345		3.875			6/20/09		—			(10,783	)
		Total		2,010							—			(16,563	)
XL Capital Ltd.:
	Barclays Bank plc	Sell		1,485		3.550			9/20/09		—			(110,212	)
	Deutsche Bank AG	Sell		1,675		3.550			9/20/09		—			(124,313	)
		Total		3,160							—			(234,525	)
		Grand Total Buys		14,184							(370	)		1,856,895
		Grand Total Sells		75,230							3,407,621			(14,734,890	)
					Total Credit			Default Swaps		$	3,407,251		$	(12,877,995	)

The table that follows shows the undiscounted maximum potential payment by the Fund related to selling credit protection in credit default swaps:

Type of Reference	Total Maximum Potential
Asset on which the	Payments for Selling Credit				Reference Asset
Fund Sold Protection	Protection (Undiscounted)		Amount Recoverable*		Rating Range**
Asset-Backed Indexes	$	2,870,000	$	—	AAA to AA
Single Name Corporate Debt		41,335,000		2,005,000	AAA to BBB-
Single Name Corporate Debt		31,025,000		3,390,000	BB+ to D
Total	$	75,230,000	$	5,395,000

*	Amounts recoverable includes potential payments from related purchased protection for instances where the Fund is the seller of protection. In addition, the Fund has no recourse provisions under the credit derivatives and holds no collateral which can offset or reduce potential payments under a triggering event.
**	The reference asset security rating, as rated by any rating organization, are included in the equivalent Standard & Poor’s rating category. The reference asset rating represents the likelihood of a potential payment by the Fund if the reference asset experiences a credit event as of period end.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued
Interest Rate Swap Contracts as of December 31, 2008 are as follows:

	Notional
	Amount		Paid by			Received by			Termination
Reference Entity/Swap Counterparty	(000’s)		the Fund			the Fund			Date		Value
USD BBA LIBOR:
Credit Suisse International	$	690		4.353	%	Three-Month USD BBA LIBOR				10/21/16	$	(98,623	)
Credit Suisse International		2,740		2.225		Three-Month USD BBA LIBOR				11/20/10		(38,743	)
Goldman Sachs Group, Inc. (The)		20,000		4.488		Three-Month USD BBA LIBOR				10/17/16		(3,049,431	)
Goldman Sachs Group, Inc. (The)		60,000		2.820		Three-Month USD BBA LIBOR				10/29/10		(1,368,198	)
Goldman Sachs Group, Inc. (The)		1,810		4.358		Three-Month USD BBA LIBOR				10/21/16		(259,374	)
Goldman Sachs Group, Inc. (The)		13,640		2.233		Three-Month USD BBA LIBOR				11/20/10		(194,887	)
Goldman Sachs International		12,000		4.275		Three-Month USD BBA LIBOR				9/5/16		(1,782,468	)
UBS AG		3,620		2.230		Three-Month USD BBA LIBOR				11/20/10		(51,543	)
Total where Fund pays a fixed rate		114,500										(6,843,267	)
Credit Suisse International		4,580	Three-Month USD BBA LIBOR				5.428	%		8/7/17		1,170,547
Deutsche Bank AG		3,870	Three-Month USD BBA LIBOR				5.445			8/8/17		994,845
Goldman Sachs Group, Inc. (The)		10,000	Three-Month USD BBA LIBOR				4.543			10/21/28		2,775,640
Goldman Sachs Group, Inc. (The)		25,000	Three-Month USD BBA LIBOR				2.823			12/4/16		847,600
Total where Fund pays a variable rate		43,450										5,788,632
Total Interest Rate Swaps											$	(1,054,635	)

Abbreviation/Definition is as follows:

BBA LIBOR British Bankers’ Association London-Interbank Offered Rate

Total Return Swap Contracts as of December 31, 2008 are as follows:

	Notional
	Amount		Paid by		Received by		Termination
Reference Entity/Swap Counterparty	(000’s)		the Fund		the Fund		Date		Value
Banc of America Securities LLC AAA 10 yr. CMBS Daily Index*:
Goldman Sachs Group, Inc. (The)	$	36,590		A		D		3/31/09	$	7,881,791
Goldman Sachs Group, Inc. (The)		30,110		B		C		1/31/09		(7,153,383	)
							Reference Entity Total			728,408
Barclays Capital U.S. CMBS AAA Index*:
Morgan Stanley		7,300		A		D		2/1/09		798,499
Morgan Stanley		14,200		A		D		3/1/09		1,556,053
							Reference Entity Total			2,354,552
Barclays Capital U.S. CMBS AAA 8.5+ Index*:
Goldman Sachs Group, Inc. (The)		8,500		A		D		3/1/09		1,451,339
Goldman Sachs Group, Inc. (The)		3,210		A		D		3/1/09		546,796
Goldman Sachs Group, Inc. (The)		6,630		A		D		2/1/09		1,132,044
Morgan Stanley		2,290		A		D		3/1/09		390,478
Morgan Stanley		5,860		A		D		3/1/09		991,871
Morgan Stanley		440		A		D		2/1/09		74,078
Morgan Stanley		3,530		A		D		2/1/09		600,716
Morgan Stanley		6,170		A		D		2/1/09		1,054,829

Total Return Swap Contracts: Continued

	Notional
	Amount		Paid by		Received by		Termination
Reference Entity/Swap Counterparty	(000’s)		the Fund		the Fund		Date		Value
Barclays Capital U.S. CMBS AAA 8.5+ Index*: Continued Morgan Stanley	$	3,170		A		D		2/1/09	$	537,685
							Reference Entity Total			6,779,836
							Total of Total Return Swaps		$	9,862,796

* The CMBS Indexes are representative indexes of segments of the commercial mortgage backed securities market. These indexes are measured by movements in the credit spreads of the underlying holdings. As the credit market perceives an improvement in the credit quality of an Index’s underlying holdings and reduced probability of default, the spread of an index narrows. As the credit market perceives a decrease in credit quality and an increased probability of default on an Index’s underlying holdings, the spread widens.

Abbreviation is as follows:

CMBS Commercial Mortgage Backed Securities

A — The Fund makes periodic payments when credit spreads, as represented by the Reference Entity, widen.

B — The Fund makes periodic payments when credit spreads, as represented by the Reference Entity, narrow.

C — The Fund receives periodic payments when credit spreads, as represented by the Reference Enitiy, widen.

D — The Fund receives periodic payments when credit spreads, as represented by the Reference Enitiy, narrow.

The following table aggregates, as of period end, the amount receivable from/(payable to) each counterparty with whom the Fund has entered into a swap agreement. Swaps are individually disclosed in the preceding tables.

Swap Summary as of December 31, 2008 is as follows:

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)		Value
Barclays Bank plc:
	Credit Default Buy Protection	$	1,330	$	125,508
	Credit Default Sell Protection		16,470		(2,071,392	)
					(1,945,884	)
Credit Suisse International:
	Credit Default Sell Protection		13,430		(2,048,344	)
	Interest Rate		8,010		1,033,181
					(1,015,163	)
Deutsche Bank AG:
	Credit Default Buy Protection		4,864		333,167
	Credit Default Sell Protection		19,390		(2,903,333	)
	Interest Rate		3,870		994,845
					(1,575,321	)
Goldman Sachs Bank USA	Credit Default Sell Protection		1,970		(1,356,986	)
Goldman Sachs Group, Inc. (The):
	Total Return		85,040		3,858,587
	Interest Rate		130,450		(1,248,650	)
					2,609,937
Goldman Sachs International:
	Credit Default Sell Protection		5,295		(465,470	)
	Interest Rate		12,000		(1,782,468	)
					(2,247,938	)
Morgan Stanley	Total Return		42,960		6,004,209
Morgan Stanley Capital Services, Inc.:
	Credit Default Buy Protection		7,990		1,398,220
	Credit Default Sell Protection		18,675		(5,889,365	)
					(4,491,145	)
UBS AG	Interest Rate		3,620		(51,543	)
		Total Swaps		$	(4,069,834	)

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $362,220,387)	$	292,726,010
Affiliated companies (cost $13,605,218)		13,605,218
		306,331,228
Cash		2,989,915
Swaps, at value (net upfront payment received $14,005)		25,069,538
Receivables and other assets:
Interest, dividends and principal paydowns		2,286,439
Shares of beneficial interest sold		171,022
Terminated investment contracts		33,605
Investments sold		344
Due from Manager		37
Other		14,777
Total assets		336,896,905
Liabilities
Swaps, at value (upfront payment received $3,393,246)		29,139,372
Payables and other liabilities:
Investments purchased on a when-issued or delayed delivery basis		86,956,884
Futures margins		509,885
Terminated investment contracts		508,856
Shares of beneficial interest redeemed		214,068
Distribution and service plan fees		41,622
Shareholder communications		10,020
Trustees’ compensation		8,494
Transfer and shareholder servicing agent fees		1,720
Other		74,409
Total liabilities		117,465,330
Net Assets	$	219,431,575
Composition of Net Assets
Par value of shares of beneficial interest	$	34,070
Additional paid-in capital		355,718,025
Accumulated net investment loss		(466,070	)
Accumulated net realized loss on investments		(65,604,020	)
Net unrealized depreciation on investments		(70,250,430	)
Net Assets	$	219,431,575
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $156,339,150 and 24,221,312 shares of beneficial interest outstanding)	$	6.45
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $63,092,425 and 9,848,377 shares of beneficial interest outstanding)	$	6.41

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Interest	$	26,126,967
Fee income		1,170,034
Dividends from affiliated companies		246,255
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		9,712
Affiliated companies		18,564
Total investment income		27,571,532
Expenses
Management fees		2,241,087
Distribution and service plan fees—Service shares		249,916
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,995
Trustees’ compensation		14,749
Custodian fees and expenses		2,722
Other		64,261
Total expenses		2,592,724
Less reduction to custodian expenses		(1,988	)
Less waivers and reimbursements of expenses		(29,721	)
Net expenses		2,561,015
Net Investment Income		25,010,517
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments from unaffiliated companies		(13,666,272	)
Closing and expiration of futures contracts		(5,577,484	)
Swap contracts		(89,718,336	)
Net realized loss		(108,962,092	)
Net change in unrealized appreciation (depreciation) on:
Investments		(68,626,214	)
Futures contracts		190,392
Swap contracts		455,655
Net change in unrealized depreciation		(67,980,167	)
Net Decrease in Net Assets Resulting from Operations	$	(151,931,742	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	25,010,517		$	20,943,854
Net realized loss		(108,962,092	)		(3,101,555	)
Net change in unrealized depreciation		(67,980,167	)		(11,066	)
Net increase (decrease) in net assets resulting from operations		(151,931,742	)		17,831,233
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(12,773,902	)		(18,342,384	)
Service shares		(4,423,158	)		(2,404,569	)
		(17,197,060	)		(20,746,953	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(47,839,123	)		(37,703,583	)
Service shares		7,196,319			61,525,061
		(40,642,804	)		23,821,478
Net Assets
Total increase (decrease)		(209,771,606	)		20,905,758
Beginning of period		429,203,181			408,297,423
End of period (including accumulated net investment income (loss) of $(466,070) and $18,856,205, respectively)	$	219,431,575		$	429,203,181

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	11.06		$	11.16		$	11.19		$	11.50		$	11.42
Income (loss) from investment operations:
Net investment income1		.66			.55			.53			.51			.43
Net realized and unrealized gain (loss)		(4.82	)		(.08	)		.03			(.23	)		.18
Total from investment operations		(4.16	)		.47			.56			.28			.61
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.45	)		(.57	)		(.59	)		(.59	)		(.53	)
Net asset value, end of period	$	6.45		$	11.06		$	11.16		$	11.19		$	11.50
Total Return, at Net Asset Value2		(39.05	)%		4.39	%		5.28	%		2.59	%		5.49	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	156,339		$	325,661		$	367,106		$	430,642		$	504,244
Average net assets (in thousands)	$	271,355		$	345,723		$	391,750		$	466,033		$	552,293
Ratios to average net assets:3
Net investment income		6.76	%		5.07	%		4.83	%		4.56	%		3.82	%
Total expenses		0.63	%4		0.68	%4		0.77	%4		0.76	%		0.75	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.62	%		0.68	%		0.77	%		0.76	%		0.75	%
Portfolio turnover rate5		51	%		89	%		114	%		111	%		95	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods of less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.63	%
Year Ended December 31, 2007	0.68	%
Year Ended December 31, 2006	0.77	%

5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	1,019,711,829	$	963,377,934
Year Ended December 31, 2007	$	662,784,931	$	678,316,693
Year Ended December 31, 2006	$	1,168,229,255	$	1,270,329,129
Year Ended December 31, 2005	$	2,420,041,493	$	2,423,498,913
Year Ended December 31, 2004	$	2,841,348,053	$	2,925,500,296

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	10.98		$	11.10		$	11.15		$	11.47		$	11.39
Income (loss) from investment operations:
Net investment income1		.63			.52			.49			.47			.40
Net realized and unrealized gain (loss)		(4.77	)		(.08	)		.03			(.22	)		.18
Total from investment operations		(4.14	)		.44			.52			.25			.58
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.43	)		(.56	)		(.57	)		(.57	)		(.50	)
Net asset value, end of period	$	6.41		$	10.98		$	11.10		$	11.15		$	11.47
Total Return, at Net Asset Value2		(39.07	)%		4.09	%		4.93	%		2.33	%		5.22	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	63,093		$	103,542		$	41,191		$	11,110		$	3,505
Average net assets (in thousands)	$	101,597		$	70,116		$	21,265		$	7,213		$	3,002
Ratios to average net assets:3
Net investment income		6.55	%		4.85	%		4.56	%		4.29	%		3.55	%
Total expenses		0.88	%4		0.92	%4		1.06	%4		1.03	%		0.99	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.87	%		0.92	%		1.06	%		1.03	%		0.99	%
Portfolio turnover rate5		51	%		89	%		114	%		111	%		95	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.88	%
Year Ended December 31, 2007	0.92	%
Year Ended December 31, 2006	1.06	%

5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	1,019,711,829	$	963,377,934
Year Ended December 31, 2007	$	662,784,931	$	678,316,693
Year Ended December 31, 2006	$	1,168,229,255	$	1,270,329,129
Year Ended December 31, 2005	$	2,420,041,493	$	2,423,498,913
Year Ended December 31, 2004	$	2,841,348,053	$	2,925,500,296

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Core Bond Fund/VA (the “Fund”), is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s main investment objective is to seek a high level of current income. As a secondary objective, the Fund seeks capital appreciation when consistent with its primary objective. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Securities on a When-Issued or Delayed Delivery Basis. The Fund may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis. “When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis normally takes place within six months and possibly as long as two years or more after the 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 purchase of securities on a when-issued basis may increase the volatility of the Fund’s net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. When the Fund engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain or dispose of the security at a price and yield it considers advantageous. The Fund maintains internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase.

As of December 31, 2008, the Fund had purchased securities issued on a when-issued or delayed delivery basis and sold securities issued on a delayed delivery basis as follows:

	When-Issued or Delayed
	Delivery Basis Transactions
Purchased securities	$	86,956,884

The Fund may enter into “forward roll” transactions with respect to mortgage-related securities. In this type of transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security (same type, coupon and maturity) at a later date at a set price. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. The Fund records the incremental difference between the forward purchase and sale of each forward roll as realized gain (loss) on investments or as fee income in the case of such transactions that have an associated fee in lieu of a difference in the forward purchase and sale price.

     Risks of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Fund to receive inferior securities at redelivery as compared to the securities sold to the counterparty; counterparty credit risk. To assure its future payment of the purchase price, the Fund maintains internally designated assets with a market value equal to or greater than the payment obligation under the roll.

Credit Risk. The Fund invests in high-yield, non-investment-grade bonds, which may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of December 31, 2008, securities with an aggregate market value of $702,820, representing 0.32% of the Fund’s net assets, were in default.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments in OFI Liquid Assets Fund, LLC. The Fund is permitted to invest cash collateral received in connection with its securities lending activities. Pursuant to the Fund’s Securities Lending Procedures, the Fund may invest cash collateral in, among other investments, an affiliated money market fund. OFI Liquid Assets Fund, LLC (“LAF”) is a limited liability company whose investment objective is to seek current income and stability of principal. The Manager is also the investment adviser of LAF. LAF is not registered under the Investment Company Act of 1940. However, LAF does comply with the investment restrictions applicable to registered money market funds set forth in Rule 2a-7 adopted under the Investment Company Act. The Fund’s investment in LAF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation Based
					on Cost of Securities
Undistributed	Undistributed		Accumulated		and Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3,4		Tax Purposes
$—	$	—	$	66,764,804	$	69,547,225

1. As of December 31, 2008, the Fund had $50,047,655 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2008, details of the capital loss carryforwards were as follows:

Expiring
2010	$	29,885,554
2013		57,295
2014		6,081,496
2015		1,245,459
2016		12,777,851
Total	$	50,047,655

2.	As of December 31, 2008, the Fund had $16,717,149 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
3.	During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.
4.	During the fiscal year ended December 31, 2007, the Fund did not utilize any capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Reduction to		Reduction to
	Accumulated		Accumulated Net
Reduction	Net Investment		Realized Loss
to Paid-in Capital	Income		on Investments
$53,556,351	$	27,135,732	$	80,692,083

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	17,197,060	$	20,746,953

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other

investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	374,758,290
Federal tax cost of other investments		18,663,549
Total federal tax cost	$	393,421,839
Gross unrealized appreciation	$	11,278,504
Gross unrealized depreciation		(80,825,729	)
Net unrealized depreciation	$	(69,547,225	)

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		1,056,698		$	9,889,610			1,273,250		$	13,904,774
Dividends and/or distributions reinvested		1,288,991			12,773,902			1,704,683			18,342,384
Acquisition-Note 11		1,626,777			17,178,762			—			—
Redeemed		(9,205,898	)		(87,681,397	)		(6,416,114	)		(69,950,741	)
Net decrease		(5,233,432	)	$	(47,839,123	)		(3,438,181	)	$	(37,703,583	)
Service Shares
Sold		4,464,539		$	42,884,220			6,555,320		$	70,649,282
Dividends and/or distributions reinvested		449,051			4,423,158			224,516			2,404,569
Redeemed		(4,496,387	)		(40,111,059	)		(1,059,398	)		(11,528,790	)
Net increase		417,203		$	7,196,319			5,720,438		$	61,525,061

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	135,191,911	$	261,682,762
U.S. government and government agency obligations		7,305,293		7,709,375
To Be Announced (TBA) mortgage-related securities		1,019,711,829		963,377,934

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $1 billion	0.60	%
Over $1 billion	0.50

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $20,020 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. The Manager voluntarily reimbursed expenses of $21,750 related to the acquisition of Government Securities Portfolio.

     OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $7,971 for IMMF management fees.

5. Futures Contracts

A futures contract is a commitment to buy or sell a specific amount of a financial instrument at a negotiated price on a stipulated future date. The Fund may buy and sell futures contracts and may also buy or write put or call options on these futures contracts.

     Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund’s assets are valued.

     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.

     Futures contracts are reported on a schedule following the Statement of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted in the Statement of Assets and Liabilities. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. Realized gains (losses) are reported in the Statement of Operations at the closing or expiration of futures contracts.

     Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market where the Fund is unable to liquidate the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities.

6. Swap Contracts

The Fund may enter into privately negotiated agreements with a counterparty to exchange or “swap” payments at specified future intervals based on the return of an asset (such as a stock, bond or currency) or non-asset reference (such as an interest rate or index). The swap agreement will specify the “notional” amount of the asset or non-asset reference to which the contract relates. As derivative contracts, swaps typically do not have an associated cost at contract inception. At initiation, contract terms are typically set at market value such that the value of the swap is $0. If a

NOTES TO FINANCIAL STATEMENTS Continued

6. Swap Contracts Continued

counterparty specifies terms that would result in the contract having a value other than $0 at initiation, one counterparty will pay the other an upfront payment to equalize the contract. Subsequent changes in market value are calculated based upon changes in the performance of the asset or non-asset reference multiplied by the notional value of the contract. Contract types may include credit default, interest rate, total return, and currency swaps.

     Swaps are marked to market daily using quotations primarily from pricing services, counterparties or brokers. Swap contracts are reported on a schedule following the Statement of Investments. The value of the contracts is separately disclosed on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) is comprised of the change in the valuation of the swap combined with the accrued interest due to (owed by) the Fund at termination or settlement. The net change in this amount during the period is included on the Statement of Operations. Any payment received or paid to initiate a contract is recorded as a cost of the swap in the Statement of Assets and Liabilities and as a component of unrealized gain or loss on the Statement of Operations until contract termination; upon contract termination, this amount is recorded as realized gain or loss on the Statement of Operations. Excluding amounts paid at contract initiation as described above, the Fund also records any periodic payments received from (paid to) the counterparty, including at termination, as realized gain (loss) on the Statement of Operations.

     Risks of entering into swap contracts include credit, market and liquidity risk. Credit risk arises from the possibility that the counterparty fails to make a payment when due or otherwise defaults under the terms of the contract. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received. Market risk is the risk that the value of the contract will depreciate due to unfavorable changes in the performance of the asset or non-asset reference. Liquidity risk is the risk that the Fund may be unable to close the contract prior to its termination.

Credit Default Swap Contracts. A credit default swap is a bilateral contract that enables an investor to buy or sell protection on a debt security against a defined-issuer credit event, such as the issuer’s failure to make timely payments of interest or principal on the debt security, bankruptcy or restructuring. The Fund may enter into credit default swaps either by buying or selling protection on a single security or a basket of securities (the “reference asset”).

     The buyer of protection pays a periodic fee to the seller of protection based on the notional amount of debt securities underlying the swap contract. The seller of protection agrees to compensate the buyer of protection for future potential losses as a result of a credit event on the reference asset. The contract effectively transfers the credit event risk of the reference asset from the buyer of protection to the seller of protection.

     The ongoing value of the contract will fluctuate throughout the term of the contract based primarily on the credit risk of the reference asset. If the credit quality of the reference asset improves relative to the credit quality at contract initiation, the buyer of protection may have an unrealized loss greater than the anticipated periodic fee owed. This unrealized loss would be the result of current credit protection being cheaper than the cost of credit protection at contract initiation. If the buyer elects to terminate the contract prior to its maturity, and there has been no credit event, this unrealized loss will become realized. If the contract is held to maturity, and there has been no credit event, the realized loss will be equal to the periodic fee paid over the life of the contract.

     If there is a credit event, the buyer of protection can exercise its rights under the contract and receive a payment from the seller of protection equal to the notional amount of the reference asset less the market value of the reference asset. Upon exercise of the contract the difference between the value of the underlying reference asset and the notional amount is recorded as realized gain (loss) and is included on the Statement of Operations.

     Risks of credit default swaps include credit, market and liquidity risk. Additional risks include but are not limited to: the cost of paying for credit protection if there are no credit events or the cost of selling protection when a credit event occurs (paying the notional amount to the protection buyer); and pricing transparency when assessing the value of a credit default swap.

     As of the period end, the Fund has sold credit protection through credit default swaps to gain exposure to the credit risk of individual securities and/or indexes that are either unavailable or considered to be less attractively priced in the bond market. The Fund has also engaged in pairs trades by purchasing protection through a credit default swap referenced to the debt of an issuer, and simultaneously selling protection through a credit default swap referenced to the debt of a different issuer with the intent to realize gains from the pricing differences of the two issuers who are expected to have similar market risks. Pairs trades attempt to gain exposure to credit risk while hedging or offsetting the effects of overall market movements. In addition, the Fund has engaged in spread curve trades by simultaneously purchasing and selling protection through credit default swaps referenced to the same issuer but with different maturities. Spread curve trades attempt to gain exposure to credit risk on a forward basis by realizing gains on the expected differences in spreads.

Interest Rate Swap Contracts. An interest rate swap is an agreement between counterparties to exchange periodic payments based on interest rates. One cash flow stream will typically be a floating rate payment based upon a specified interest rate while the other is typically a fixed interest rate.

     Risks of interest rate swaps include credit, market and liquidity risk. Additional risks include but are not limited to, interest rate risk. There is a risk, based on future movements of interest rates that the payments made by the Fund under a swap agreement will be greater than the payments it received.

Total Return Swap Contracts. A total return swap is an agreement between counterparties to exchange periodic payments based on asset or non-asset references. One cash flow is typically based on a non-asset reference (such as an interest rate or index) and the other on the total return of a reference asset (such as a security or a basket of securities). The total return of the reference asset typically includes appreciation or depreciation on the reference asset, plus any interest or dividend payments.

     Risks of total return swaps include credit, market and liquidity risk.

8. Illiquid Securities

As of December 31, 2008, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

9. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

     As of December 31, 2008, the Fund had no securities on loan.

NOTES TO FINANCIAL STATEMENTS Continued

10. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

11. Acquisition of Government Securities Portfolio

On April 30, 2008, the Fund acquired all of the net assets of Government Securities Portfolio, pursuant to an Agreement and Plan of Reorganization approved by the Government Securities Portfolio shareholders on April 25, 2008. The Fund issued (at an exchange ratio of 1.0341 for Non-Service of the Fund to one share of Government Securities Portfolio) 1,626,777 shares of beneficial interest for Non-Service, valued at $17,178,762 in exchange for the net assets, resulting in combined Non-Service net assets of $321,759,067 on April 30, 2008. The net assets acquired included net unrealized appreciation $284,900 and an unused capital loss carryforward of $194,746, potential utilization subject to tax limitations. The exchange qualified as a tax-free reorganization for federal income tax purposes.

12. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Global Securities Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Global Securities Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Shares		Value
Common Stocks—97.1%
Consumer Discretionary—17.4%
Automobiles—1.7%
Bayerische Motoren Werke (BMW) AG		648,671	$	20,368,555
Toyota Motor Corp.		527,800		17,263,056
				37,631,611
Hotels, Restaurants & Leisure—3.4%
Aristocrat Leisure Ltd.		467,500		1,317,123
Carnival Corp.		1,174,826		28,571,768
International Game Technology		483,500		5,748,815
McDonald’s Corp.		550,400		34,229,376
Shuffle Master, Inc.1		597,800		2,965,088
				72,832,170
Household Durables—1.4%
Sony Corp.		1,416,700		30,773,903
Leisure Equipment & Products—0.3%
Sega Sammy Holdings, Inc.		571,100		6,621,788
Media—3.2%
Dish TV India Ltd.1		2,600,122		1,078,804
Grupo Televisa SA, Sponsored GDR		1,730,829		25,858,585
Sirius XM Radio, Inc.1		13,192,210		1,583,065
Walt Disney Co. (The)		1,336,900		30,334,261
Wire & Wireless India Ltd.1		2,382,450		606,219
Zee Entertainment Enterprises Ltd.		2,967,210		8,615,954
				68,076,888
Specialty Retail—4.3%
Hennes & Mauritz AB, Cl. B		964,400		38,070,800
Industria de Diseno Textil SA		732,100		32,514,613
Tiffany & Co.		893,500		21,113,405
				91,698,818
Textiles, Apparel & Luxury Goods—3.1%
Bulgari SpA		1,893,618		11,879,338
Burberry Group plc		1,539,768		5,009,630
LVMH Moet Hennessey Louis Vuitton		571,970		38,612,317
Tod’s SpA		290,697		12,301,811
				67,803,096
Consumer Staples—9.6%
Beverages—2.4%
Diageo plc		982,995		13,871,323
Fomento Economico Mexicano SA de CV, UBD		8,608,400		25,966,321
Grupo Modelo SA de CV, Series C		3,660,600		11,735,257
				51,572,901
Food & Staples Retailing—3.7%
Seven & I Holdings Co. Ltd.		507,553		17,375,210
Tesco plc		4,725,005		24,972,135
Wal-Mart Stores, Inc.		694,700		38,944,882
				81,292,227
Food Products—0.9%
Cadbury plc		2,153,921		19,127,714
Household Products—2.6%
Colgate-Palmolive Co.		393,400		26,963,636
Hindustan Unilever Ltd.		1,019,691		5,266,426
Reckitt Benckiser Group plc		613,028		23,167,602
				55,397,664
Energy—4.7%
Energy Equipment & Services—1.7%
Technip SA		587,010		18,069,717
Transocean Ltd.1		406,672		19,215,252
				37,284,969
Oil, Gas & Consumable Fuels—3.0%
BP plc, ADR		438,869		20,512,737
Husky Energy, Inc.		939,230		23,830,057
Total SA		369,620		20,247,234
				64,590,028
Financials—11.1%
Capital Markets—1.6%
3i Group plc		1,105,480		4,417,951
Credit Suisse Group AG		1,088,645		29,787,161
				34,205,112
Commercial Banks—3.1%
HSBC Holdings plc		2,619,887		25,149,071
ICICI Bank Ltd., Sponsored ADR		10,150		195,388
Royal Bank of Scotland Group plc (The)		7,593,923		5,568,958
Societe Generale, Cl. A		258,280		13,143,831
Sumitomo Mitsui Financial Group, Inc.		5,312		23,917,054
				67,974,302
Consumer Finance—0.9%
SLM Corp.1		2,100,250		18,692,225
Diversified Financial Services—1.4%
Citigroup, Inc.		658,700		4,419,877
CME Group, Inc.		11,100		2,310,021
Investor AB, B Shares		1,556,354		23,660,583
				30,390,481

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Insurance—4.1%
AFLAC, Inc.		564,500	$	25,876,680
Allianz SE		281,598		30,307,706
Prudential plc		2,840,787		17,544,914
Sony Financial Holdings, Inc.		2,410		9,247,755
XL Capital Ltd., Cl. A		1,502,100		5,557,770
				88,534,825
Health Care—7.4%
Biotechnology—1.2%
Acadia Pharmaceuticals, Inc.1		316,300		284,670
Basilea Pharmaceutica AG1		30,457		4,290,031
InterMune, Inc.1		302,300		3,198,334
NicOx SA1		229,530		2,518,584
Regeneron Pharmaceuticals, Inc.1		196,802		3,613,285
Seattle Genetics, Inc.1		579,228		5,178,298
Theravance, Inc.1		499,300		6,186,327
				25,269,529
Health Care Providers & Services—1.3%
Aetna, Inc.		735,000		20,947,500
WellPoint, Inc.1		196,735		8,288,446
				29,235,946
Pharmaceuticals—4.9%
Roche Holding AG		407,718		62,652,637
Sanofi-Aventis SA		347,185		22,156,576
Shionogi & Co. Ltd.		798,000		20,480,784
				105,289,997
Industrials—14.6%
Aerospace & Defense—4.6%
Boeing Co.		242,100		10,330,407
Empresa Brasileira de Aeronautica SA, ADR		871,383		14,125,118
European Aeronautic Defense & Space Co.		1,527,640		25,914,509
Lockheed Martin Corp.		184,200		15,487,536
Northrop Grumman Corp.		245,300		11,048,312
Raytheon Co.		440,200		22,467,808
				99,373,690
Air Freight & Logistics—0.8%
TNT NV		910,400		17,568,989
Building Products—1.4%
Assa Abloy AB, Cl. B		2,590,685		29,696,111
Commercial Services & Supplies—0.9%
Secom Co. Ltd.		390,600		20,103,748
Electrical Equipment—1.3%
Emerson Electric Co.		480,500		17,591,105
Mitsubishi Electric Corp.		1,642,000		10,267,217
				27,858,322
Industrial Conglomerates—5.2%
3M Co.		499,400		28,735,476
Koninklijke (Royal) Philips Electronics NV		1,400,000		27,358,848
Siemens AG		748,055		56,415,296
				112,509,620
Machinery—0.4%
Fanuc Ltd.		126,400		8,982,511
Information Technology—27.6%
Communications Equipment—7.4%
Corning, Inc.		1,959,900		18,677,847
Juniper Networks, Inc.1		2,363,200		41,379,632
Tandberg ASA		1,117,450		12,398,509
Telefonaktiebolaget LM Ericsson, B Shares		11,164,280		86,501,253
				158,957,241
Electronic Equipment & Instruments—3.6%
Hoya Corp.		1,012,800		17,580,622
Keyence Corp.		95,840		19,608,685
Kyocera Corp.		157,600		11,360,485
Murata Manufacturing Co. Ltd.		597,500		23,403,833
Nidec Corp.		166,800		6,481,465
				78,435,090
Internet Software & Services—1.4%
eBay, Inc.1		2,218,900		30,975,844
IT Services—3.0%
Automatic Data Processing, Inc.		933,200		36,712,088
Infosys Technologies Ltd.		1,237,326		28,665,476
				65,377,564
Semiconductors & Semiconductor Equipment—4.8%
Altera Corp.		1,347,500		22,516,725
Cree, Inc.1		588,595		9,341,003
Linear Technology Corp.		541,496		11,977,892
Maxim Integrated Products, Inc.		1,319,465		15,068,290
MediaTek, Inc.		2,652,238		17,912,620
Taiwan Semiconductor Manufacturing Co. Ltd.		12,511,942		17,121,822
Taiwan Semiconductor Manufacturing Co. Ltd., ADR		1,103,573		8,718,227
				102,656,579

	Shares			Value
Software—7.4%
Adobe Systems, Inc. 1		1,294,163		$	27,552,730
Intuit,Inc.1		1,543,000			36,707,970
Microsoft Corp.		1,965,300			38,205,432
Nintendo Co. Ltd.		50,000			19,194,922
SAP AG		1,067,019			38,127,142
					159,788,196
Telecommunication Services—3.8%
Wireless Telecommunication Services—3.8%
KDDI Corp.		5,916			42,103,537
SK Telecom Co. Ltd., ADR		612,660			11,138,159
Turkcell Iletisim Hizmetleri AS, ADR		516,000			7,523,280
Vodafone Group plc		10,793,252			22,041,622
					82,806,598
Utilities—0.9%
Electric Utilities—0.9%
Fortum Oyj		928,500			20,039,033
Total Common Stocks (Cost $2,527,078,435)					2,099,425,330
Preferred Stocks—1.6%
Bayerische Motoren Werke (BMW) AG, Preference		228,797			4,581,285
Companhia de Bebidas das Americas, ADR, Preference		368,415			16,324,469
Porsche Automobil Holding, Preference		137,289			10,930,839
Schering-Plough Corp., 6% Cv.		8,750			1,526,875
Total Preferred Stocks (Cost $21,345,146)					33,363,468
	Principal
	Amount
Convertible Corporate Bonds and Notes—0.1%
Theravance, Inc., 3% Cv. Sub. Nts.,1/15/15 (Cost $2,882,000)	$	2,882,000			1,779,635
	Units
Rights, Warrants and Certificates—0.0%
Dish TV India Ltd. Rts., Strike Price 22INR, Exp.1/9/091,2 (Cost $0)		3,008,933			25,128
	Shares
Investment Company—1.1%
Oppenheimer Institutional
Money Market Fund, Cl. E, 1.96%3,4 (Cost $24,247,807)		24,247,807			24,247,807
Total Investments, at Value (Cost $2,575,553,388)		99.9	%	$	2,158,841,368
Other Assets Net of Liabilities		0.1			2,448,349
Net Assets		100.0	%	$	2,161,289,717

Industry classifications are unaudited.

Strike price is reported in the following currency:

INR Indian Rupee

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2008 was $25,128, which represents less than 0.005% of the Fund’s net assets. See Note 6 of accompanying Notes.
3.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares						Shares
	December 31,		Gross		Gross		December 31,
	2007		Additions		Reductions		2008
OFI Liquid Assets Fund, LLC		—		129,524,610		129,524,610		—
Oppenheimer Institutional Money Market Fund, Cl.E		68,796,760		564,819,419		609,368,372		24,247,807

	Value		Income
OFI Liquid Assets Fund, LLC	$	—	$	161,932	a
Oppenheimer Institutional Money Market Fund, Cl. E		24,247,807		1,607,885
	$	24,247,807	$	1,769,817

a.	Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.
4.	Rate shown is the 7-day yield as of December 31, 2008.

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1-quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2-inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3-unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments		Other Financial
Valuation Description	in Securities		Instruments*
Level 1—Quoted Prices	$	899,174,483	$	—
Level 2—Other Significant Observable Inputs		1,259,666,885		(531	)
Level 3—Significant Unobservable Inputs		—		—
Total	$	2,158,841,368	$	(531	)

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

Foreign Currency Exchange Contracts as of December 31, 2008 are as follows:

		Contract Amount		Expiration				Unrealized		Unrealized
Contract Description	Buy	(000s)			Dates	Value		Appreciation		Depreciation
Euro (EUR)	Buy	334	EUR		1/2/09-1/5/09	$	466,061	$	—	$	3,683
Norwegian Krone (NOK)	Buy	502	NOK		1/5/09		72,229		1,891		—
Swedish Krona (SEK)	Buy	8,679	SEK		1/5/09		1,108,585		4,748		—
Swiss Franc (CHF)	Buy	646	CHF		1/5/09		605,990		—		3,487
Total unrealized appreciation and depreciation								$	6,639	$	7,170

Distribution of investments representing geographic holdings, as a percentage of total investments at value, is as follows:

Geographic Holdings (Unaudited)	Value		Percent
United States	$	730,995,625		33.9	%
Japan		304,766,575		14.1
United Kingdom		181,383,657		8.4
Sweden		177,928,747		8.2
Germany		160,730,823		7.4
France		140,662,768		6.5
Switzerland		96,729,829		4.5
Mexico		63,560,163		2.9
The Netherlands		44,927,837		2.1
India		44,453,395		2.1
Taiwan		43,752,669		2.0
Spain		32,514,613		1.5
Brazil		30,449,587		1.4
Italy		24,181,149		1.1
Canada		23,830,057		1.1
Finland		20,039,033		0.9
Norway		12,398,509		0.6
Korea, Republic of South		11,138,159		0.5
Turkey		7,523,280		0.4
Cayman Islands		5,557,770		0.3
Australia		1,317,123		0.1
Total	$	2,158,841,368		100.0	%

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $2,551,305,581)	$	2,134,593,561
Affiliated companies (cost $24,247,807)		24,247,807
		2,158,841,368
Cash		499,266
Cash—foreign currencies (cost $411)		411
Unrealized appreciation on foreign currency exchange contracts		6,639
Receivables and other assets:
Interest and dividends		3,318,367
Shares of beneficial interest sold		2,475,317
Investments sold		222,298
Due from Manager		66
Other		214,484
Total assets		2,165,578,216
Liabilities
Unrealized depreciation on foreign currency exchange contracts		7,170
Payables and other liabilities:
Investments purchased		2,253,058
Shares of beneficial interest redeemed		1,202,221
Distribution and service plan fees		507,549
Shareholder communications		134,570
Trustees’ compensation		25,732
Transfer and shareholder servicing agent fees		3,440
Other		154,759
Total liabilities		4,288,499
Net Assets	$	2,161,289,717
Composition of Net Assets
Par value of shares of beneficial interest	$	107,267
Additional paid-in capital		2,525,706,042
Accumulated net investment income		47,532,805
Accumulated net realized gain on investments and foreign currency transactions		4,517,239
Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies		(416,573,636	)
Net Assets	$	2,161,289,717

STATEMENT OF ASSETS AND LIABILITIES Continued

Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $1,150,113,178 and 56,896,358 shares of beneficial interest outstanding)	$	20.21
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $772,106,849 and 38,571,163 shares of beneficial interest outstanding)	$	20.02
Class 3 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $175,971,338 and 8,650,393 shares of beneficial interest outstanding)	$	20.34
Class 4 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $63,098,352 and 3,149,441 shares of beneficial interest outstanding)	$	20.03

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $3,750,833)	$	76,486,584
Affiliated companies		1,607,885
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		2,062,471
Affiliated companies		161,932
Interest		121,992
Total investment income		80,440,864
Expenses
Management fees		19,436,828
Distribution and service plan fees:
Service shares		2,631,693
Class 4 shares		234,211
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,994
Class 3 shares		9,994
Class 4 shares		9,994
Shareholder communications:
Non-Service shares		79,228
Service shares		49,587
Class 3 shares		12,706
Class 4 shares		4,408
Custodian fees and expenses		345,880
Trustees’ compensation		63,901
Other		129,120
Total expenses		23,027,538
Less reduction to custodian expenses		(1,915	)
Less waivers and reimbursements of expenses		(50,784	)
Net expenses		22,974,839
Net Investment Income		57,466,025
Realized and Unrealized Gain (Loss)
Net realized gain on:
Investments from unaffiliated companies		10,488,755
Foreign currency transactions		14,259,003
Net realized gain		24,747,758
Net change in unrealized depreciation on:
Investments		(1,514,074,821	)
Translation of assets and liabilities denominated in foreign currencies		(82,199,935	)
Net change in unrealized depreciation		(1,596,274,756	)
Net Decrease in Net Assets Resulting from Operations	$	(1,514,060,973	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	57,466,025		$	44,674,647
Net realized gain		24,747,758			240,399,758
Net change in unrealized appreciation (depreciation)		(1,596,274,756	)		(48,606,722	)
Net increase (decrease) in net assets resulting from operations		(1,514,060,973	)		236,467,683
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(26,708,494	)		(30,881,671	)
Service shares		(13,401,398	)		(12,491,101	)
Class 3 shares		(4,326,225	)		(5,291,097	)
Class 4 shares		(1,190,079	)		(1,330,580	)
		(45,626,196	)		(49,994,449	)
Distributions from net realized gain:
Non-Service shares		(117,354,093	)		(112,256,514	)
Service shares		(71,861,924	)		(52,238,025	)
Class 3 shares		(19,045,871	)		(19,263,594	)
Class 4 shares		(6,614,741	)		(5,788,329	)
		(214,876,629	)		(189,546,462	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(78,197,928	)		(104,231,544	)
Service shares		71,375,736			321,202,694
Class 3 shares		(30,841,100	)		(34,573,579	)
Class 4 shares		(6,272,856	)		9,459,510
		(43,936,148	)		191,857,081
Net Assets
Total increase (decrease)		(1,818,499,946	)		188,783,853
Beginning of period		3,979,789,663			3,791,005,810
End of period (including accumulated net investment income of $47,532,805 and $31,615,758, respectively)	$	2,161,289,717		$	3,979,789,663

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	36.60		$	36.79		$	33.38		$	29.51		$	25.08
Income (loss) from investment operations:
Net investment income1		.55			.45			.43			.32			.26
Net realized and unrealized gain (loss)		(14.46	)		1.69			5.20			3.85			4.49
Total from investment operations		(13.91	)		2.14			5.63			4.17			4.75
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.46	)		(.50	)		(.36	)		(.30	)		(.32	)
Distributions from net realized gain		(2.02	)		(1.83	)		(1.86	)		—			—
Total dividends and/or distributions to shareholders		(2.48	)		(2.33	)		(2.22	)		(.30	)		(.32	)
Net asset value, end of period	$	20.21		$	36.60		$	36.79		$	33.38		$	29.51
Total Return, at Net Asset Value2		(40.19	)%		6.32	%		17.69	%		14.31	%		19.16	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,150,113		$	2,193,638		$	2,297,315		$	2,124,413		$	2,518,867
Average net assets (in thousands)	$	1,679,720		$	2,302,726		$	2,189,511		$	2,123,523		$	2,451,188
Ratios to average net assets:3
Net investment income		1.95	%		1.21	%		1.27	%		1.08	%		1.01	%
Total expenses		0.65	%4,5,6		0.65	%4,5,6		0.66	%4,5,6		0.67	%5		0.66	%5
Portfolio turnover rate		19	%		18	%		21	%		35	%		30	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.65	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

5.	Reduction to custodian expenses less than 0.005%.
6.	Waiver or reimbursement of indirect management fees less than 0.005%.

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	36.27		$	36.49		$	33.16		$	29.33		$	24.96
Income (loss) from investment operations:
Net investment income1		.47			.33			.33			.24			.20
Net realized and unrealized gain (loss)		(14.32	)		1.72			5.16			3.84			4.46
Total from investment operations		(13.85	)		2.05			5.49			4.08			4.66
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.38	)		(.44	)		(.30	)		(.25	)		(.29	)
Distributions from net realized gain		(2.02	)		(1.83	)		(1.86	)		—			—
Total dividends and/or distributions to shareholders		(2.40	)		(2.27	)		(2.16	)		(.25	)		(.29	)
Net asset value, end of period	$	20.02		$	36.27		$	36.49		$	33.16		$	29.33
Total Return, at Net Asset Value2		(40.33	)%		6.08	%		17.36	%		14.06	%		18.88	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	772,107		$	1,300,989		$	983,558		$	557,284		$	346,403
Average net assets (in thousands)	$	1,051,239		$	1,180,656		$	750,499		$	413,849		$	247,490
Ratios to average net assets:3
Net investment income		1.70	%		0.91	%		0.98	%		0.79	%		0.77	%
Total expenses		0.90	%4,5,6		0.89	%4,5,6		0.91	%4,5,6		0.92	%5		0.91	%5
Portfolio turnover rate		19	%		18	%		21	%		35	%		30	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.90	%
Year Ended December 31, 2007	0.89	%
Year Ended December 31, 2006	0.91	%

5.	Reduction to custodian expenses less than 0.005%.
6.	Waiver or reimbursement of indirect management fees less than 0.005%.

See accompanying Notes to Financial Statements.

Class 3 Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	36.82		$	36.99		$	33.55		$	29.65		$	25.19
Income (loss) from investment operations:
Net investment income1		.56			.45			.43			.32			.26
Net realized and unrealized gain (loss)		(14.56	)		1.71			5.23			3.88			4.52
Total from investment operations		(14.00	)		2.16			5.66			4.20			4.78
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.46	)		(.50	)		(.36	)		(.30	)		(.32	)
Distributions from net realized gain		(2.02	)		(1.83	)		(1.86	)		—			—
Total dividends and/or distributions to shareholders		(2.48	)		(2.33	)		(2.22	)		(.30	)		(.32	)
Net asset value, end of period	$	20.34		$	36.82		$	36.99		$	33.55		$	29.65
Total Return, at Net Asset Value2		(40.19	)%		6.34	%		17.69	%		14.34	%		19.19	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	175,971		$	361,621		$	395,901		$	346,064		$	265,044
Average net assets (in thousands)	$	269,650		$	391,270		$	369,406		$	296,252		$	199,388
Ratios to average net assets:3
Net investment income		1.95	%		1.22	%		1.26	%		1.06	%		1.00	%
Total expenses		0.65	%4,5,6		0.65	%4,5,6		0.66	%4,5,6		0.67	%5		0.66	%5
Portfolio turnover rate		19	%		18	%		21	%		35	%		30	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.65	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

5.	Reduction to custodian expenses less than 0.005%.
6.	Waiver or reimbursement of indirect management fees less than 0.005%.

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Class 4 Shares Year Ended December 31,	2008			2007			2006			2005			20041
Per Share Operating Data
Net asset value, beginning of period	$	36.28		$	36.49		$	33.15		$	29.35		$	25.21
Income (loss) from investment operations:
Net investment income2		.47			.34			.34			.24			.09
Net realized and unrealized gain (loss)		(14.34	)		1.70			5.16			3.84			4.05
Total from investment operations		(13.87	)		2.04			5.50			4.08			4.14
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.36	)		(.42	)		(.30	)		(.28	)		—
Distributions from net realized gain		(2.02	)		(1.83	)		(1.86	)		—			—
Total dividends and/or distributions to shareholders		(2.38	)		(2.25	)		(2.16	)		(.28	)		—
Net asset value, end of period	$	20.03		$	36.28		$	36.49		$	33.15		$	29.35
Total Return, at Net Asset Value3		(40.35	)%		6.06	%		17.40	%		14.05	%		16.42	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	63,099		$	123,542		$	114,232		$	90,604		$	37,384
Average net assets (in thousands)	$	93,909		$	122,385		$	100,973		$	61,380		$	19,774
Ratios to average net assets:4
Net investment income		1.69	%		0.93	%		1.00	%		0.79	%		0.53	%
Total expenses		0.91	%5,6,7		0.90	%5,6,7		0.91	%5,6,7		0.93	%6		0.94	%6
Portfolio turnover rate		19	%		18	%		21	%		35	%		30	%

1.	For the period from May 3, 2004 (inception of offering) to December 31, 2004.
2.	Per share amounts calculated based on the average shares outstanding during the period.
3.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4.	Annualized for periods less than one full year.
5.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.90	%
Year Ended December 31, 2006	0.91	%

6.	Reduction to custodian expenses less than 0.005%.
7.	Waiver or reimbursement of indirect management fees less than 0.005%.

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Global Securities Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, “growth-type” companies, cyclical industries and special situations that are considered to have appreciation possibilities. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers Non-Service, Service, Class 3 and Class 4 shares. All classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares being designated as Service shares and Class 4 shares are subject to a distribution and service plan. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. The Fund assesses a 1% fee on the proceeds of Class 3 and Class 4 shares that are redeemed (either by selling or exchanging to another Oppenheimer fund or other investment option offered through your variable life insurance or variable annuity contract) within 60 days of their purchase. The fee, which is retained by the Fund, is accounted for as an addition to paid-in capital.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

     In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments in OFI Liquid Assets Fund, LLC. The Fund is permitted to invest cash collateral received in connection with its securities lending activities. Pursuant to the Fund’s Securities Lending Procedures, the Fund may invest cash collateral in, among other investments, an affiliated money market fund. OFI Liquid Assets Fund, LLC (“LAF”) is a limited liability company whose investment objective is to seek current income and stability of principal. The Manager is also the investment adviser of LAF. LAF is not registered under the Investment Company Act of 1940. However, LAF does comply with the investment restrictions applicable to registered money market funds set forth in Rule 2a-7 adopted under the Investment Company Act. The Fund’s investment in LAF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation
					Based on Cost of
Undistributed	Undistributed		Accumulated		Securities and Other
Net Investment	Long-Term		Loss		Investments for Federal
Income	Gain		Carryforward1,2,3		Income Tax Purposes
$49,324,546	$	49,781,773	$	23,157,860	$	440,446,473

1.	As of December 31, 2008, the Fund had $23,157,860 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
2.	During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.
3.	During the fiscal year ended December 31, 2007, the Fund did not utilize any capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Increase		Reduction to
	to Accumulated		Accumulated Net
Increase to	Net Investment		Realized Gain
Paid-in Capital	Income		on Investments4
$6,509,001	$	4,077,218	$	10,586,219

4. $6,509,001, all of which was long-term capital gain, was distributed in connection with Fund share redemptions.

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	52,262,946	$	64,685,816
Long-term capital gain		208,239,879		174,855,095
Total	$	260,502,825	$	239,540,911

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	2,599,426,756
Federal tax cost of other investments		2,252,865
Total federal tax cost	$	2,601,679,621
Gross unrealized appreciation	$	238,151,866
Gross unrealized depreciation		(678,598,339	)
Net unrealized depreciation	$	(440,446,473	)

Certain foreign countries impose a tax on capital gains which is accrued by the Fund based on unrealized appreciation, if any, on affected securities. The tax is paid when the gain is realized.

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		9,646,046		$	259,758,983			6,411,129		$	236,447,298
Dividends and/or distributions reinvested		4,840,813			144,062,587			4,207,471			143,138,185
Redeemed		(17,521,140	)		(482,019,498	)		(13,131,133	)		(483,817,027	)
Net decrease		(3,034,281	)	$	(78,197,928	)		(2,512,533	)	$	(104,231,544	)
Service Shares
Sold		6,325,047		$	162,252,325			10,073,670		$	368,640,666
Dividends and/or distributions reinvested		2,887,346			85,263,322			1,916,196			64,729,126
Redeemed		(6,514,971	)		(176,139,911	)		(3,068,408	)		(112,167,098	)
Net increase		2,697,422		$	71,375,736			8,921,458		$	321,202,694

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest Continued

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Class 3 Shares
Sold		277,654		$	8,012,360			404,332		$	14,980,587
Dividends and/or distributions reinvested		780,370			23,372,096			717,554			24,554,691
Redeemed		(2,229,618	)		(62,225,556	)1		(2,002,496	)		(74,108,857	)2
Net decrease		(1,171,594	)	$	(30,841,100	)		(880,610	)	$	(34,573,579	)
Class 4 Shares
Sold		101,469		$	2,904,870			392,793		$	14,359,772
Dividends and/or distributions reinvested		264,033			7,804,820			210,681			7,118,909
Redeemed		(621,183	)		(16,982,546	)1		(328,721	)		(12,019,171	)2
Net increase (decrease)		(255,681	)	$	(6,272,856	)		274,753		$	9,459,510

1.	Net of redemption fees of $7,921 and $5,109 for Class 3 and Class 4, respectively.
2.	Net of redemption fees of $11,158 and $4,865 for Class 3 and Class 4, respectively.

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	575,234,267	$	763,285,976

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $40,115 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares and Class 4 Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares and Class 4 shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares and Class 4 shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares and Class 4 shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that

hold Service shares and Class 4 shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares and Class 4 shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $50,784 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into foreign currency exchange contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

     Risks to the Fund include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received.

6. Illiquid Securities

As of December 31, 2008, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

7. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

     As of December 31, 2008, the Fund had no securities on loan.

NOTES TO FINANCIAL STATEMENTS Continued

8. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

9. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer High Income Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer High Income Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Principal
	Amount		Value
Asset-Backed Securities—0.2%
Ameriquest Mortgage Securities, Inc., Home Equity Mtg. Obligations, Series 2005-R10, Cl. A2B, 0.691%, 12/25/351	$	264,347	$	219,060
Mastr Asset-Backed Securities Trust 2005-WF1, Mtg. Pass-Through Certificates, Series 2005-WF1, Cl. A2C, 0.711%, 6/25/351		128,105		113,958
Total Asset-Backed Securities (Cost $389,178)				333,018
Mortgage-Backed Obligations—8.2%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2008-1, Cl. AJ, 6.201%, 1/1/181		1,290,000		360,857
Bear Stearns ARM Trust 2006-4, Mtg. Pass-Through Certificates, Series 2006-4, Cl. 2A1, 5.779%, 10/25/361		103,175		49,899
Citigroup/Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-CD4, Cl. AJ, 5.398%, 12/1/49		1,110,000		284,426
CitiMortgage Alternative Loan Trust 2006-A5, Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Series 2006-A5, Cl. 1A1, 0.871%, 10/25/361		321,924		139,163
Series 2006-A5, Cl. 1A13, 0.921%, 10/25/361		168,278		68,752
CitiMortgage Alternative Loan Trust 2007-A2, Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2007-A2, Cl. 1A5, 6%, 2/25/37		4,183,710		2,483,682
CWALT Alternative Loan Trust 2005-18CB, Mtg. Pass-Through Certificates, Series 2005-18CB, Cl. A8, 5.50%, 5/25/36		280,000		206,920
CWALT Alternative Loan Trust 2005-85CB, Mtg. Pass-Through Certificates, Series 2005-85CB, Cl. 2A3, 5.50%, 2/25/36		210,000		160,893
CWALT Alternative Loan Trust 2005-J1, Mtg. Pass-Through Certificates, Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32		266,323		170,574
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 2520, Cl. SE, 70.518%, 5/15/222		287,271		28,321
Series 2527, Cl. SG, 31.83%, 2/15/322		263,278		16,870
Series 2531, Cl. ST, 35.211%, 2/15/302		302,908		19,682
Series 2574, Cl. IN, (2.915)%, 12/15/222		1,477,355		180,342
Series 2989, Cl. TS, 77.854%, 6/15/252		1,556,188		114,740
Federal National Mortgage Assn., 5.50%, 11/1/33		92,397		94,957
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2002-60, Cl. SM, 42.196%, 8/25/322		731,286		75,999
Trust 2002-7, Cl. SK, 43.23%, 1/25/322		280,423		29,784
Trust 2002-77, Cl. BS, 32.357%, 12/18/322		435,063		57,766
Trust 2002-90, Cl. SN, 43.76%, 8/25/322		375,767		40,446
Trust 2002-90, Cl. SY, 45.591%, 9/25/322		193,343		20,487
Trust 2003-14, Cl. OI, 0.356%, 3/25/332		270,531		46,687
Trust 2003-23, Cl. ES, 75.427%, 10/25/222		602,492		43,884
Trust 2003-52, Cl. NS, 63.973%, 6/25/232		648,223		56,712
Trust 2003-89, Cl. XS, 20.272%, 11/25/322		490,388		38,313
Trust 2005-86, Cl. AI, (4.411)%, 10/1/352		279,662		38,991
Trust 2006-33, Cl. SP, 48.204%, 5/25/362		437,903		45,623
Trust 302, Cl. 2, (9.691)%, 6/1/292		551,700		78,044
Trust 331, Cl. 18, 13.467%, 2/1/332		808,975		91,782
Trust 334, Cl. 3, 13.538%, 7/1/332		287,209		32,225
Trust 334, Cl. 4, 13.717%, 7/1/332		452,116		50,720
Trust 339, Cl. 12, 13.466%, 7/1/332		124,953		16,048
Trust 339, Cl. 17, 13.133%, 8/1/332		1,212,918		193,240
Trust 339, Cl. 8, 12.211%, 8/1/332		158,642		17,803
Trust 342, Cl. 2, (6.399)%, 9/1/332		83,493		11,939
Trust 343, Cl. 13, 12.001%, 9/1/332		100,391		10,617
Trust 343, Cl. 18, 14.18%, 5/1/342		291,725		40,894
Trust 343, Cl. 20, 13.788%, 10/1/332		1,142,541		161,592
Trust 346, Cl. 2, (12.874)%, 12/1/332		506,450		60,838
Trust 351, Cl. 10, 14.256%, 4/1/342		265,431		28,760
Trust 355, Cl. 7, 9.047%, 11/1/332		182,157		23,750
Trust 356, Cl. 6, 13.305%, 12/1/332		235,570		25,706
Trust 364, Cl. 16, 14.77%, 9/1/352		130,015		20,678
First Horizon Alternative Mortgage Securities Trust 2004-FA2, Mtg. Pass-Through Certificates, Series 2004-FA2, Cl. 3A1, 6%, 1/25/35		85,160		62,261
GMAC Mortgage Corp. Loan Trust, Mtg. Pass-Through Certificates, Series 2004-J4, Cl. A7, 5.50%, 9/25/34		190,000		151,900
GSR Mortgage Loan Trust 2005-4F, Mtg. Pass-Through Certificates, Series 2005-4F, Cl. 6A1, 6.50%, 2/25/35		211,636		174,488
GSR Mortgage Loan Trust 2005-AR7, Mtg. Pass-Through Certificates, Series 2005-AR7, Cl. 3A1, 5.14%, 11/25/351		1,324,359		837,916
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2007-CB15, Cl. AJ, 5.502%, 6/1/47		430,000		112,517
Series 2008-C2, Cl. AJ, 6.579%, 2/1/511		2,170,000		590,429

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Mortgage-Backed Obligations Continued
LB-UBS Commercial Mortgage Trust 2003-C5, Commercial Mtg. Pass-Through Certificates, Series 2003-C5, Cl. A2, 3.478%, 7/15/27	$	19,707	$	19,592
Mastr Asset Securitization Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 0.921%, 10/25/361		4,084,541		2,574,946
Merrill Lynch Mortgage Investors Trust 2007-3, Mtg. Pass-Through Certificates, Series 2007-3, Cl. 1A1, 5.801%, 9/1/371		145,305		123,773
Merrill Lynch Mortgage Trust 2006-C1, Commercial Mtg. Pass-Through Certificates, Series 2006-C1, Cl. AJ, 5.657%, 5/1/391		890,000		280,635
Morgan Stanley Mortgage Loan Trust 2006-AR, Mtg. Pass-Through Certificates, Series 2006-AR, Cl. 5A3, 5.416%, 6/25/361		130,000		90,100
WaMu Mortgage Pass-Through Certificates 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 5.75%, 10/25/361		408,228		231,434
WaMu Mortgage Pass-Through Certificates 2006-AR14 Trust, Mtg. Pass-Through Certificates:
Series 2006-AR14, Cl. 1A7, 5.631%, 11/1/361		1,631,248		529,759
Series 2006-AR14, Cl. 2A4, 5.752%, 11/1/361,3		445,374		111,343
WaMu Mortgage Pass-Through Certificates 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 2A1, 6.127%, 8/25/361		381,579		253,827
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates:
Series 2007-HY1, Cl. 1A2, 5.706%, 2/25/371,3		79,440		18,271
Series 2007-HY1, Cl. 2A4, 5.863%, 2/1/371		728,270		313,094
WaMu Mortgage Pass-Through Certificates 2007-HY2 Trust, Mtg. Pass-Through Certificates, Series 2007-HY2, Cl. 1A2, 5.606%, 12/1/361,3		1,744,744		279,159
WaMu Mortgage Pass-Through Certificates 2007-HY3 Trust, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 2A2, 5.668%, 3/1/371		208,087		53,781
WaMu Mortgage Pass-Through Certificates 2007-HY4 Trust, Mtg. Pass-Through Certificates, Series 2007-HY4, Cl. 5A1, 5.548%, 11/1/361		140,645		92,425
WaMu Mortgage Pass-Through Certificates 2007-HY5 Trust, Mtg. Pass-Through Certificates, Series 2007-HY5, Cl. 2A3, 5.647%, 5/1/371		149,528		95,618
Wells Fargo Mortgage-Backed Securities 2004-R Trust, Mtg. Pass-Through Certificates, Series 2004-R, Cl. 2A1, 4.368%, 9/1/341		67,855		48,576
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 4A1, 5.557%, 7/25/361		199,232		130,678
Wells Fargo Mortgage-Backed Securities 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 6.099%, 9/25/361		333,401		214,326
Total Mortgage-Backed Obligations (Cost $23,966,497)				13,130,254
Corporate Bonds and Notes—65.4%
Consumer Discretionary—22.2%
Auto Components—1.0%
Goodyear Tire & Rubber Co. (The):
7.857% Nts., 8/15/11		330,000		275,550
9% Sr. Unsec. Nts., 7/1/15		230,000		186,300
Lear Corp., 8.75% Sr. Unsec. Nts., Series B, 12/1/16		3,945,000		1,163,775
				1,625,625
Automobiles—2.8%
Case New Holland, Inc., 7.125% Sr. Unsec. Nts., 3/1/14		4,390,000		3,138,850
General Motors Acceptance Corp., 8% Bonds, 11/1/31		2,210,000		1,295,416
				4,434,266
Diversified Consumer Services—0.2%
Service Corp. International, 6.75% Sr. Unsec. Nts., 4/1/15		465,000		369,675
Hotels, Restaurants & Leisure—6.3%
CCM Merger, Inc., 8% Unsec. Nts., 8/1/134		1,655,000		860,600
Greektown Holdings, Inc., 10.75% Sr. Nts., 12/1/134,5,6		2,525,000		606,000
Harrah’s Operating Co., Inc., 10.75% Sr. Unsec. Nts., 2/1/164		2,620,000		759,800
Isle of Capri Casinos, Inc., 7% Sr. Unsec. Sub. Nts., 3/1/14		2,650,000		1,139,500

	Principal
	Amount		Value
Hotels, Restaurants & Leisure Continued
Mashantucket Pequot Tribe, 8.50% Bonds, Series A, 11/15/154	$	1,770,000	$	703,575
MGM Mirage, Inc., 8.375% Sr. Unsec. Sub. Nts., 2/1/11		780,000		468,000
Mohegan Tribal Gaming Authority:
6.125% Sr. Unsec. Sub. Nts., 2/15/13		1,925,000		1,222,375
8% Sr. Sub. Nts., 4/1/12		3,415,000		2,100,225
Pinnacle Entertainment, Inc., 8.25% Sr. Unsec. Sub. Nts., 3/15/12		885,000		677,025
Pokagon Gaming Authority, 10.375% Sr. Nts., 6/15/144		540,000		467,100
Station Casinos, Inc., 6.50% Sr. Unsec. Sub. Nts., 2/1/14		5,860,000		366,250
Trump Entertainment Resorts, Inc., 8.50% Sec. Nts., 6/1/15		1,350,000		185,625
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14		790,000		600,400
				10,156,475
Household Durables—2.2%
Centex Corp., 5.80% Sr. Unsec. Nts., 9/15/09		1,175,000		1,122,125
Jarden Corp., 7.50% Sr. Unsec. Sub. Nts., 5/1/17		625,000		429,688
K. Hovnanian Enterprises, Inc.:
7.75% Sr. Unsec. Sub. Nts., 5/15/13		545,000		122,625
8.875% Sr. Sub. Nts., 4/1/12		1,275,000		376,125
Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11		1,110,000		1,015,650
William Lyon Homes, Inc.:
7.50% Sr. Unsec. Nts., 2/15/14		220,000		53,900
10.75% Sr. Nts., 4/1/13		1,510,000		385,050
				3,505,163
Leisure Equipment & Products—0.4%
Leslie’s Poolmart, Inc., 7.75% Sr. Unsec. Nts., 2/1/13		795,000		639,975
Media—7.8%
Allbritton Communications Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/12		565,000		280,381
AMC Entertainment, Inc., 8% Sr. Unsec. Sub. Nts., 3/1/14		990,000		613,800
American Media Operations, Inc.:
8.875% Sr. Unsec. Sub. Nts., 1/15/113		32,724		7,854
8.875% Sr. Unsec. Sub. Nts., 1/15/11		875,000		180,469
CCH I LLC/CCH I Capital Corp., 11% Sr. Sec. Nts., 10/1/15		1,455,000		261,900
Cinemark, Inc., 0%/9.75% Sr. Unsec. Nts., 3/15/147		835,000		679,481
CSC Holdings, Inc., 7.625% Sr. Unsec. Unsub. Nts., Series B, 4/1/11		450,000		426,375
EchoStar DBS Corp., 6.375% Sr. Unsec. Nts., 10/1/11		1,180,000		1,100,350
Idearc, Inc., 8% Sr. Unsec. Nts., 11/15/16		3,045,000		243,600
Lamar Media Corp., 7.25% Sr. Unsec. Sub. Nts., 1/1/13		790,000		633,975
Lin Television Corp., 6.50% Sr. Sub. Nts., 5/15/13		1,035,000		499,388
Marquee Holdings, Inc., 9.505% Sr. Nts., 8/15/141		2,180,000		1,122,700
MediaNews Group, Inc.:
6.375% Sr. Sub. Nts., 4/1/14		1,460,000		100,375
6.875% Sr. Unsec. Sub. Nts., 10/1/13		2,510,000		172,563
NTL Cable plc, 9.125% Sr. Nts., 8/15/16		1,340,000		998,300
R.H. Donnelley Corp.:
6.875% Sr. Nts., 1/15/13		1,780,000		249,200
6.875% Sr. Nts., Series A-2, 1/15/13		1,960,000		274,400
Radio One, Inc., 8.875% Sr. Unsec. Sub. Nts., Series B, 7/1/11		430,000		213,925
Rainbow National Services LLC, 8.75% Sr. Nts., 9/1/124		275,000		248,875
Sinclair Broadcast Group, Inc., 8% Sr. Unsec. Sub. Nts., 3/15/12		2,700,000		2,038,500
Videotron Ltd., 9.125% Sr. Nts., 4/15/184		445,000		416,075
Virgin Media Finance plc, 8.75% Sr. Unsec. Nts., 4/15/14		410,000		309,550
Warner Music Group Corp., 7.375% Sr. Sub. Bonds, 4/15/14		800,000		472,000
WMG Holdings Corp., 0%/9.50% Sr. Nts., 12/15/147		2,335,000		875,625
				12,419,661
Specialty Retail—1.1%
Claire’s Stores, Inc., 10.50% Sr. Unsec. Sub. Nts., 6/1/17		2,805,000		490,875
GameStop Corp., 8% Sr. Unsec. Nts., 10/1/12		490,000		458,150
Sally Holdings LLC:
9.25% Sr. Unsec. Nts., 11/15/14		450,000		389,250
10.50% Sr. Unsec. Sub. Nts., 11/15/16		545,000		373,325
				1,711,600
Textiles, Apparel & Luxury Goods—0.4%
Levi Strauss & Co., 9.75% Sr. Unsec. Unsub. Nts., 1/15/15		905,000		674,225

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Consumer Staples—3.8%
Food & Staples Retailing—1.9%
Albertson’s, Inc., 8% Sr. Unsec. Debs., 5/1/31	$	3,560,000	$	2,153,800
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31		900,000		912,381
Real Time Data Co., 11% Nts., 5/31/093,5,6,8		476,601		—
				3,066,181
Food Products—1.6%
Dole Food Co., Inc.:
7.25% Sr. Unsec. Nts., 6/15/10		420,000		295,050
8.625% Sr. Nts., 5/1/09		687,000		625,170
8.875% Sr. Unsec. Nts., 3/15/11		146,000		91,980
Pinnacle Foods Finance LLC/Pinnacle Foods Finance Corp., 10.625% Sr. Sub. Nts., 4/1/17		2,475,000		1,348,875
Smithfield Foods, Inc., 7% Sr. Nts., 8/1/11		360,000		257,400
				2,618,475
Personal Products—0.3%
Elizabeth Arden, Inc., 7.75% Sr. Unsec. Sub. Nts., 1/15/14		625,000		409,375
Energy—7.4%
Energy Equipment & Services—1.1%
Helix Energy Solutions Group, Inc., 9.50% Sr. Unsec. Nts., 1/15/164		1,210,000		647,350
Key Energy Services, Inc., 8.375% Sr. Unsec. Nts., 12/1/14		1,740,000		1,157,100
				1,804,450
Oil, Gas & Consumable Fuels—6.3%
Atlas Energy Resources LLC, 10.75% Sr. Nts., 2/1/184		1,590,000		977,850
Atlas Pipeline Partners LP, 8.125% Sr. Unsec. Nts., 12/15/15		630,000		428,400
Berry Petroleum Co., 8.25% Sr. Sub. Nts., 11/1/16		1,035,000		564,075
Copano Energy LLC/Copano Energy Finance Corp., 7.75% Sr. Nts., 6/1/184		1,465,000		996,200
Denbury Resources, Inc., 7.50% Sr. Sub. Nts., 12/15/15		905,000		647,075
Enterprise Products Operating LP, 8.375% Jr. Sub. Nts., 8/1/661		2,075,000		1,142,553
Forest Oil Corp., 7.75% Sr. Nts., 5/1/14		795,000		671,775
Kinder Morgan Energy Partners LP, 7.30% Sr. Unsec. Nts., 8/15/33		1,382,000		1,150,092
Quicksilver Resources, Inc.:
7.125% Sr. Sub. Nts., 4/1/16		1,720,000		928,800
8.25% Sr. Unsec. Nts., 8/1/15		340,000		217,600
Sabine Pass LNG LP:
7.25% Sr. Sec. Nts., 11/30/13		450,000		330,750
7.50% Sr. Sec. Nts., 11/30/16		1,325,000		960,625
Tesoro Corp., 6.625% Sr. Unsec. Nts., 11/1/15		1,855,000		1,085,175
				10,100,970
Financials—11.1%
Capital Markets—1.4%
Berry Plastics Holding Corp., 8.875% Sr. Sec. Nts., 9/15/14		2,255,000		992,200
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34		1,350,000		982,188
Lehman Brothers Holdings, Inc., 7.50% Sub. Nts., 5/11/386		5,341,000		534
Travelport LLC, 11.875% Sr. Unsec. Sub. Nts., 9/1/16		990,000		282,150
				2,257,072
Commercial Banks—4.4%
Barclays Bank plc, 6.278% Perpetual Bonds9		4,940,000		2,859,618
HBOS plc, 6.413% Sub. Perpetual Bonds, Series A4,9		5,700,000		2,214,256
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/351		4,900,000		2,052,473
				7,126,347
Consumer Finance—1.4%
SLM Corp., 4.50% Nts., Series A, 7/26/10		2,600,000		2,257,252
Diversified Financial Services—3.0%
AAC Group Holding Corp., 0%/10.25% Sr. Unsec. Nts., 10/1/127		200,000		133,000
Bank of America Corp.:
8% Unsec. Perpetual Bonds, Series K9		830,000		597,866
8.125% Perpetual Bonds, Series M9		285,000		213,536
Citigroup, Inc.:
8.30% Jr. Sub. Bonds, 12/21/571		585,000		452,192
8.40% Perpetual Bonds, Series E9		2,345,000		1,551,311
JPMorgan Chase & Co., 7.90% Perpetual Bonds, Series 19		2,130,000		1,776,475
				4,724,380
Insurance—0.7%
MetLife Capital Trust X, 9.25% Sec. Bonds, 4/8/381		200,000		139,777
MetLife, Inc., 6.40% Jr. Unsec. Sub. Bonds, 12/15/361		1,210,000		727,678
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/234		210,000		202,788

	Principal
	Amount		Value
Insurance Continued
Prudential Insurance Co. of America, 8.30% Nts., 7/1/254	$	160,000	$	108,118
				1,178,361
Real Estate Investment Trusts—0.2%
iStar Financial, Inc., 2.471% Sr. Unsec. Nts., 3/16/091		415,000		299,319
Health Care—8.2%
Health Care Equipment & Supplies—1.4%
Novelis, Inc., 7.25% Sr. Unsec. Nts., 2/15/151		1,750,000		1,023,750
Universal Hospital Services, Inc., 8.50% Sr. Sec. Nts., 6/1/158		1,790,000		1,279,850
				2,303,600
Health Care Providers & Services—5.9%
Catalent Pharma Solutions, Inc., 9.50% Sr. Unsec. Nts., 4/15/158		1,155,000		444,675
Community Health Systems, Inc., 8.875% Sr. Unsec. Nts., 7/15/15		490,000		453,250
DaVita, Inc., 6.625% Sr. Unsec. Nts., 3/15/13		705,000		673,275
Fresenius Medical Care Capital Trust IV, 7.875% Sr. Sub. Nts., 6/15/11		235,000		224,425
HCA, Inc.:
6.375% Nts., 1/15/15		2,490,000		1,531,350
9.25% Sr. Sec. Nts., 11/15/16		345,000		317,400
HealthSouth Corp., 10.75% Sr. Unsec. Nts., 6/15/16		1,350,000		1,245,375
Select Medical Corp., 7.625% Sr. Unsec. Sub. Nts., 2/1/15		2,290,000		1,225,150
US Oncology Holdings, Inc., 8.334% Sr. Unsec. Nts., 3/15/121,8		1,057,000		671,195
US Oncology, Inc., 9% Sr. Unsec. Nts., 8/15/12		515,000		471,225
Vanguard Health Holding Co. I LLC, 0%/11.25% Sr. Nts., 10/1/157		2,765,000		2,184,350
				9,441,670
Pharmaceuticals—0.9%
DJO Finance LLC/DJO Finance Corp., 10.875% Sr. Unsec. Nts., 11/15/14		1,915,000		1,388,375
Industrials—3.9%
Aerospace & Defense—0.7%
BE Aerospace, Inc., 8.50% Sr. Unsec. Nts., 7/1/18		245,000		221,113
L-3 Communications Corp., 5.875% Sr. Sub. Nts., 1/15/15		1,020,000		923,100
				1,144,213
Building Products—0.2%
Nortek, Inc., 8.50% Sr. Unsec. Unsub. Nts., 9/1/14		860,000		202,100
Commercial Services & Supplies—1.5%
Allied Waste North America, Inc., 7.375% Sr. Sec. Nts., Series B, 4/15/14		1,195,000		1,130,482
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/053,5,6		200,000		—
Iron Mountain, Inc., 8.625% Sr. Unsec. Sub. Nts., 4/1/13		1,300,000		1,228,500
				2,358,982
Road & Rail—0.9%
Avis Budget Car Rental LLC, 7.625% Sr. Unsec. Unsub. Nts., 5/15/14		2,370,000		699,150
Hertz Corp.:
8.875% Sr. Unsec. Nts., 1/1/14		90,000		55,800
10.50% Sr. Unsec. Sub. Nts., 1/1/16		1,570,000		724,163
				1,479,113
Trading Companies & Distributors—0.6%
United Rentals, Inc., 7% Sr. Sub. Nts., 2/15/14		1,605,000		987,075
Information Technology—0.0%
Communications Equipment—0.0%
Orion Network Systems, Inc., 12.50% Sr. Unsub. Nts., 1/15/073,5,6		1,150,000		12
Internet Software & Services—0.0%
Exodus Communications, Inc., 10.75% Sr. Nts., 12/15/093,5,6	844,866 EUR			—
NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/103,5,6		240,208		—
				—
Materials—4.3%
Chemicals—0.4%
Momentive Performance Materials, Inc., 11.50% Sr. Unsec. Sub. Nts., 12/1/16		2,255,000		676,500
Construction Materials—0.2%
NTK Holdings, Inc., 0%/10.75% Sr. Unsec. Nts., 3/1/147		1,535,000		337,700
Containers & Packaging—1.9%
Crown Americas, Inc., 7.75% Sr. Nts., 11/15/15		720,000		720,000
Graham Packaging Co., Inc., 9.875% Sr. Unsec. Sub. Nts., 10/15/14		1,315,000		815,300
Graphic Packaging International Corp., 8.50% Sr. Nts., 8/15/11		1,715,000		1,440,600
				2,975,900

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Metals & Mining—1.5%
Freeport-McMoRan Copper & Gold, Inc., 8.375% Sr. Nts., 4/1/17	$	1,695,000		$	1,391,826
Ispat Inland ULC, 9.75% Sr. Sec. Nts., 4/1/14		660,000			564,936
Steel Dynamics, Inc., 7.375% Sr. Unsec. Unsub. Nts., 11/1/12		600,000			441,000
					2,397,762
Paper & Forest Products—0.3%
NewPage Corp., 10% Sr. Sec. Nts., 5/1/12		990,000			440,550
Telecommunication Services—4.3%
Diversified Telecommunication Services—2.4%
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		1,280,000			1,094,400
FairPoint Communications, Inc., 13.125% Sr. Nts., 4/1/18		1,340,000			649,900
Qwest Corp., 8.875% Unsec. Unsub. Nts., 3/15/12		1,080,000			1,004,400
Teligent, Inc., 11.50% Sr. Nts., 12/1/083,5,6		400,000			—
Windstream Corp.:
8.125% Sr. Unsec. Unsub. Nts., 8/1/13		700,000			647,500
8.625% Sr. Unsec. Unsub. Nts., 8/1/16		570,000			507,300
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/103,5,6		1,000,000			—
					3,903,500
Wireless Telecommunication Services—1.9%
American Tower Corp., 7.50% Sr. Nts., 5/1/12		430,000			425,700
Nextel Communications, Inc., 7.375% Sr. Nts., Series D, 8/1/15		2,040,000			857,190
Sprint Capital Corp., 8.75% Nts., 3/15/32		2,470,000			1,670,389
					2,953,279
Utilities—0.2%
Gas Utilities—0.2%
Ferrellgas Partners LP, 6.75% Sr. Nts,, 5/1/144		520,000			361,400
Total Corporate Bonds and Notes (Cost $184,573,474)					104,730,578
	Shares			Value
Preferred Stocks—0.4%
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.3,5,8		13,764		$	—
Eagle-Picher Holdings, Inc.,
11.75% Cum. Exchangeable, Series B, Non-Vtg.3,5		8,000			—
Fannie Mae, 8.25% Non-Cum. Sub., Series S, Non-Vtg.		160,075			132,858
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.3,5,8		342			—
Sovereign Real Estate Investment Trust, 12% Non-Cum., Series A3		545			453,713
Total Preferred Stocks (Cost $5,592,567)					586,571
Common Stocks—0.1%
Global Aero Logistics, Inc.3,5		4,647			4,647
Revlon, Inc., Cl. A5		28,649			191,089
Total Common Stocks (Cost $395,996)					195,736
	Units
Rights, Warrants and Certificates—0.0%
Global Aero Logistics, Inc. Wts., Strike Price $10, Exp. 2/28/113,5 (Cost $4,339)		570			6
	Shares
Investment Company—48.0%
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%10,11 (Cost $76,839,590)		76,839,590			76,839,590
Total Investments, at Value (Cost $291,761,641)		122.3	%		195,815,753
Liabilities in Excess of Other Assets		(22.3	)		(35,651,430	)
Net Assets		100.0	%	$	160,164,323

Industry classifications are unaudited.

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
Oppenheimer Institutional Money Market Fund, Cl. E		10,989,620		348,482,278		282,632,308		76,839,590
					Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E					$	76,839,590	$	371,423

11.      Rate shown is the 7-day yield as of December 31, 2008.

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments in		Other Financial
Valuation Description	Securities		Instruments*
Level 1—Quoted Prices	$	77,030,679	$	—
Level 2—Other Significant Observable Inputs		118,780,421		(44,330,311	)
Level 3—Significant Unobservable Inputs		4,653		—
Total	$	195,815,753	$	(44,330,311	)

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

The following is a reconciliation of assets in which significant observable inputs (level 3) were used in determining fair value::

	Investments in			Other Financial
Valuation Description	Securities			Instruments
Value as of December 31, 2007:	$	—		$	—
Realized gain (loss)		(2,473,993	)		—
Change in unrealized appreciation (depreciation)		2,448,807			—
Accretion/(amortization) of premium discount1		(1,251	)		—
Net purchases (sales)		(3,763	)		—
Transfers in and out of Level 3		34,853			—
Value as of December 31, 2008	$	4,653		$	—

1. Included in net investment income for fixed income securities

Credit Default Swaps as of December 31, 2008 are as follows:

										Upfront
			Notional		Pay/					Payment
		Buy/Sell Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)		Value
ABX.HE.AA.06-2 Index:
	Barclays Bank plc	Sell	$	1,760		0.170	%		5/25/46	$	1,361,567	$	(1,545,719	)
	Morgan Stanley Capital Services, Inc.	Sell		380		0.170			5/25/46		30,359		(333,735	)
	Morgan Stanley Capital Services, Inc.	Sell		730		0.170			5/25/46		72,997		(641,122	)
		Total		2,870							1,464,923		(2,520,576	)
American International Group, Inc.:
	Barclays Bank plc	Sell		140		3.000			3/20/09		—		(821	)
	Barclays Bank plc	Sell		260		4.000			3/20/09		—		(896	)
	Barclays Bank plc	Sell		170		5.350			3/20/09		—		(32	)
	Deutsche Bank AG	Sell		325		4.000			3/20/09		—		(1,120	)
	Morgan Stanley Capital Services, Inc.	Sell		195		4.000			3/20/09		—		(672	)
		Total		1,090							—		(3,541	)
ARAMARK Corp.:
	Credit Suisse International	Sell		705		6.000			3/20/13		—		(12,628	)
	Credit Suisse International	Sell		60		4.750			12/20/13		—		(4,048	)
	Morgan Stanley Capital Services, Inc.	Sell		835		5.920			3/20/13		—		(17,179	)
		Total		1,600							—		(33,855	)
Cablevision Systems Corp.	Citibank NA, New York	Sell		160		3.100			12/20/10		—		(15,228	)
		Total		160							—		(15,228	)
Capmark Financial Group, Inc.:
	Barclays Bank plc	Sell		160		5.000			6/20/12		44,800		(75,275	)
	Citibank NA, New York	Sell		3,300		7.125			12/20/12		—		(1,506,436	)
	Citibank NA, New York	Sell		1,485		9.700			12/20/12		—		(625,254	)
	Citibank NA, New York	Sell		1,235		9.750			12/20/12		—		(519,142	)
	Credit Suisse International	Sell		1,060		3.500			6/20/12		—		(520,039	)
	Credit Suisse International	Sell		1,120		5.200			12/20/12		—		(540,957	)
	Credit Suisse International	Sell		550		6.250			12/20/12		—		(257,698	)
	Morgan Stanley Capital Services, Inc.	Sell		530		7.400			12/20/12		—		(239,936	)
	Morgan Stanley Capital Services, Inc.	Sell		550		7.150			12/20/12		—		(250,883	)
		Total		9,990							44,800		(4,535,620	)
CDX North America High Yield Index, Series 10:
	JPMorgan Chase Bank NA, NY Branch	Sell		2,720		5.000			6/20/13		243,289		(423,713	)
	JPMorgan Chase Bank NA, NY Branch	Sell		2,275		5.000			6/20/13		211,701		(354,392	)
	UBS AG	Sell		2,720		5.000			6/20/13		243,289		(423,713	)
	UBS AG	Sell		1,515		5.000			6/20/13		140,979		(236,002	)
		Total		9,230							839,258		(1,437,820	)
Cemex SAB de CV	Deutsche Bank AG	Sell		190		2.000			3/20/09		—		(2,779	)
		Total		190							—		(2,779	)
Charter Communications Holdings LLC/Charter Communications Holdings Capital:
	Credit Suisse International	Sell		175		5.000			9/20/17		35,000		(95,730	)
	Credit Suisse International	Sell		635		5.000			9/20/17		127,000		(347,363	)
		Total		810							162,000		(443,093	)

Credit Default Swaps: Continued

										Upfront
			Notional		Pay/					Payment
		Buy/Sell Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)		Value
CIT Group, Inc.	Barclays Bank plc	Sell	$	75		10.500	%		6/20/09	$	—	$	991
		Total		75							—		991
CMBX.3.AJ Index:
	JPMorgan Chase Bank NA, NY Branch	Sell		1,000		1.470			12/13/49		119,886		(575,856	)
	Morgan Stanley Capital Services, Inc.	Sell		2,190		1.470			12/13/49		365,209		(1,261,125	)
	Morgan Stanley Capital Services, Inc.	Sell		2,500		1.470			12/13/49		328,412		(1,439,641	)
		Total		5,690							813,507		(3,276,622	)
CMBX.4.AJ Index:
	JPMorgan Chase Bank NA, NY Branch	Sell		1,000		0.960			2/17/51		169,360		(622,020	)
	Morgan Stanley Capital Services, Inc.	Sell		2,190		0.960			2/17/51		450,444		(1,362,225	)
		Total		3,190							619,804		(1,984,245	)
Constellation Brands, Inc. JPMorgan Chase Bank NA, NY Branch		Sell		475		3.970			9/20/13		—		(19,221	)
		Total		475							—		(19,221	)
Dean Foods Co.:
	JPMorgan Chase Bank NA, NY Branch	Sell		930		1.030			6/20/11		—		(73,511	)
	JPMorgan Chase Bank NA, NY Branch	Sell		930		1.060			6/20/11		—		(72,880	)
	JPMorgan Chase Bank NA, NY Branch	Sell		460		1.050			6/20/11		—		(36,152	)
	JPMorgan Chase Bank NA, NY Branch	Sell		1,200		1.080			6/20/11		—		(93,496	)
		Total		3,520							—		(276,039	)
Eastman Kodak Co.:
	Credit Suisse International	Buy		905		3.700			12/20/18		—		170,107
	Credit Suisse International	Buy		405		4.050			12/20/18		—		68,441
	Credit Suisse International	Buy		385		4.010			12/20/18		—		65,896
		Total		1,695							—		304,444
	Barclays Bank plc	Sell		405		4.000			12/20/13		—		(53,028	)
	Barclays Bank plc	Sell		385		3.960			12/20/13		—		(50,963	)
	Credit Suisse International	Sell		905		3.650			12/20/13		—		(129,882	)
		Total		1,695							—		(233,873	)
El Paso Corp.:
	Credit Suisse International	Sell		505		2.800			3/20/18		—		(133,067	)
	Merrill Lynch International	Sell		530		2.900			3/20/18		—		(137,046	)
	Merrill Lynch International	Sell		1,345		2.890			3/20/18		—		(348,449	)
		Total		2,380							—		(618,562	)
Energy Future Holdings Corp.:
	Credit Suisse International	Sell		925		1.530			6/20/11		—		(276,670	)
	Credit Suisse International	Sell		410		1.610			6/20/11		—		(122,068	)
	Credit Suisse International	Sell		125		5.910			12/20/12		—		(34,307	)
	Credit Suisse International	Sell		115		6.050			12/20/12		—		(31,191	)
	Credit Suisse International	Sell		125		6.000			12/20/12		—		(34,048	)
	Merrill Lynch International	Sell		925		1.590			6/20/11		—		(275,715	)
	Merrill Lynch International	Sell		1,150		1.620			6/20/11		—		(342,188	)
	Merrill Lynch International	Sell		1,310		2.060			6/20/11		—		(379,885	)
		Total		5,085							—		(1,496,072	)
Ford Motor Co.:
	Deutsche Bank AG	Sell		2,750		5.800			12/20/16		—		(1,837,943	)
	Deutsche Bank AG	Sell		550		8.200			3/20/18		—		(373,631	)
	Deutsche Bank AG	Sell		25		5.000			12/20/18		13,500		(17,657	)
	JPMorgan Chase Bank NA, NY Branch	Sell		2,335		6.000			12/20/16		—		(1,556,836	)
	Merrill Lynch International	Sell		2,070		5.300			12/20/12		—		(1,311,510	)
	Morgan Stanley Capital Services, Inc.	Sell		2,335		6.150			12/20/16		—		(1,554,026	)
	Morgan Stanley Capital Services, Inc.	Sell		150		5.900			12/20/16		—		(100,131	)
		Total		10,215							13,500		(6,751,734	)
Ford Motor Credit Co. LLC:
	Citibank NA, New York	Sell		1,700		2.320			3/20/12		—		(271,573	)
	Credit Suisse International	Sell		3,280		2.385			3/20/12		—		(523,512	)
	Credit Suisse International	Sell		875		2.550			3/20/12		—		(139,342	)
		Total		5,855							—		(934,427	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swaps: Continued

										Upfront
			Notional		Pay/					Payment
		Buy/Sell Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)		Value
General Electric Capital Corp.:
	Barclays Bank plc	Sell	$	910		8.000	%		12/20/09	$	—	$	26,811
	Credit Suisse International	Sell		865		8.000			12/20/09		—		25,486
		Total		1,775							—		52,297
General Motors Corp.:
	Goldman Sachs Bank USA	Sell		1,865		4.950			12/20/16		—		(1,488,977	)
	Goldman Sachs International	Sell		500		5.950			12/20/17		—		(394,876	)
	JPMorgan Chase Bank NA, NY Branch	Sell		2,760		4.750			12/20/16		—		(2,208,315	)
	Merrill Lynch International	Sell		2,550		4.050			12/20/12		—		(2,039,010	)
	Morgan Stanley Capital Services, Inc.	Sell		1,865		4.900			12/20/16		—		(1,489,786	)
	Morgan Stanley Capital Services, Inc.	Sell		120		4.620			12/20/16		—		(96,149	)
		Total		9,660							—		(7,717,113	)
GMAC LLC:
	Credit Suisse International	Sell		1,915		5.000			3/20/09		277,675		(224,875	)
	Goldman Sachs International	Sell		1,095		1.390			3/20/17		—		(321,494	)
	Goldman Sachs International	Sell		1,030		1.370			3/20/17		—		(302,677	)
		Total		4,040							277,675		(849,046	)
Goldman Sachs Group, Inc. (The):
	Barclays Bank plc	Sell		355		5.750			12/20/09		—		7,235
	Deutsche Bank AG	Sell		360		5.500			12/20/09		—		6,462
	Deutsche Bank AG	Sell		285		5.450			12/20/09		—		4,978
		Total		1,000							—		18,675
Harrah’s Operating Co., Inc.	Credit Suisse International	Sell		1,160		5.000			3/20/10		73,950		(265,191	)
		Total		1,160							73,950		(265,191	)
Hartford Financial Services Group, Inc.	Morgan Stanley Capital Services, Inc.	Sell		195		2.400			3/20/09		—		(1,948	)
		Total		195							—		(1,948	)
HCP, Inc.	Barclays Bank plc	Sell		285		4.600			3/20/09		—		327
		Total		285							—		327
Idearc, Inc.:
	Credit Suisse International	Sell		25		5.000			12/20/09		5,125		(18,085	)
	Goldman Sachs International	Sell		620		5.000			9/20/09		201,075		(452,480	)
	JPMorgan Chase Bank NA, NY Branch	Sell		280		5.000			9/20/09		36,400		(204,346	)
		Total		925							242,600		(674,911	)
Intelsat Ltd.:
	Citibank NA, New York	Sell		545		5.000			3/20/09		—		980
	Credit Suisse International	Sell		555		4.400			3/20/09		—		867
	Credit Suisse International	Sell		55		5.750			3/20/09		—		115
	Deutsche Bank AG	Sell		220		4.400			3/20/09		—		344
	Deutsche Bank AG	Sell		550		4.750			3/20/09		—		936
	Deutsche Bank AG	Sell		325		5.000			3/20/09		—		585
		Total		2,250							—		3,827
iStar Financial, Inc.:
	Barclays Bank plc	Sell		345		4.400			12/20/12		—		(187,051	)
	Credit Suisse International	Sell		135		4.000			12/20/12		—		(73,534	)
	Credit Suisse International	Sell		845		4.150			12/20/12		—		(459,469	)
	Credit Suisse International	Sell		185		12.000			3/20/09		—		(20,230	)
	Deutsche Bank AG	Sell		1,035		4.000			12/20/12		—		(563,759	)
	Deutsche Bank AG	Sell		460		12.000			3/20/09		—		(50,303	)
	Goldman Sachs International	Sell		2,310		3.950			12/20/12		—		(1,258,971	)
	UBS AG	Sell		550		4.560			12/20/12		—		(297,644	)
		Total		5,865							—		(2,910,961	)

Credit Default Swaps: Continued

										Upfront
			Notional		Pay/					Payment
		Buy/Sell Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)		Value
J.C. Penney Corp., Inc.:
	Morgan Stanley Capital Services, Inc.	Sell	$	370		1.070	%		12/20/17	$	—	$	(72,072	)
	Morgan Stanley Capital Services, Inc.	Sell		385		1.300			12/20/17		—		(69,505	)
		Total		755							—		(141,577	)
Jefferson Smurfit Corp. US:
	Citibank NA, New York	Sell		145		8.000			12/20/13		—		(104,566	)
	Merrill Lynch International	Sell		495		6.700			6/20/13		—		(362,382	)
	Merrill Lynch International	Sell		710		6.800			6/20/13		—		(519,172	)
	Merrill Lynch International	Sell		360		7.950			12/20/13		—		(259,768	)
		Total		1,710							—		(1,245,888	)
Jones Apparel Group, Inc.:
	Deutsche Bank AG	Buy		210		2.635			6/20/18		—		46,901
	Morgan Stanley Capital Services, Inc.	Buy		425		2.970			6/20/18		—		87,185
		Total		635							—		134,086
	Deutsche Bank AG	Sell		210		2.720			6/20/13		—		(41,646	)
	Morgan Stanley Capital Services, Inc.	Sell		425		3.200			6/20/13		—		(77,745	)
		Total		635							—		(119,391	)
Kohl’s Corp.:
	Barclays Bank plc	Buy		210		1.180			6/20/18		—		18,748
	Barclays Bank plc	Buy		205		1.040			6/20/18		—		20,389
	Deutsche Bank AG	Buy		205		1.300			6/20/18		—		16,513
	Morgan Stanley Capital Services, Inc.	Buy		555		0.660			12/20/17		—		67,702
	Morgan Stanley Capital Services, Inc.	Buy		575		0.870			12/20/17		—		61,695
		Total		1,750							—		185,047
	Barclays Bank plc	Sell		210		1.080			6/20/13		—		(14,128	)
	Barclays Bank plc	Sell		205		0.900			6/20/13		—		(15,253	)
	Deutsche Bank AG	Sell		205		1.180			6/20/13		—		(12,980	)
		Total		620							—		(42,361	)
Liz Claiborne, Inc.:
	Morgan Stanley Capital Services, Inc.	Buy		415		2.900			6/20/18		—		128,494
		Total		415							—		128,494
	Deutsche Bank AG	Sell		765		3.250			6/20/09		—		(22,462	)
	Morgan Stanley Capital Services, Inc.	Sell		415		3.100			6/20/13		—		(110,158	)
		Total		1,180							—		(132,620	)
Louisiana-Pacific Corp.	Morgan Stanley Capital Services, Inc.	Sell		375		6.250			9/20/09		—		(32,043	)
		Total		375							—		(32,043	)
Massey Energy Co.:
	Credit Suisse International	Sell		460		5.000			3/20/13		—		(31,994	)
	Credit Suisse International	Sell		210		5.000			3/20/13		—		(14,606	)
	Morgan Stanley Capital Services, Inc.	Sell		690		5.100			9/20/12		—		(47,257	)
	UBS AG	Sell		375		5.050			9/20/12		—		(26,237	)
	UBS AG	Sell		430		5.100			9/20/12		—		(29,450	)
		Total		2,165							—		(149,544	)
MGM Mirage:
	Citibank NA, New York	Sell		440		5.000			12/20/13		145,200		(161,435	)
	Credit Suisse International	Sell		440		8.400			12/20/13		—		(126,620	)
	Credit Suisse International	Sell		675		5.000			12/20/13		168,750		(247,655	)
	Goldman Sachs International	Sell		725		8.400			12/20/13		—		(208,636	)
		Total		2,280							313,950		(744,346	)
Morgan Stanley:
	Citibank NA, New York	Sell		1,555		7.800			12/20/13		—		232,584
	Credit Suisse International	Sell		495		7.800			12/20/13		—		74,038
	JPMorgan Chase Bank NA, NY Branch	Sell		1,830		7.800			12/20/13		—		273,717
		Total		3,880							—		580,339

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swaps: Continued

										Upfront
			Notional		Pay/					Payment
		Buy/Sell Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)		Value
Nalco Co.:
	Barclays Bank plc	Sell	$	420		4.500	%		9/20/13	$	—	$	(41,815	)
	Citibank NA, New York	Sell		435		3.600			9/20/12		—		(43,331	)
	Citibank NA, New York	Sell		455		4.170			9/20/13		—		(50,570	)
	Credit Suisse International	Sell		860		3.400			9/20/12		—		(90,815	)
	Credit Suisse International	Sell		425		3.600			9/20/12		—		(42,335	)
	Goldman Sachs Bank USA	Sell		455		4.250			9/20/13		—		(49,292	)
	Goldman Sachs International	Sell		465		3.700			9/20/12		—		(44,927	)
	Goldman Sachs International	Sell		425		4.700			9/20/13		—		(39,329	)
	Goldman Sachs International	Sell		760		4.700			9/20/13		—		(70,330	)
	JPMorgan Chase Bank NA, NY Branch	Sell		425		4.650			9/20/13		—		(40,075	)
		Total		5,125							—		(512,819	)
Owens-Illinois, Inc.:
	Citibank NA, New York	Sell		500		2.500			6/20/13		—		(24,265	)
	Credit Suisse International	Sell		290		2.500			6/20/13		—		(14,074	)
	Deutsche Bank AG	Sell		140		2.500			6/20/13		—		(6,794	)
		Total		930							—		(45,133	)
Reliant Energy, Inc.:
	Citibank NA, New York	Sell		465		2.450			9/20/11		—		(67,758	)
	Citibank NA, New York	Sell		1,070		2.600			9/20/11		—		(152,324	)
	Citibank NA, New York	Sell		1,035		3.900			9/20/11		—		(117,233	)
	Credit Suisse International	Sell		175		9.000			12/20/09		—		(4,392	)
	Credit Suisse International	Sell		175		9.000			12/20/09		—		(4,392	)
	Merrill Lynch International	Sell		420		2.050			9/20/11		—		(64,960	)
		Total		3,340							—		(411,059	)
RH Donnelley Corp.:
	Barclays Bank plc	Sell		450		5.000			9/20/10		81,000		(202,946	)
	Goldman Sachs International	Sell		430		9.000			3/20/09		—		(18,540	)
	Goldman Sachs International	Sell		650		5.000			9/20/10		143,000		(293,145	)
	Morgan Stanley Capital Services, Inc.	Sell		270		5.000			9/20/10		48,600		(121,768	)
		Total		1,800							272,600		(636,399	)
Rite Aid Corp.:
	Credit Suisse International	Sell		395		7.500			3/20/09		—		(20,213	)
	Goldman Sachs International	Sell		715		8.060			3/20/09		—		(35,661	)
	Goldman Sachs International	Sell		350		5.000			12/20/09		99,038		(79,753	)
		Total		1,460							99,038		(135,627	)
SLM Corp.	Deutsche Bank AG	Sell		580		2.010			9/20/09		—		(49,205	)
		Total		580							—		(49,205	)
Sprint Nextel Corp.:
	Credit Suisse International	Sell		825		6.300			3/20/09		—		(11,489	)
	Goldman Sachs International	Sell		295		6.300			3/20/09		—		(4,108	)
		Total		1,120							—		(15,597	)
Station Casinos, Inc.:
	Barclays Bank plc	Sell		505		5.000			6/20/13		90,900		(399,943	)
	Goldman Sachs International	Sell		315		5.000			6/20/13		55,519		(247,729	)
		Total		820							146,419		(647,672	)
Temple-Inland, Inc.	Deutsche Bank AG	Sell		95		3.000			9/20/09		—		(5,648	)
		Total		95							—		(5,648	)
Tribune Co.:
	Citibank NA, New York	Sell		525		5.000			1/16/09		168,000		(492,252	)
	Citibank NA, New York	Sell		540		5.000			1/16/09		176,850		(506,316	)
	Citibank NA, New York	Sell		540		5.000			1/16/09		178,200		(506,316	)
	Citibank NA, New York	Sell		555		5.000			1/16/09		194,250		(520,380	)
	Credit Suisse International	Sell		545		6.350			1/16/09		—		(511,004	)
	Credit Suisse International	Sell		40		5.000			1/16/09		8,800		(37,505	)

Credit Default Swaps: Continued

										Upfront
			Notional		Pay/					Payment
		Buy/Sell Credit	Amount		Receive			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Fixed Rate			Date		(Paid)		Value
Tribune Co. Continued:
	Credit Suisse International	Sell	$	170		5.000	%		1/16/09	$	39,100	$	(159,396	)
	JPMorgan Chase Bank NA, NY Branch	Sell		260		5.000			1/16/09		62,400		(243,782	)
		Total		3,175							827,600		(2,976,951	)
Univision Communications, Inc.:
	Citibank NA, New York	Sell		435		5.000			12/20/09		30,450		(149,384	)
	Credit Suisse International	Sell		1,265		14.600			3/20/09		—		(91,428	)
	Goldman Sachs International	Sell		980		5.000			6/20/09		98,000		(323,982	)
	Goldman Sachs International	Sell		270		5.000			6/20/09		29,700		(89,260	)
	Goldman Sachs International	Sell		465		5.000			6/20/09		27,900		(153,726	)
	JPMorgan Chase Bank NA, NY Branch	Sell		750		5.000			6/20/09		97,500		(247,946	)
	UBS AG	Sell		450		5.000			6/20/09		40,500		(148,767	)
		Total		4,615							324,050		(1,204,493	)
Vale Overseas:
	Deutsche Bank AG	Buy		840		0.630			3/20/17		—		137,722
		Total		840							—		137,722
	Deutsche Bank AG	Sell		840		1.050			3/20/17		—		(113,254	)
		Total		840							—		(113,254	)
Vornado Realty LP:
	Credit Suisse International	Sell		190		3.600			3/20/09		—		(1,651	)
	Deutsche Bank AG	Sell		385		3.875			6/20/09		—		(3,087	)
		Total		575							—		(4,738	)
XL Capital Ltd.:
	Barclays Bank plc	Sell		425		3.550			9/20/09		—		(31,542	)
	Deutsche Bank AG	Sell		485		3.550			9/20/09		—		(35,995	)
		Total		910							—		(67,537	)
		Grand Total Buys		5,335							—		889,793
		Grand Total Sells		130,260							6,535,674		(45,779,923	)
		Total Credit Default Swaps								$	6,535,674	$	(44,890,130	)

The table that follows shows the undiscounted maximum potential payment by the Fund related to selling credit protection in credit default swaps:

Type of Reference Asset	Total Maximum Potential
on which the Fund	Payments for Selling Credit				Reference Asset
Sold Protection	Protection (Undiscounted)		Amount Recoverable*		Rating Range**
Asset-Backed Indexes	$	2,870,000	$	—	AA
CMBS Indexes		8,880,000		—	AAA
High Yield Indexes		9,230,000		—		B
Single Name Corporate Debt		28,720,000		620,000	AAA to BBB-
Single Name Corporate Debt		80,560,000		2,745,000	BB+ to D
Total	$	130,260,000	$	3,365,000

*	Amounts recoverable includes potential payments from related purchased protection for instances where the Fund is the seller of protection. In addition, the Fund has no recourse provisions under the credit derivatives and holds no collateral which can offset or reduce potential payments under a triggering event.
**	The reference asset security rating, as rated by any rating organization, are included in the equivalent Standard & Poor’s rating category. The reference asset rating represents the likelihood of a potential payment by the Fund if the reference asset experiences a credit event as of period end.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Interest Rate Swap Contracts as of December 31, 2008 are as follows:

	Notional
Reference Entity/	Amount		Paid by			Received by			Termination
Swap Counterparty	(000’s)		the Fund			the Fund			Date		Value
USD BBA LIBOR:
Credit Suisse International	$	3,710		4.353	%	Three-Month USD BBA LIBOR				10/21/16	$	(530,278	)
Credit Suisse International		2,740		2.225		Three-Month USD BBA LIBOR				11/20/10		(38,743	)
Goldman Sachs Group, Inc. (The)		17,000		4.488		Three-Month USD BBA LIBOR				10/17/16		(2,592,016	)
Goldman Sachs Group, Inc. (The)		20,000		2.820		Three-Month USD BBA LIBOR				10/29/10		(456,066	)
Goldman Sachs International		4,000		4.820		Three-Month USD BBA LIBOR				8/22/28		(1,335,612	)
UBS AG		3,620		2.230		Three-Month USD BBA LIBOR				11/20/10		(51,543	)
Total where Fund pays a fixed rate		51,070										(5,004,258	)
Credit Suisse International		9,000	Three-Month USD BBA LIBOR				3.173	%		11/28/28		668,925
Goldman Sachs International		10,000	Three-Month USD BBA LIBOR				4.519			8/22/18		1,919,770
Total where Fund pays a variable rate		19,000										2,588,695
Total Interest Rate Swaps											$	(2,415,563	)

Abbreviation is as follows:

BBA LIBOR British Bankers’ Association London-Interbank Offered Rate

Total Return Swap Contracts as of December 31, 2008 are as follows:

	Notional
Reference Entity/	Amount		Paid by		Received by		Termination
Swap Counterparty	(000’s)		the Fund		the Fund		Date		Value
Banc of America Securities LLC AAA 10 yr. CMBS Daily Index*:
Goldman Sachs Group, Inc. (The)	$	47,110		A		D		3/31/09	$	10,147,886	)
Goldman Sachs Group, Inc. (The)		45,430		B		C		1/31/09		(10,793,032	)
Morgan Stanley		6,240		B		C		3/31/09		(1,539,668	)
							Reference Entity Total			(2,184,814	)
Barclays Capital U.S. CMBS AAA Index*:
Citibank NA		19,800		A		D		2/1/09		2,163,413	)
Citibank NA		11,500		A		D		2/1/09		1,264,038	)
Morgan Stanley		2,200		A		D		2/1/09		240,644	)
Morgan Stanley		3,800		A		D		3/1/09		416,408	)
							Reference Entity Total			4,084,503	)
Barclays Capital U.S. CMBS AAA 8.5+ Index*:
Barclays Bank plc		7,820		B		C		4/1/09		(1,484,675	)
Goldman Sachs Group, Inc. (The)		10,800		A		D		3/1/09		1,850,682
Goldman Sachs Group, Inc. (The)		4,200		A		D		3/1/09		709,686
							Reference Entity Total			1,075,693
							Total of Total Return Swaps		$	2,975,382

* The CMBS Indexes are representative indexes of segments of the commercial mortgage backed securities market. These indexes are measured by movements in the credit spreads of the underlying holdings. As the credit market perceives an improvement in the credit quality of an Index’s underlying holdings and reduced probability of default, the spread of an index narrows. As the credit market perceives a decrease in credit quality and an increased probability of default on an Index’s underlying holdings, the spread widens.

Abbreviation is as follows:

CMBS Commercial Mortgage Backed Securities

A—The Fund makes periodic payments when credit spreads, as represented by the Reference Entity, widen.

B—The Fund makes periodic payments when credit spreads, as represented by the Reference Entity, narrow.

C—The Fund receives periodic payments when credit spreads, as represented by the Reference Entity, widen.

D—The Fund receives periodic payments when credit spreads, as represented by the Reference Entity, narrow.

Footnotes to Statement of Investments Continued

The following table aggregates, as of period end, the amount receivable from/(payable to) each counterparty with whom the Fund has entered into a swap agreement. Swaps are individually disclosed in the preceding tables.

Swap Summary as of December 31, 2008 are as follows:

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)		Value
Barclays Bank plc:
	Credit Default Buy Protection	$	415	$	39,137
	Credit Default Sell Protection		7,465		(2,584,048	)
	Total Return		7,820		(1,484,675	)
					(4,029,586	)
Citibank NA, New York	Credit Default Sell Protection		17,120		(5,600,199	)
Citibank NA	Total Return		31,300		3,427,451
Credit Suisse International:
	Credit Default Buy Protection		1,695		304,444
	Credit Default Sell Protection		24,945		(5,572,997	)
	Interest Rate		15,450		99,904
					(5,168,649	)
Deutsche Bank AG:
	Credit Default Buy Protection		1,255		201,136
	Credit Default Sell Protection		10,780		(3,124,958	)
					(2,923,822	)
Goldman Sachs Bank USA	Credit Default Sell Protection		2,320		(1,538,269	)
Goldman Sachs Group, Inc. (The):
	Interest Rate		37,000		(3,048,082	)
	Total Return		107,540		1,915,222
					(1,132,860	)
Goldman Sachs International:
	Credit Default Sell Protection		12,400		(4,339,624	)
	Interest Rate		14,000		584,158
					(3,755,466	)
JPMorgan Chase Bank NA, NY Branch	Credit Default Sell Protection		19,630		(6,498,824	)
Merrill Lynch International	Credit Default Sell Protection		11,865		(6,040,085	)
Morgan Stanley Capital Services, Inc.:
	Credit Default Buy Protection		1,970		345,076
	Credit Default Sell Protection		17,695		(9,319,106	)
					(8,974,030	)
Morgan Stanley	Total Return		12,240		(882,616	)
UBS AG:
	Credit Default Sell Protection		6,040		(1,161,813	)
	Interest Rate		3,620		(51,543	)
					(1,213,356	)
		Total Swaps		$	(44,330,311	)

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $214,922,051)	$	118,976,163
Affiliated companies (cost $76,839,590)		76,839,590
		195,815,753
Cash		7,688,751
Swaps, at value (upfront payment received $376,713)		20,623,073
Receivables and other assets:
Interest, dividends and principal paydowns		4,014,143
Investments sold		707,969
Shares of beneficial interest sold		592,220
Due from Manager		211
Other		12,586
Total assets		229,454,706
Liabilities
Swaps, at value (upfront payment received $6,158,961)		64,953,384
Payables and other liabilities:
Terminated investment contracts		4,164,301
Shareholder communications		44,656
Shares of beneficial interest redeemed		35,260
Distribution and service plan fees		31,474
Trustees’ compensation		6,357
Transfer and shareholder servicing agent fees		2,726
Other		52,225
Total liabilities		69,290,383
Net Assets	$	160,164,323
Composition of Net Assets
Par value of shares of beneficial interest	$	101,322
Additional paid-in capital		488,096,558
Accumulated net investment income		35,234,239
Accumulated net realized loss on investments and foreign currency transactions		(229,527,271	)
Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies		(133,740,525	)
Net Assets	$	160,164,323
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $111,040,118 and 70,203,241 shares of beneficial interest outstanding)	$	1.58
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $43,374,578 and 27,493,189 shares of beneficial interest outstanding)	$	1.58
Class 3 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $1,582,575 and 1,008,930 shares of beneficial interest outstanding)	$	1.57
Class 4 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $4,167,052 and 2,616,813 shares of beneficial interest outstanding)	$	1.59

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Interest	$	33,736,606
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $3,460)		570,689
Affiliated companies		371,423
Fee income		20,238
Total investment income		34,698,956
Expenses
Management fees		2,529,797
Distribution and service plan fees:
Service shares		287,674
Class 4 shares		24,493
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,994
Class 3 shares		255
Class 4 shares		5,210
Shareholder communications:
Non-Service shares		80,297
Service shares		43,899
Class 3 shares		1,953
Class 4 shares		3,811
Trustees’ compensation		12,928
Custodian fees and expenses		2,512
Other		62,841
Total expenses		3,075,658
Less reduction to custodian expenses		(2,129	)
Less waivers and reimbursements of expenses		(81,045	)
Net expenses		2,992,484
Net Investment Income		31,706,472
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies		(85,561,562	)
Closing and expiration of futures contracts		2,278,201
Foreign currency transactions		402,036
Short positions		(76,620	)
Swap contracts		(158,865,141	)
Net realized loss		(241,823,086	)
Net change in unrealized appreciation (depreciation) on:
Investments		(76,156,186	)
Translation of assets and liabilities denominated in foreign currencies		(606,244	)
Futures contracts		(346,624	)
Short positions		23,908
Swap contracts		(24,813,985	)
Net change in unrealized depreciation		(101,899,131	)
Net Decrease in Net Assets Resulting from Operations	$	(312,015,745	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	31,706,472		$	35,258,258
Net realized gain (loss)		(241,823,086	)		2,744,711
Net change in unrealized depreciation		(101,899,131	)		(38,060,297	)
Net decrease in net assets resulting from operations		(312,015,745	)		(57,328	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(16,471,157	)		(24,967,707	)
Service shares		(8,570,925	)		(11,831,305	)
Class 3 shares		(292,606	)		—
Class 4 shares		(611,268	)		—
		(25,945,956	)		(36,799,012	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		19,699,234			(42,430,203	)
Service shares		5,209,593			(3,835,518	)
Class 3 shares		1,808,854			5,091,701
Class 4 shares		4,859,490			9,835,657
		31,577,171			(31,338,363	)
Net Assets
Total decrease		(306,384,530	)		(68,194,703	)
Beginning of period		466,548,853			534,743,556
End of period (including accumulated net investment income of $35,234,239 and $38,507,913, respectively)	$	160,164,323		$	466,548,853

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	7.95		$	8.55		$	8.44		$	8.80		$	8.61
Income (loss) from investment operations:
Net investment income1		.54			.57			.58			.57			.58
Net realized and unrealized gain (loss)		(6.44	)		(.56	)		.17			(.37	)		.15
Total from investment operations		(5.90	)		.01			.75			.20			.73
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.47	)		(.61	)		(.64	)		(.56	)		(.54	)
Net asset value, end of period	$	1.58		$	7.95		$	8.55		$	8.44		$	8.80
Total Return, at Net Asset Value2		(78.67	)%		(0.10	)%		9.42	%		2.31	%		8.97	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	111,040		$	294,819		$	361,445		$	384,726		$	479,405
Average net assets (in thousands)	$	211,186		$	335,702		$	365,154		$	444,477		$	460,877
Ratios to average net assets:3
Net investment income		9.30	%		6.96	%		7.05	%		6.79	%		6.91	%
Total expenses		0.80	%4		0.75	%4		0.74	%4		0.75	%		0.75	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.78	%		0.74	%		0.74	%		0.75	%		0.75	%
Portfolio turnover rate		53	%5		67	%5		57	%		64			51	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.80	%
Year Ended December 31, 2007	0.76	%
Year Ended December 31, 2006	0.74	%

5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	40,240,084	$	41,196,921
Year Ended December 31, 2007	$	30,798,147	$	24,096,458

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	7.89		$	8.50		$	8.39		$	8.76		$	8.58
Income (loss) from investment operations:
Net investment income1		.54			.55			.56			.55			.56
Net realized and unrealized gain (loss)		(6.40	)		(.57	)		.17			(.38	)		.15
Total from investment operations		(5.86	)		(.02	)		.73			.17			.71
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.45	)		(.59	)		(.62	)		(.54	)		(.53	)
Net asset value, end of period	$	1.58		$	7.89		$	8.50		$	8.39		$	8.76
Total Return, at Net Asset Value2		(78.57	)%		(0.47	)%		9.23	%		2.01	%		8.73	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	43,375		$	157,333		$	173,299		$	155,617		$	134,013
Average net assets (in thousands)	$	116,236		$	169,569		$	160,703		$	141,287		$	101,464
Ratios to average net assets:3
Net investment income		9.13	%		6.71	%		6.80	%		6.54	%		6.63	%
Total expenses		1.05	%4		1.01	%4		1.00	%4		1.00	%		1.01	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.03	%		1.00	%		1.00	%		1.00	%		1.01	%
Portfolio turnover rate		53	%5		67	%5		57	%		64	%		51	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	1.05	%
Year Ended December 31, 2007	1.02	%
Year Ended December 31, 2006	1.00	%

5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	40,240,084	$	41,196,921
Year Ended December 31, 2007	$	30,798,147	$	24,096,458

See accompanying Notes to Financial Statements.

Class 3 Shares Year Ended December 31,	2008			20071
Per Share Operating Data
Net asset value, beginning of period	$	7.98		$	8.26
Income (loss) from investment operations:
Net investment income2		.56			.37
Net realized and unrealized loss		(6.50	)		(.65	)
Total from investment operations		(5.94	)		(.28	)
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.47	)		—
Net asset value, end of period	$	1.57		$	7.98
Total Return, at Net Asset Value3		(78.89	)%		(3.39	)%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,582		$	4,921
Average net assets (in thousands)	$	5,292		$	3,750
Ratios to average net assets:4
Net investment income		9.29	%		6.90	%
Total expenses5		0.80	%		0.76	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.78	%		0.75	%
Portfolio turnover rate6		53	%		67	%

1.	For the period from May 1, 2007 (inception of offering) to December 31, 2007.
2.	Per share amounts calculated based on the average shares outstanding during the period.
3.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4.	Annualized for periods less than one full year.
5.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.80	%
Period Ended December 31, 2007	0.77	%

6. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	40,240,084	$	41,196,921
Period Ended December 31, 2007	$	30,798,147	$	24,096,458

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Class 4 Shares Year Ended December 31,	2008			20071
Per Share Operating Data
Net asset value, beginning of period	$	7.97		$	8.26
Income (loss) from investment operations:
Net investment income2		.54			.36
Net realized and unrealized loss		(6.46	)		(.65	)
Total from investment operations		(5.92	)		(.29	)
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.46	)		—
Net asset value, end of period	$	1.59		$	7.97
Total Return, at Net Asset Value3		(78.63	)%		(3.51	)%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	4,167		$	9,476
Average net assets (in thousands)	$	10,658		$	7,201
Ratios to average net assets:4
Net investment income		9.00	%		6.61	%
Total expenses5		1.07	%		1.05	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.05	%		1.04	%
Portfolio turnover rate6		53	%		67	%

1.	For the period from May 1, 2007 (inception of offering) to December 31, 2007.
2.	Per share amounts calculated based on the average shares outstanding during the period.
3.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4.	Annualized for periods less than one full year.
5.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	1.07	%
Period Ended December 31, 2007	1.06	%

6. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	40,240,084	$	41,196,921
Period Ended December 31, 2007	$	30,798,147	$	24,096,458

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer High Income Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, 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 by investing mainly in a diversified portfolio of high-yield, lower-grade, fixed-income securities that the Fund’s investment manager, OppenheimerFunds, Inc. (the “Manager”), believes does not involve undue risk. On December 17, 2008, the Manager purchased Non-Service Shares of the Fund for $50,000,000. As of December 31, 2008, 47% of the shares outstanding of Non-Service Shares were owned by the Manager.

     The Fund offers Non-Service, Service, Class 3 and Class 4 shares. All classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares being designated as Service shares and Class 4 shares are subject to a distribution and service plan. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. The Fund assesses a 1% fee on the proceeds of Class 3 and Class 4 shares that are redeemed (either by selling or exchanging to another Oppenheimer fund or other investment option offered through your variable life insurance or variable annuity contract) within 60 days of their purchase. The fee, which is retained by the Fund, is accounted for as an addition to paid-in capital.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

     In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Securities on a When-Issued or Delayed Delivery Basis. The Fund may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis. “When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis normally takes place within six months and possibly as long as two years or more after the 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 purchase of securities on a when-issued basis may increase the volatility of the Fund’s net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. When the Fund engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain or dispose of the security at a price and yield it considers advantageous. The Fund maintains internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase.

     As of December 31, 2008, the Fund had no purchased securities issued on a when-issued or delayed delivery basis and no sold securities issued on a delayed delivery basis.

     The Fund may enter into “forward roll” transactions with respect to mortgage-related securities. In this type of transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security (same type, coupon and maturity) at a later date at a set price. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. The Fund records the incremental difference between the forward purchase and sale of each forward roll as realized gain (loss) on investments or as fee income in the case of such transactions that have an associated fee in lieu of a difference in the forward purchase and sale price.

     Risks of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Fund to receive inferior securities at redelivery as compared to the securities

sold to the counterparty; counterparty credit risk. To assure its future payment of the purchase price, the Fund maintains internally designated assets with a market value equal to or greater than the payment obligation under the roll.

Securities Sold Short. The Fund may short sell when-issued securities for future settlement. The value of the open short position is recorded as a liability, and the Fund records an unrealized gain or loss for the change in value of the open short position. The Fund records a realized gain or loss when the short position is closed out.

     As of December 31, 2008, the Fund had no securities sold short.

Credit Risk. The Fund invests in high-yield, non-investment-grade bonds, which may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of December 31, 2008, securities with an aggregate market value of $606,546, representing 0.38% of the Fund’s net assets, were in default.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

     The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation
					Based on Cost of
					Securities and
Undistributed	Undistributed		Accumulated		Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3,4,5		Tax Purposes
$ —	$	—	$	229,873,294	$	98,153,945

1. As of December 31, 2008, the Fund had $135,987,641 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2008, details of the capital loss carryforwards were as follows:

Expiring
2009	$	22,696,701
2010		56,061,391
2011		8,529,303
2012		128,504
2016		48,571,742
Total	$	135,987,641

2.	As of December 31, 2008, the Fund had $93,885,653 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
3.	During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.
4.	During the fiscal year ended December 31, 2007, the Fund utilized $4,768,054 of capital loss carryforward to offset capital gains realized in that fiscal year.
5.	During the fiscal year ended December 31, 2008, $9,779,664 of unused capital loss carryforward expired.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

     Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

			Reduction to
	Reduction to		Accumulated Net
Reduction to Paid-in	Accumulated Net		Realized Loss on
Capital	Investment Income		Investments
$107,447,213	$	9,034,190	$	116,481,403

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	25,945,956	$	36,799,012

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	291,496,007
Federal tax cost of other investments		(41,856,620	)
Total federal tax cost	$	249,639,387
Gross unrealized appreciation	$	2,609,753
Gross unrealized depreciation		(100,763,698	)
Net unrealized depreciation	$	(98,153,945	)

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 20071
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		46,686,845		$	99,443,229			6,787,194		$	55,828,051
Dividends and/or distributions reinvested		2,553,668			16,471,157			3,059,768			24,967,707
Redeemed		(16,133,552	)		(96,215,152	)		(15,007,275	)		(123,225,961	)
Net increase (decrease)		33,106,961		$	19,699,234			(5,160,313	)	$	(42,430,203	)
Service Shares
Sold		11,108,688		$	27,272,759			3,742,971		$	30,663,500
Dividends and/or distributions reinvested		1,335,035			8,570,925			1,457,057			11,831,305
Redeemed		(4,887,160	)		(30,634,091	)		(5,655,204	)		(46,330,323	)
Net increase (decrease)		7,556,563		$	5,209,593			(455,176	)	$	(3,835,518	)
Class 3 Shares
Sold		1,353,807		$	7,210,645			881,563		$	7,225,930
Dividends and/or distributions reinvested		45,225			292,606			—			—
Redeemed		(1,006,838	)		(5,694,397	)2		(264,827	)		(2,134,229	)3
Net increase		392,194		$	1,808,854			616,736		$	5,091,701
Class 4 Shares
Sold		2,743,234		$	12,307,065			1,978,987		$	16,140,299
Dividends and/or distributions reinvested		94,331			611,268			—			—
Redeemed		(1,409,411	)		(8,058,843	)2		(790,328	)		(6,304,642	)3
Net increase		1,428,154		$	4,859,490			1,188,659		$	9,835,657

1.	For the year ended December 31, 2007, for non-service and service shares, and for the period from May 1, 2007 (inception of offering) to December 31, 2007 for Class 3 and Class 4 shares.
2.	Net of redemption fees of $3,056 and $11,199 for Class 3 and Class 4 shares, respectively.
3.	Net of redemption fees of $10,660 and $30,654 for Class 3 and Class 4 shares, respectively.

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	156,305,813	$	346,254,575
To Be Announced (TBA) mortgage- related securities		40,240,084		41,196,921

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Next $200 million	0.60
Over $1 billion	0.50

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $26,163 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares and Class 4 Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares and Class 4 shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares and Class 4 shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares and Class 4 shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares and Class 4 shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares and Class 4 shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. Effective September 1, 2008 through August 31, 2009 (the “waiver period”), the Manager has voluntarily agreed to reduce its advisory fee rate by 0.10% of the Fund’s average daily net assets if the Fund’s trailing one-year total return performance is in the fifth quintile of the Fund’s Lipper peer group and by 0.05% of the Fund’s average daily net assets if the Fund’s trailing one-year total return performance is in the fourth quintile of the Fund’s Lipper peer group as of August 31, 2008. However, if the Fund’s trailing one-year total return performance, as measured at the end of any calendar quarter during the waiver period, improves from the fifth quintile to the fourth quintile, the advisory fee waiver for subsequent quarters during the waiver period will be reduced only by an annualized rate of 0.05% of the Fund’s average daily net assets, and if the Fund’s trailing one-year total return performance at the end of any calendar quarter during the waiver period improves to the third or higher quintile of the Fund’s Lipper peer group, the advisory fee reduction will be terminated effective the following business day. During the year ended December 31, 2008, OFI waived $67,380. The advisory fee reduction is a voluntary undertaking and may be terminated by the Manager at any time.

     OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $13,665 for IMMF management fees.

NOTES TO FINANCIAL STATEMENTS Continued

5. Futures Contracts

A futures contract is a commitment to buy or sell a specific amount of a financial instrument at a negotiated price on a stipulated future date. The Fund may buy and sell futures contracts and may also buy or write put or call options on these futures contracts.

     Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund’s assets are valued.

     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.

     Futures contracts are reported on a schedule following the Statement of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted in the Statement of Assets and Liabilities. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. Realized gains (losses) are reported in the Statement of Operations at the closing or expiration of futures contracts.

     Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market where the Fund is unable to liquidate the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities.

     As of December 31, 2008, the Fund had no outstanding futures contracts.

6. Swap Contracts

The Fund may enter into privately negotiated agreements with a counterparty to exchange or “swap” payments at specified future intervals based on the return of an asset (such as a stock, bond or currency) or non-asset reference (such as an interest rate or index). The swap agreement will specify the “notional” amount of the asset or non-asset reference to which the contract relates. As derivative contracts, swaps typically do not have an associated cost at contract inception. At initiation, contract terms are typically set at market value such that the value of the swap is $0. If a counterparty specifies terms that would result in the contract having a value other than $0 at initiation, one counter-party will pay the other an upfront payment to equalize the contract. Subsequent changes in market value are calculated based upon changes in the performance of the asset or non-asset reference multiplied by the notional value of the contract. Contract types may include credit default, interest rate, total return, and currency swaps.

     Swaps are marked to market daily using quotations primarily from pricing services, counterparties or brokers. Swap contracts are reported on a schedule following the Statement of Investments. The value of the contracts is separately disclosed on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) is comprised of the change in the valuation of the swap combined with the accrued interest due to (owed by) the Fund at termination or settlement. The net change in this amount during the period is included on the Statement of Operations. Any payment received or paid to initiate a contract is recorded as a cost of the swap in the Statement of Assets and Liabilities and as a component of unrealized gain or loss on the Statement of Operations until contract termination; upon contract termination, this amount is recorded as realized gain or loss on the Statement of Operations. Excluding amounts paid at contract initiation as described above, the Fund also records any periodic payments received from (paid to) the counterparty, including at termination, as realized gain (loss) on the Statement of Operations.

     Risks of entering into swap contracts include credit, market and liquidity risk. Credit risk arises from the possibility that the counterparty fails to make a payment when due or otherwise defaults under the terms of the contract. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received. Market risk is the risk that the value of the contract will depreciate due to unfavorable changes in the performance of the asset or non-asset reference. Liquidity risk is the risk that the Fund may be unable to close the contract prior to its termination.

Credit Default Swap Contracts. A credit default swap is a bilateral contract that enables an investor to buy or sell protection on a debt security against a defined-issuer credit event, such as the issuer’s failure to make timely payments of interest or principal on the debt security, bankruptcy or restructuring. The Fund may enter into credit default swaps either by buying or selling protection on a single security or a basket of securities (the “reference asset”).

     The buyer of protection pays a periodic fee to the seller of protection based on the notional amount of debt securities underlying the swap contract. The seller of protection agrees to compensate the buyer of protection for future potential losses as a result of a credit event on the reference asset. The contract effectively transfers the credit event risk of the reference asset from the buyer of protection to the seller of protection.

     The ongoing value of the contract will fluctuate throughout the term of the contract based primarily on the credit risk of the reference asset. If the credit quality of the reference asset improves relative to the credit quality at contract initiation, the buyer of protection may have an unrealized loss greater than the anticipated periodic fee owed. This unrealized loss would be the result of current credit protection being cheaper than the cost of credit protection at contract initiation. If the buyer elects to terminate the contract prior to its maturity, and there has been no credit event, this unrealized loss will become realized. If the contract is held to maturity, and there has been no credit event, the realized loss will be equal to the periodic fee paid over the life of the contract.

     If there is a credit event, the buyer of protection can exercise its rights under the contract and receive a payment from the seller of protection equal to the notional amount of the reference asset less the market value of the reference asset. Upon exercise of the contract the difference between the value of the underlying reference asset and the notional amount is recorded as realized gain (loss) and is included on the Statement of Operations.

     Risks of credit default swaps include credit, market and liquidity risk. Additional risks include but are not limited to: the cost of paying for credit protection if there are no credit events or the cost of selling protection when a credit event occurs (paying the notional amount to the protection buyer); and pricing transparency when assessing the value of a credit default swap.

     As of the period end, the Fund has sold credit protection through credit default swaps to gain exposure to the credit risk of individual securities and/or indexes that are either unavailable or considered to be less attractively priced in the bond market. The Fund has also engaged in pairs trades by purchasing protection through a credit default swap referenced to the debt of an issuer, and simultaneously selling protection through a credit default swap referenced to the debt of a different issuer with the intent to realize gains from the pricing differences of the two issuers who are expected to have similar market risks. Pairs trades attempt to gain exposure to credit risk while hedging or offsetting the effects of overall market movements. In addition, the Fund has engaged in spread curve trades by simultaneously purchasing and selling protection through credit default swaps referenced to the same issuer but with different maturities. Spread curve trades attempt to gain exposure to credit risk on a forward basis by realizing gains on the expected differences in spreads.

Interest Rate Swap Contracts. An interest rate swap is an agreement between counterparties to exchange periodic payments based on interest rates. One cash flow stream will typically be a floating rate payment based upon a specified interest rate while the other is typically a fixed interest rate.

     Risks of interest rate swaps include credit, market and liquidity risk. Additional risks include but are not limited to, interest rate risk. There is a risk, based on future movements of interest rates that the payments made by the Fund under a swap agreement will be greater than the payments it received.

NOTES TO FINANCIAL STATEMENTS Continued

6. Swap Contracts Continued

Total Return Swap Contracts. A total return swap is an agreement between counterparties to exchange periodic payments based on asset or non-asset references. One cash flow is typically based on a non-asset reference (such as an interest rate or index) and the other on the total return of a reference asset (such as a security or a basket of securities). The total return of the reference asset typically includes appreciation or depreciation on the reference asset, plus any interest or dividend payments.

     Risks of total return swaps include credit, market and liquidity risk.

7. Illiquid Securities

As of December 31, 2008, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

8. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

9. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

December 31, 2008 Oppenheimer Management Main Street Fu/VA Commentaries and A Series of Oppenheimer Variable Account Funds Annual Report M A N A G E M E N T C O M M E N T A R I E S Listing of Top Holdings A N N U A L R E P O RT Fund Performance Discussion Listing of Investments Financial Statements 1234

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Main Street Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Main Street Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Shares		Value
Common Stocks—99.2%
Consumer Discretionary—9.5%
Auto Components—0.5%
ArvinMeritor, Inc.1		56,400	$	160,740
Autoliv, Inc.		52,500		1,126,650
BorgWarner, Inc.1		44,000		957,880
Exide Technologies2		5,300		28,037
Federal-Mogul Corp.2		500		2,115
Gentex Corp.		54,400		480,352
Goodyear Tire & Rubber Co. (The)2		130,700		780,279
Johnson Controls, Inc.		136,500		2,478,840
Lear Corp.2		63,500		89,535
TRW Automotive Holdings Corp.2		100,700		362,520
WABCO Holdings, Inc.		62,400		985,296
				7,452,244
Automobiles—0.0%
Thor Industries, Inc.1		45,000		593,100
Distributors—0.0%
LKQ Corp.1,2		17,100		199,386
Diversified Consumer Services—0.2%
Brink’s Home Security Holdings, Inc.2		11,100		243,312
Career Education Corp.1,2		44,631		800,680
Corinthian Colleges, Inc.2		22,200		363,414
Hillenbrand, Inc.		2,700		45,036
Regis Corp.		14,000		203,420
Service Corp. International1		92,800		461,216
				2,117,078
Hotels, Restaurants & Leisure—0.9%
Ameristar Casinos, Inc.1		8,800		76,032
Bally Technologies, Inc.2		8,200		197,046
Bob Evans Farms, Inc.		23,600		482,148
Boyd Gaming Corp.1		90,700		429,011
Brinker International, Inc.1		76,500		806,310
Carnival Corp.		70,400		1,712,128
CEC Entertainment, Inc.2		37,400		906,950
Chipotle Mexican Grill, Inc., Cl. B2		619		35,463
International Speedway Corp., Cl. A		16,300		468,299
Interval Leisure Group, Inc.2		16,840		90,768
Jack in the Box, Inc.2		48,400		1,069,156
Life Time Fitness, Inc.1,2		16,400		212,380
McDonald’s Corp.		37,800		2,350,782
Panera Bread Co., Cl. A1,2		14,500		757,480
Papa John’s International, Inc.2		5,900		108,737
Sonic Corp.2		20,000		243,400
Speedway Motorsports, Inc.		13,000		209,430
Vail Resorts, Inc.1,2		20,800		553,280
WMS Industries, Inc.1,2		38,700		1,041,030
Wyndham Worldwide Corp.		109,700		718,535
				12,468,365
Household Durables—0.4%
American Greetings Corp., Cl. A		36,577		276,888
Centex Corp.1		45,900		488,376
Harman International Industries, Inc.		54,300		908,439
Jarden Corp.2		8,800		101,200
KB Home		21,300		290,106
Lennar Corp., Cl. A1		72,800		631,176
MDC Holdings, Inc.		5,900		178,770
Meritage Homes Corp.2		10,600		129,002
Pulte Homes, Inc.		7,900		86,347
Ryland Group, Inc. (The)		29,000		512,430
Snap-On, Inc.		28,000		1,102,640
Stanley Works (The)		25,100		855,910
Tempur-Pedic International, Inc.1		71,100		504,099
				6,065,383
Internet & Catalog Retail—0.3%
Expedia, Inc.2		114,600		944,304
HSN, Inc.2		16,840		122,427
Liberty Media Corp.-Interactive, Series A2		201,500		628,680
NetFlix.com, Inc.1,2		48,500		1,449,665
Priceline.com, Inc.1,2		17,100		1,259,415
Ticketmaster Entertainment, Inc.2		16,840		108,113
				4,512,604
Leisure Equipment & Products—0.1%
Brunswick Corp.1		97,100		408,791
Callaway Golf Co.		71,100		660,519
Polaris Industries, Inc.1		20,700		593,055
Pool Corp.		7,852		141,100
				1,803,465
Media—3.4%
Arbitron, Inc.		6,100		81,008
Cablevision Systems Corp. New York Group, Cl. A		63,200		1,064,288
CBS Corp., Cl. B1		816,600		6,687,954
Central European Media Enterprises Ltd., Cl. A1,2		4,200		91,224
Cinemark Holdings, Inc.		700		5,201
Clear Channel Outdoor Holdings, Inc., Cl. A1,2		25,200		154,980

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Media Continued
Cox Radio, Inc., Cl. A1,2		20,196	$	121,378
DirecTV Group, Inc. (The)2		148,300		3,397,553
Dish Network Corp., Cl. A2		88,400		980,356
DreamWorks Animation SKG, Inc., Cl. A2		47,800		1,207,428
Gannett Co., Inc.1		84,300		674,400
Harte-Hanks, Inc.		15,800		98,592
Hearst-Argyle Television, Inc.		2,700		16,362
Lamar Advertising Co., Cl. A1,2		48,500		609,160
Liberty Media Corp.-Entertainment, Series A2		54,400		950,912
Liberty Media Holding Corp.-Capital, Series A2		16,900		79,599
McGraw-Hill Cos., Inc. (The)		113,400		2,629,746
Mediacom Communications Corp.2		1,300		5,590
Meredith Corp.1		54,300		929,616
News Corp., Inc., Cl. A		690,669		6,278,181
Scholastic Corp.		28,200		382,956
Time Warner, Inc.		1,569,400		15,788,164
Viacom, Inc., Cl. B2		90,173		1,718,697
Walt Disney Co. (The)		250,600		5,686,114
Warner Music Group Corp.		31,200		94,224
				49,733,683
Multiline Retail—0.4%
Big Lots, Inc.1,2		56,600		820,134
Dillard’s, Inc., Cl. A1		96,400		382,708
Dollar Tree, Inc.2		36,300		1,517,340
Kohl’s Corp.2		49,600		1,795,520
Macy’s, Inc.		112,800		1,167,480
Nordstrom, Inc.1		55,000		732,050
				6,415,232
Specialty Retail—2.7%
Aaron Rents, Inc.		14,800		393,976
Abercrombie & Fitch Co., Cl. A1		46,800		1,079,676
Aeropostale, Inc.2		83,300		1,341,130
American Eagle Outfitters, Inc.		91,100		852,696
AnnTaylor Stores Corp.2		107,700		621,429
AutoNation, Inc.1,2		127,400		1,258,712
Barnes & Noble, Inc.1		55,500		832,500
bebe stores, inc.		34,400		256,968
Best Buy Co., Inc.1		300,500		8,447,055
Buckle, Inc. (The)1		32,100		700,422
Chico’s FAS, Inc.2		7,500		31,350
Children’s Place Retail Stores, Inc.1,2		43,800		949,584
Dress Barn, Inc. (The)1,2		62,200		668,028
Foot Locker, Inc.		74,400		546,096
Gap, Inc. (The)		493,300		6,605,287
Guess?, Inc.		31,100		477,385
Gymboree Corp.2		13,600		354,824
Home Depot, Inc. (The)		90,400		2,081,008
J. Crew Group, Inc.2		3,800		46,360
Limited Brands, Inc.		115,200		1,156,608
Lowe’s Cos., Inc.		26,000		559,520
Men’s Wearhouse, Inc. (The)1		51,500		697,310
Office Depot, Inc.2		192,500		573,650
OfficeMax, Inc.		11,300		86,332
Penske Automotive Group, Inc.1		35,600		273,408
RadioShack Corp.		67,200		802,368
Rent-A-Center, Inc.2		47,300		834,845
Ross Stores, Inc.		16,300		484,599
Sally Beauty Holdings, Inc.1,2		63,600		361,884
Sherwin-Williams Co.		20,100		1,200,975
Signet Jewelers Ltd.		1,000		8,670
Talbots, Inc. (The)1		36,600		87,474
TJX Cos., Inc. (The)		82,600		1,699,082
Tractor Supply Co.1,2		31,600		1,142,024
Urban Outfitters, Inc.2		17,200		257,656
Williams-Sonoma, Inc.		116,300		914,118
Zale Corp.1,2		39,804		132,547
				38,817,556
Textiles, Apparel & Luxury Goods—0.6%
Carter’s, Inc.2		28,100		541,206
Coach, Inc.2		79,200		1,644,984
Fossil, Inc.2		39,300		656,310
Jones Apparel Group, Inc.		81,300		476,418
Liz Claiborne, Inc.1		155,500		404,300
Phillips/Van Heusen Corp.		42,202		849,526
Polo Ralph Lauren Corp., Cl. A		18,500		840,085
Quicksilver, Inc.2		67,800		124,752
Skechers USA, Inc., Cl. A2		20,000		256,400
Timberland Co., Cl. A2		49,000		565,950
UniFirst Corp.		4,600		136,574
Warnaco Group, Inc. (The)2		63,900		1,254,357
Wolverine World Wide, Inc.		37,700		793,208
				8,544,070
Consumer Staples—5.4%
Beverages—0.9%
Coca-Cola Co. (The)		162,200		7,342,794
PepsiCo, Inc.		96,250		5,271,613
				12,614,407

	Shares		Value
Food & Staples Retailing—1.9%
Casey’s General Stores, Inc.		22,800	$	519,156
CVS Caremark Corp.		59,000		1,695,660
Kroger Co. (The)		156,700		4,138,447
Safeway, Inc.		413,600		9,831,272
SUPERVALU, Inc.		27,800		405,880
Wal-Mart Stores, Inc.		205,300		11,509,118
Weis Markets, Inc.		2,400		80,712
Winn-Dixie Stores, Inc.2		4,100		66,010
				28,246,255
Food Products—0.1%
Bunge Ltd.		4,700		243,319
Darling International, Inc.2		15,600		85,644
Del Monte Foods Co.		24,100		172,074
Fresh Del Monte Produce, Inc.2		5,600		125,552
Ralcorp Holdings, Inc.2		6,200		362,080
				988,669
Household Products—1.4%
Procter & Gamble Co. (The)		341,299		21,099,104
Personal Products—0.2%
Chattem, Inc.1,2		7,700		550,781
Herbalife Ltd.		53,400		1,157,712
NBTY, Inc.2		53,200		832,580
Nu Skin Asia Pacific, Inc., Cl. A		16,600		173,138
Revlon, Inc., Cl. A2		3,000		20,010
				2,734,221
Tobacco—0.9%
Altria Group, Inc.		91,000		1,370,460
Philip Morris International, Inc.		250,200		10,886,202
Universal Corp.1		12,200		364,414
				12,621,076
Energy—20.0%
Energy Equipment & Services—3.2%
Baker Hughes, Inc.		147,100		4,717,497
Basic Energy Services, Inc.2		15,400		200,816
BJ Services Co.		69,500		811,065
Complete Production Services, Inc.2		75,100		612,065
Diamond Offshore Drilling, Inc.1		29,900		1,762,306
Dresser-Rand Group, Inc.2		50,860		877,335
Dril-Quip, Inc.2		12,800		262,528
ENSCO International, Inc.		35,200		999,328
Exterran Holdings, Inc.1,2		23,300		496,290
Gulfmark Offshore, Inc.2		10,600		252,174
Halliburton Co.		226,400		4,115,952
Helix Energy Solutions Group, Inc.2		33,049		239,275
Helmerich & Payne, Inc.		26,200		596,050
Hercules Offshore, Inc.1,2		3,800		18,050
Hornbeck Offshore Services, Inc.2		1,300		21,242
ION Geophysical Corp.2		3,600		12,348
Key Energy Services, Inc.2		137,500		606,375
Lufkin Industries, Inc.		6,800		234,600
Nabors Industries Ltd.2		65,300		781,641
National Oilwell Varco, Inc.2		123,200		3,011,008
Noble Corp.		308,700		6,819,183
Oceaneering International, Inc.2		24,800		722,672
Oil States International, Inc.1,2		56,745		1,060,564
Parker Drilling Co.2		70,200		203,580
Patterson-UTI Energy, Inc.		65,200		750,452
Pioneer Drilling Co.2		3,300		18,381
Precision Drilling Trust1		5,763		47,697
Pride International, Inc.2		45,900		733,482
Schlumberger Ltd.		137,000		5,799,210
Seacor Holdings, Inc.1,2		15,900		1,059,735
Smith International, Inc.		6,100		139,629
Superior Energy Services, Inc.2		51,600		821,988
Tetra Technologies, Inc.2		10,400		50,544
Tidewater, Inc.		20,400		821,508
Transocean Ltd.2		70,000		3,307,500
Unit Corp.2		35,855		958,046
Weatherford International Ltd.2		221,400		2,395,548
				46,337,664
Oil, Gas & Consumable Fuels—16.8%
Anadarko Petroleum Corp.		337,900		13,026,045
Apache Corp.		205,000		15,278,650
Arena Resources, Inc.2		8,000		224,720
Berry Petroleum Co., Cl. A		44,600		337,176
Bill Barrett Corp.2		26,200		553,606
BPZ Resources, Inc.2		2,100		13,440
Carrizo Oil & Gas, Inc.2		14,100		227,010
Chesapeake Energy Corp.1		116,500		1,883,805
Chevron Corp.		437,326		32,349,004
Cimarex Energy Co.		29,300		784,654
ConocoPhillips		445,483		23,076,019
Contango Oil & Gas Co.2		1,000		56,300
CVR Energy, Inc.2		14,000		56,000
Delta Petroleum Corp.1,2		22,000		104,720
Denbury Resources, Inc.2		71,100		776,412
Devon Energy Corp.		84,500		5,552,495
Encore Acquisition Co.2		24,500		625,240

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Oil, Gas & Consumable Fuels Continued
Exxon Mobil Corp.		827,456	$	66,055,812
Foundation Coal Holdings, Inc.		64,400		902,888
Frontier Oil Corp.		83,900		1,059,657
Frontline Ltd.1		21,200		627,732
Hess Corp.1		176,800		9,483,552
Holly Corp.		19,400		353,662
International Coal Group, Inc.2		6,200		14,260
Marathon Oil Corp.		355,800		9,734,688
Mariner Energy, Inc.2		89,200		909,840
Massey Energy Co.		49,700		685,363
McMoRan Exploration Co.2		18,400		180,320
Murphy Oil Corp.		159,600		7,078,260
Noble Energy, Inc.		139,300		6,856,346
Nordic American Tanker Shipping Ltd.		400		13,500
Occidental Petroleum Corp.		361,800		21,704,382
Overseas Shipholding Group, Inc.		26,400		1,111,704
Pioneer Natural Resources Co.		21,800		352,724
Plains Exploration & Production Co.2		40,700		945,868
Quicksilver Resources, Inc.2		61,600		343,112
Rosetta Resources, Inc.2		35,400		250,632
St. Mary Land & Exploration Co.		10,200		207,162
Stone Energy Corp.2		64,245		707,980
Sunoco, Inc.1		32,300		1,403,758
Swift Energy Co.2		39,400		662,314
Tesoro Corp.		133,200		1,754,244
Valero Energy Corp.		477,900		10,341,756
W&T Offshore, Inc.		66,700		955,144
Walter Industries, Inc.		14,300		250,393
Whiting Petroleum Corp.2		6,400		214,144
Williams (Clayton) Energy, Inc.2		2,100		95,424
World Fuel Services Corp.		700		25,900
XTO Energy, Inc.		109,600		3,865,592
				244,073,409
Financials—8.9%
Capital Markets—1.6%
Affiliated Managers Group, Inc.2		5,700		238,944
Ameriprise Financial, Inc.		47,600		1,111,936
BlackRock, Inc.1		10,400		1,395,160
Cohen & Steers, Inc.		800		8,792
E*TRADE Financial Corp.1,2		274,400		315,560
Franklin Resources, Inc.		49,600		3,163,488
GAMCO Investors, Inc., Cl. A		3,500		95,620
GLG Partners, Inc.		1,600		3,632
Goldman Sachs Group, Inc. (The)1		57,000		4,810,230
Greenhill & Co., Inc.1		9,000		627,930
Investment Technology Group, Inc.2		11,600		263,552
Janus Capital Group, Inc.		65,500		525,965
Jefferies Group, Inc.		15,900		223,554
KBW, Inc.1,2		12,600		289,800
Knight Capital Group, Inc., Cl. A2		52,700		851,105
Lazard Ltd., Cl. A		13,500		401,490
Legg Mason, Inc.		48,300		1,058,253
Piper Jaffray Cos., Inc.2		17,800		707,728
SEI Investments Co.		28,900		454,019
Stifel Financial Corp.2		13,000		596,050
T. Rowe Price Group, Inc.1		84,700		3,001,768
TD Ameritrade Holding Corp.2		178,800		2,547,900
Waddell & Reed Financial, Inc., Cl. A		4,800		74,208
				22,766,684
Commercial Banks—1.6%
Cathay Bancorp, Inc.1		17,400		413,250
Colonial BancGroup, Inc. (The)1		118,400		245,088
East West Bancorp, Inc.		54,700		873,559
First BanCorp		16,100		179,354
First Citizens BancShares, Inc., Cl. A		200		30,560
First Commonwealth Financial Corp.		700		8,666
First Horizon National Corp.		150,618		1,592,032
First Midwest Bancorp, Inc.1		20,600		411,382
FirstMerit Corp.		17,100		352,089
Hancock Holding Co.1		6,800		309,128
International Bancshares Corp.		14,400		314,352
National Penn Bancshares, Inc.1		33,300		483,183
Old National Bancorp1		30,300		550,248
Pacific Capital Bancorp		56,600		955,408
PacWest Bancorp1		24,411		656,656
Park National Corp.1		1,900		136,325
Popular, Inc.1		148,000		763,680
Regions Financial Corp.		163,900		1,304,644
Sterling Financial Corp., Western US1		13,000		114,400
Susquehanna Bancshares, Inc.1		35,900		571,169
Trustmark Corp.1		14,700		317,373
U.S. Bancorp		182,000		4,551,820

	Shares		Value
Commercial Banks Continued
UCBH Holdings, Inc.		55,500	$	381,840
Umpqua Holdings Corp.1		19,600		283,612
United Community Banks, Inc.1		11,430		155,219
Webster Financial Corp.		55,000		757,900
Wells Fargo & Co.		197,200		5,813,456
Whitney Holding Corp.		10,000		159,900
Wintrust Financial Corp.		2,400		49,368
Zions Bancorp		17,500		428,925
				23,164,586
Consumer Finance—0.3%
AmeriCredit Corp.1,2		71,900		549,316
Capital One Financial Corp.		23,800		758,982
Cash America International, Inc.		33,500		916,225
Discover Financial Services		150,300		1,432,359
EZCORP, Inc., Cl. A2		8,100		123,201
Nelnet, Inc., Cl. A		11,700		167,661
Student Loan Corp. (The)		2,700		110,700
				4,058,444
Diversified Financial Services—1.6%
Bank of America Corp.		589,109		8,294,655
CIT Group, Inc.		163,200		740,928
Interactive Brokers Group, Inc., Cl. A2		39,200		701,288
JPMorgan Chase & Co.		349,444		11,017,969
NYSE Euronext		93,500		2,560,030
PHH Corp.1,2		24,400		310,612
Pico Holdings, Inc.2		400		10,632
				23,636,114
Insurance—3.7%
Allied World Assurance Holdings Ltd.		24,900		1,010,940
Allstate Corp.		44,400		1,454,544
American Financial Group, Inc.		55,200		1,262,976
American National Insurance Co.		500		36,865
AmTrust Financial Services, Inc.		3,200		37,120
Arch Capital Group Ltd.2		10,000		701,000
Aspen Insurance Holdings Ltd.		46,100		1,117,925
Assured Guaranty Ltd.1		23,000		262,200
Axis Capital Holdings Ltd.		45,300		1,319,136
Berkley (W.R.) Corp.		53,200		1,649,200
Berkshire Hathaway, Inc., Cl. B2		1,664		5,348,096
Brown & Brown, Inc.		61,200		1,279,080
Chubb Corp.1		114,900		5,859,900
Cincinnati Financial Corp.		25,056		728,378
CNA Financial Corp.		55,600		914,064
CNA Surety Corp.2		4,600		88,320
Conseco, Inc.2		35,800		185,444
Delphi Financial Group, Inc., Cl. A		33,300		614,052
Employers Holdings, Inc.		27,200		448,800
Endurance Specialty Holdings Ltd.		19,300		589,229
FBL Financial Group, Inc., Cl. A		1,500		23,175
Fidelity National Title Group, Inc., Cl. A		22,500		399,375
First American Corp.		5,700		164,673
Flagstone Reinsurance Holdings Ltd.		2,000		19,540
Genworth Financial, Inc., Cl. A		126,500		357,995
Hanover Insurance Group, Inc.		20,000		859,400
Harleysville Group, Inc.		9,600		333,408
Hartford Financial Services Group, Inc. (The)		31,100		510,662
HCC Insurance Holdings, Inc.		30,200		807,850
Infinity Property & Casualty Corp.		1,100		51,403
IPC Holdings Ltd.		35,100		1,049,490
Lincoln National Corp.		52,800		994,752
Loews Corp.		170,933		4,828,857
Max Capital Group Ltd.		37,700		667,290
Montpelier Re Holdings Ltd.		15,700		263,603
Nationwide Financial Services, Inc., Cl. A		8,100		422,901
Navigators Group, Inc. (The)2		4,900		269,059
Odyssey Re Holdings Corp.		24,600		1,274,526
Old Republic International Corp.		39,300		468,456
OneBeacon Insurance Group Ltd.		11,700		122,148
Partnerre Holdings Ltd.		14,800		1,054,796
Phoenix Cos., Inc. (The)		32,600		106,602
Platinum Underwriters Holdings Ltd.		34,700		1,251,976
ProAssurance Corp.2		14,300		754,754
Protective Life Corp.		73,100		1,048,985
Prudential Financial, Inc.		128,000		3,873,280
RLI Corp.		10,800		660,528
Selective Insurance Group, Inc.		24,500		561,785
StanCorp Financial Group, Inc.		25,700		1,073,489
State Auto Financial Corp.		2,400		72,144
Transatlantic Holdings, Inc.		6,400		256,384
Travelers Cos., Inc. (The)		86,100		3,891,720
United Fire & Casualty Co.		4,700		146,029
Unitrin, Inc.		31,400		500,516

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Insurance Continued
Validus Holdings Ltd.		2,000	$	52,320
XL Capital Ltd., Cl. A1		53,100		196,470
Zenith National Insurance Corp.		11,700		369,369
				54,666,979
Real Estate Management & Development—0.0%
CB Richard Ellis Group, Inc., Cl. A2		59,500		257,040
Forest City Enterprises, Inc., Cl. A1		31,700		212,390
Jones Lang LaSalle, Inc.		8,100		224,370
				693,800
Thrifts & Mortgage Finance—0.1%
MGIC Investment Corp.		64,500		224,460
NewAlliance Bancshares, Inc.		15,200		200,184
Northwest Bancorp, Inc.		800		17,104
Provident Financial Services, Inc.		20,700		316,710
Tree.com, Inc.2		2,806		7,296
				765,754
Health Care—9.1%
Biotechnology—1.1%
Amgen, Inc.2		151,000		8,720,250
Celera Corp.2		600		6,678
Cubist Pharmaceuticals, Inc.2		24,100		582,256
Facet Biotech Corp.2		17,040		163,414
Genentech, Inc.2		57,600		4,775,616
Martek Biosciences Corp.1		17,000		515,270
PDL BioPharma, Inc.		85,200		526,536
				15,290,020
Health Care Equipment & Supplies—0.3%
American Medical Systems Holdings, Inc.2		3,300		29,667
Analogic Corp.		6,700		182,776
Hill-Rom Holdings, Inc.1		23,200		381,872
Inverness Medical Innovations, Inc.2		11,100		209,901
Medtronic, Inc.		32,000		1,005,440
Sirona Dental Systems, Inc.1,2		14,500		152,250
Steris Corp.		10,300		246,067
Zimmer Holdings, Inc.2		52,500		2,122,050
				4,330,023
Health Care Providers & Services—2.7%
Aetna, Inc.		465,300		13,261,050
AMERIGROUP Corp.1,2		48,700		1,437,624
Brookdale Senior Living, Inc.1		38,300		213,714
Cardinal Health, Inc.		12,700		437,769
Catalyst Health Solutions, Inc.2		12,500		304,375
Centene Corp.2		51,500		1,015,065
Chemed Corp.		22,300		886,871
CIGNA Corp.		81,700		1,376,645
Community Health Systems, Inc.2		13,200		192,456
Coventry Health Care, Inc.2		46,000		684,480
Emergency Medical Services LP, Cl. A1,2		5,300		194,033
Health Net, Inc.2		78,000		849,420
Healthspring, Inc.2		23,000		459,310
Kindred Healthcare, Inc.2		31,200		406,224
LifePoint Hospitals, Inc.1,2		42,753		976,479
Lincare Holdings, Inc.1,2		29,100		783,663
Magellan Health Services, Inc.2		7,200		281,952
Molina Healthcare, Inc.1,2		5,200		91,572
Omnicare, Inc.		25,300		702,328
Owens & Minor, Inc.		5,200		195,780
Pediatrix Medical Group, Inc.2		13,800		437,460
PharMerica Corp.1,2		1,000		15,670
Universal American Corp.2		15,400		135,828
Universal Health Services, Inc., Cl. B		21,300		800,241
VCA Antech, Inc.2		1,200		23,856
WellCare Health Plans, Inc.2		23,300		299,638
WellPoint, Inc.2		307,600		12,959,188
				39,422,691
Health Care Technology—0.0%
Allscripts-Misys Healthcare Solutions, Inc.		11,700		116,064
IMS Health, Inc.		11,800		178,888
				294,952
Life Sciences Tools & Services—0.1%
Thermo Fisher Scientific, Inc.2		19,500		664,365
Varian, Inc.2		8,200		274,782
				939,147
Pharmaceuticals—4.9%
Abbott Laboratories		61,200		3,266,244
Eli Lilly & Co.1		172,500		6,946,575
Endo Pharmaceuticals Holdings, Inc.1,2		41,600		1,076,608
Forest Laboratories, Inc.2		71,160		1,812,445
Johnson & Johnson		376,706		22,538,320
K-V Pharmaceutical Co., Cl. A1,2		2,900		8,352

	Shares		Value
Pharmaceuticals Continued
King Pharmaceuticals, Inc.1,2		149,700	$	1,589,814
Medicis Pharmaceutical Corp., Cl. A1		72,000		1,000,800
Merck & Co., Inc.		317,900		9,664,160
Pfizer, Inc.		1,185,200		20,989,892
Sepracor, Inc.2		44,700		490,806
Warner Chilcott Ltd., Cl. A2		2,400		34,800
Watson Pharmaceuticals, Inc.2		29,700		789,129
Wyeth		34,125		1,280,029
				71,487,974
Industrials—14.1%
Aerospace & Defense—3.7%
BE Aerospace, Inc.2		82,800		636,732
Boeing Co.		155,700		6,643,719
Ceradyne, Inc.2		38,400		779,904
Cubic Corp.		8,500		231,200
DynCorp International, Inc., Cl. A2		1,500		22,755
Esterline Technologies Corp.2		32,500		1,231,425
General Dynamics Corp.		87,500		5,039,125
Goodrich Corp.		32,200		1,192,044
Honeywell International, Inc.		166,500		5,466,195
L-3 Communications Holdings, Inc.		52,900		3,902,962
Lockheed Martin Corp.		18,400		1,547,072
Northrop Grumman Corp.		250,700		11,291,528
Orbital Sciences Corp.2		19,500		380,835
Precision Castparts Corp.		47,400		2,819,352
Raytheon Co.		112,700		5,752,208
Spirit Aerosystems Holdings, Inc., Cl. A2		29,100		295,947
Triumph Group, Inc.		18,502		785,595
United Technologies Corp.		109,197		5,852,959
				53,871,557
Air Freight & Logistics—0.1%
Hub Group, Inc., Cl. A2		17,400		461,622
Pacer International, Inc.		9,700		101,171
UTi Worldwide, Inc.		17,200		246,648
				809,441
Airlines—0.3%
Alaska Air Group, Inc.2		16,800		491,400
Continental Airlines, Inc., Cl. B1,2		61,700		1,114,302
SkyWest, Inc.		41,500		771,900
UAL Corp.		87,600		965,352
US Airways Group, Inc.2		80,592		622,976
				3,965,930
Building Products—0.2%
Ameron International Corp.		700		44,044
Armstrong World Industries, Inc.		23,700		512,394
Lennox International, Inc.		34,600		1,117,234
Owens Corning, Inc.2		43,900		759,470
Simpson Manufacturing Co., Inc.		5,400		149,904
				2,583,046
Commercial Services & Supplies—1.3%
Administaff, Inc.		16,200		351,216
American Reprographics Co.2		4,200		28,980
Brink’s Co. (The)		20,000		537,600
Clean Harbors, Inc.2		6,000		380,640
Copart, Inc.2		18,600		505,734
Corporate Executive Board Co. (The)		18,900		416,934
CoStar Group, Inc.1,2		13,000		428,220
Deluxe Corp.		68,700		1,027,752
EnergySolutions, Inc.		2,600		14,690
Equifax, Inc.		37,800		1,002,456
First Advantage Corp., Cl. A2		4,394		62,175
HNI Corp.1		47,571		753,525
Interface, Inc., Cl. A		40,100		186,064
Korn-Ferry International2		60,900		695,478
M&F Worldwide Corp.2		1,000		15,450
Manpower, Inc.		34,300		1,165,857
Miller (Herman), Inc.		42,900		558,987
Monster Worldwide, Inc.1,2		109,700		1,326,273
MPS Group, Inc.1,2		124,800		939,744
Navigant Consulting, Inc.1,2		7,800		123,786
Pitney Bowes, Inc.		49,500		1,261,260
R.R. Donnelley & Sons Co.		73,100		992,698
Resources Connection, Inc.2		39,064		639,868
Robert Half International, Inc.		71,200		1,482,384
Steelcase, Inc., Cl. A		120,400		676,648
Sykes Enterprises, Inc.2		10,100		193,112
TrueBlue, Inc.2		21,800		208,626
United Stationers, Inc.2		8,800		294,712
Viad Corp.		5,200		128,648
Waste Management, Inc.		56,200		1,862,468
Watson Wyatt & Co. Holdings		21,100		1,009,002
				19,270,987

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Construction & Engineering—0.7%
Aecom Technology Corp.2		1,218	$	37,429
Chicago Bridge & Iron Co. NV		70,200		705,510
EMCOR Group, Inc.2		70,300		1,576,829
Fluor Corp.1		85,700		3,845,359
Granite Construction, Inc.		26,800		1,177,324
KBR, Inc.		19,100		290,320
MasTec, Inc.2		41,800		484,044
Perini Corp.2		52,100		1,218,098
Shaw Group, Inc. (The)2		29,500		603,865
				9,938,778
Electrical Equipment—1.1%
Acuity Brands, Inc.1		38,400		1,340,544
Baldor Electric Co.		60,900		1,087,065
Belden, Inc.		55,000		1,148,400
Brady Corp., Cl. A		12,400		296,980
Cooper Industries Ltd., Cl. A		22,700		663,521
Emerson Electric Co.		145,400		5,323,094
GrafTech International Ltd.2		152,400		1,267,968
Hubbell, Inc., Cl. B		22,500		735,300
Regal-Beloit Corp.1		5,200		197,548
Rockwell Automation, Inc.		35,300		1,138,072
Roper Industries, Inc.		9,700		421,077
Smith (A.O.) Corp.		21,600		637,632
Thomas & Betts Corp.2		35,700		857,514
Woodward Governor Co.		39,600		911,592
				16,026,307
Industrial Conglomerates—1.8%
3M Co.		77,200		4,442,088
Carlisle Cos., Inc.		4,800		99,360
General Electric Co.		1,278,500		20,711,700
McDermott International, Inc.2		14,700		145,236
Tyco International Ltd.		23,475		507,060
				25,905,444
Machinery—3.9%
Actuant Corp., Cl. A		22,900		435,558
AGCO Corp.2		5,400		127,386
Barnes Group, Inc.		15,400		223,300
Briggs & Stratton Corp.1		27,700		487,243
Bucyrus International, Inc., Cl. A		42,600		788,952
Caterpillar, Inc.		216,500		9,671,055
Chart Industries, Inc.2		9,900		105,237
CIRCOR International, Inc.		15,500		426,250
Crane Co.		35,500		612,020
Cummins, Inc.1		213,875		5,716,879
Deere & Co.		43,100		1,651,592
Dover Corp.		51,900		1,708,548
Eaton Corp.		2,200		109,362
EnPro Industries, Inc.2		22,652		487,924
Flowserve Corp.		4,500		231,750
Gardner Denver, Inc.2		49,985		1,166,650
Graco, Inc.		29,300		695,289
Harsco Corp.		39,100		1,082,288
IDEX Corp.		40,700		982,905
Illinois Tool Works, Inc.		122,800		4,304,140
Ingersoll-Rand Co. Ltd., Cl. A		243,500		4,224,725
Joy Global, Inc.		34,000		778,260
Kennametal, Inc.		66,200		1,468,978
Lincoln Electric Holdings, Inc.1		22,300		1,135,739
Manitowoc Co., Inc. (The)		106,500		922,290
Mueller Industries, Inc.		34,400		862,752
Mueller Water Products, Inc., Cl. A1		58,900		494,760
Navistar International Corp.2		23,100		493,878
Nordson Corp.1		23,700		765,273
Oshkosh Corp.		80,300		713,867
Parker-Hannifin Corp.		203,800		8,669,652
Robbins & Myers, Inc.		35,200		569,184
Sauer-Danfoss, Inc.		1,700		14,875
Terex Corp.2		26,200		453,784
Timken Co.		76,600		1,503,658
Titan International, Inc.1		40,800		336,600
Toro Co. (The)1		36,600		1,207,800
Trinity Industries, Inc.1		59,900		944,024
Wabtec Corp.		1,700		67,575
Watts Water Technologies, Inc., Cl. A1		29,000		724,130
				57,366,132
Marine—0.1%
Alexander & Baldwin, Inc.1		12,900		323,274
Excel Maritime Carriers Ltd.1		6,700		47,168
Genco Shipping & Trading Ltd.1		34,300		507,640
Kirby Corp.2		7,600		207,936
TBS International Ltd., Cl. A1,2		1,600		16,048
				1,102,066
Road & Rail—0.6%
Amerco1,2		1,600		55,248
Arkansas Best Corp.1		35,100		1,056,861

	Shares		Value
Road & Rail Continued
Avis Budget Group, Inc.2		52,800	$	36,960
CSX Corp.		37,700		1,224,119
Heartland Express, Inc.		18,500		291,560
Hertz Global Holdings, Inc.1,2		139,800		708,786
Norfolk Southern Corp.1		108,800		5,119,040
Old Dominion Freight Line, Inc.2		1,200		34,152
Ryder Systems, Inc.		2,400		93,072
Werner Enterprises, Inc.		54,700		948,498
YRC Worldwide, Inc.1,2		28,300		81,221
				9,649,517
Trading Companies & Distributors—0.3%
Applied Industrial Technologies, Inc.		27,900		527,868
GATX Corp.		12,700		393,319
MSC Industrial Direct Co., Inc., Cl. A1		26,800		987,044
RSC Holdings, Inc.2		10,700		91,164
Textainer Group Holdings Ltd.		5,200		55,120
United Rentals, Inc.1,2		100,412		915,757
Watsco, Inc.1		12,900		495,360
WESCO International, Inc.2		56,900		1,094,187
				4,559,819
Information Technology—22.8%
Communications Equipment—3.2%
3Com Corp.2		227,800		519,384
ADTRAN, Inc.		54,700		813,936
Avocent Corp.2		57,000		1,020,870
Brocade Communications Systems, Inc.2		315,100		882,280
Ciena Corp.1,2		93,300		625,110
Cisco Systems, Inc.2		1,400,100		22,821,630
CommScope, Inc.2		68,500		1,064,490
Comtech Telecommunications Corp.2		6,700		306,994
Corning, Inc.		210,300		2,004,159
EchoStar Holding Corp.1,2		31,660		470,784
Emulex Corp.2		128,200		894,836
F5 Networks, Inc.2		66,900		1,529,334
Harris Corp.		33,600		1,278,480
InterDigital, Inc.2		37,600		1,034,000
JDS Uniphase Corp.2		293,700		1,072,005
Plantronics, Inc.		69,400		916,080
Polycom, Inc.1,2		49,700		671,447
QUALCOMM, Inc.		183,800		6,585,554
Sonus Networks, Inc.2		4,400		6,952
Starent Networks Corp.2		6,700		79,931
Tekelec, Inc.2		50,700		676,338
Tellabs, Inc.2		322,300		1,327,876
ViaSat, Inc.2		3,800		91,504
				46,693,974
Computers & Peripherals—5.0%
Apple, Inc.2		98,300		8,389,905
Avid Technology, Inc.2		15,700		171,287
Dell, Inc.2		80,900		828,416
Electronics for Imaging, Inc.2		22,300		213,188
EMC Corp.2		309,400		3,239,418
Hewlett-Packard Co.		670,700		24,339,703
Intermec, Inc.2		18,800		249,664
International Business Machines Corp.		295,500		24,869,280
Lexmark International, Inc., Cl. A1,2		48,300		1,299,270
NCR Corp.2		75,300		1,064,742
NetApp, Inc.2		46,300		646,811
QLogic Corp.2		114,000		1,532,160
SanDisk Corp.2		90,800		871,680
Seagate Technology		426,600		1,889,838
Sun Microsystems, Inc.2		236,300		902,666
Synaptics, Inc.1,2		44,500		736,920
Teradata Corp.2		52,900		784,507
Western Digital Corp.2		76,300		873,635
				72,903,090
Electronic Equipment & Instruments—1.2%
Agilent Technologies, Inc.2		117,400		1,834,962
Amphenol Corp., Cl. A		34,700		832,106
Anixter International, Inc.1,2		26,100		786,132
Arrow Electronics, Inc.2		60,800		1,145,472
Avnet, Inc.2		67,200		1,223,712
AVX Corp.		28,200		223,908
Benchmark Electronics, Inc.2		83,200		1,062,464
Cogent, Inc.1,2		35,400		480,378
Cognex Corp.		11,500		170,200
Coherent, Inc.2		15,367		329,776
Dolby Laboratories, Inc., Cl. A2		23,300		763,308
Ingram Micro, Inc., Cl. A2		92,000		1,231,880
Itron, Inc.1,2		9,300		592,782
Jabil Circuit, Inc.		125,500		847,125
L-1 Identity Solutions, Inc.2		10,000		67,400
Littlefuse, Inc.2		500		8,300
Molex, Inc.		73,100		1,059,219

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Electronic Equipment & Instruments Continued
MTS Systems Corp.		1,200	$	31,968
National Instruments Corp.		29,100		708,876
Plexus Corp.2		19,500		330,525
Rofin-Sinar Technologies, Inc.2		12,100		249,018
ScanSource, Inc.2		2,800		53,956
SYNNEX Corp.1,2		14,100		159,753
Tech Data Corp.2		18,975		338,514
Technitrol, Inc.		5,700		19,836
Trimble Navigation Ltd.2		53,800		1,162,618
Tyco Electronics Ltd.		78,200		1,267,622
Vishay Intertechnology, Inc.2		190,100		650,142
				17,631,952
Internet Software & Services—0.9%
Akamai Technologies, Inc.1,2		67,100		1,012,539
Digital River, Inc.2		43,200		1,071,360
EarthLink, Inc.2		95,900		648,284
eBay, Inc.2		162,700		2,271,292
Google, Inc., Cl. A2		12,500		3,845,625
IAC/InterActiveCorp2		1,325		20,842
j2 Global Communications, Inc.1,2		57,800		1,158,312
Open Text Corp.1,2		22,400		674,912
RealNetworks, Inc.2		8,500		30,005
Sohu.com, Inc.2		16,200		766,908
ValueClick, Inc.2		94,900		649,116
VeriSign, Inc.2		51,400		980,712
VistaPrint Ltd.1,2		12,500		232,625
WebMD Health Corp., Cl. A2		300		7,077
				13,369,609
IT Services—0.9%
Acxiom Corp.		87,900		712,869
Affiliated Computer Services, Inc., Cl. A2		5,200		238,940
Broadridge Financial Solutions, Inc.		69,400		870,276
Computer Sciences Corp.1,2		44,900		1,577,786
Convergys Corp.2		155,100		994,191
CSG Systems International, Inc.2		25,300		441,991
DST Systems, Inc.1,2		18,200		691,236
Euronet Worldwide, Inc.1,2		1,100		12,771
Fidelity National Information Services, Inc.		24,600		400,242
Gartner, Inc.1,2		37,600		670,408
Heartland Payment Systems, Inc.1		6,700		117,250
Hewitt Associates, Inc.2		28,700		814,506
NeuStar, Inc., Cl. A2		38,400		734,592
Perot Systems Corp., Cl. A2		68,900		941,863
Sapient Corp.2		85,100		377,844
Syntel, Inc.		3,500		80,920
TeleTech Holdings, Inc.2		47,100		393,285
Total System Services, Inc.		60,500		847,000
Unisys Corp.2		110,400		93,840
Western Union Co.		161,800		2,320,212
				13,332,022
Office Electronics—0.7%
Xerox Corp.		1,147,200		9,143,184
Zebra Technologies Corp., Cl. A2		50,200		1,017,052
				10,160,236
Semiconductors & Semiconductor Equipment—5.0%
Advanced Micro Devices, Inc.1,2		21,600		46,656
Altera Corp.1		103,800		1,734,498
Amkor Technology, Inc.2		197,172		429,835
Analog Devices, Inc.		81,300		1,546,326
Applied Materials, Inc.		886,100		8,976,193
Atheros Communications, Inc.1,2		48,900		699,759
Atmel Corp.2		167,700		524,901
Broadcom Corp., Cl. A2		109,700		1,861,609
Cabot Microelectronics Corp.1,2		13,300		346,731
Cymer, Inc.2		24,276		531,887
Entegris, Inc.2		31,300		68,547
Fairchild Semiconductor International, Inc., Cl. A2		163,200		798,048
FEI Co.2		7,500		141,450
Integrated Device Technology, Inc.2		189,200		1,061,412
Intel Corp.		1,632,500		23,932,450
International Rectifier Corp.2		30,100		406,350
Intersil Corp., Cl. A		97,600		896,944
KLA-Tencor Corp.		56,600		1,233,314
LSI Corp.2		303,600		998,844
Marvell Technology Group Ltd.2		161,600		1,077,872
MEMC Electronic Materials, Inc.2		70,900		1,012,452
Microsemi Corp.2		18,100		228,784
MKS Instruments, Inc.2		60,400		893,316
National Semiconductor Corp.		70,500		709,935
Novellus Systems, Inc.2		80,200		989,668
NVIDIA Corp.2		137,800		1,112,046
ON Semiconductor Corp.2		72,800		247,520
PMC-Sierra, Inc.2		167,600		814,536
Power Integrations, Inc.		4,200		83,496

	Shares		Value
Semiconductors & Semiconductor Equipment Continued
RF Micro Devices, Inc.2		76,800	$	59,904
Semtech Corp.2		81,700		920,759
Silicon Laboratories, Inc.1,2		43,600		1,080,408
Skyworks Solutions, Inc.1,2		82,900		459,266
Teradyne, Inc.2		237,100		1,000,562
Tessera Technologies, Inc.2		18,500		219,780
Texas Instruments, Inc.		861,700		13,373,584
Varian Semiconductor Equipment Associates, Inc.2		33,500		607,020
Verigy Ltd.2		39,000		375,180
Xilinx, Inc.		70,200		1,250,964
				72,752,806
Software—5.9%
Adobe Systems, Inc.2		25,400		540,766
Advent Software, Inc.1,2		3,300		65,901
Amdocs Ltd.2		71,200		1,302,248
Ansys, Inc.2		24,900		694,461
Autodesk, Inc.2		67,900		1,334,235
Blackbaud, Inc.		600		8,100
BMC Software, Inc.2		18,400		495,144
CA, Inc.1		181,900		3,370,607
Cadence Design Systems, Inc.2		210,700		771,162
Check Point Software Technologies Ltd.2		30,000		569,700
Citrix Systems, Inc.2		47,500		1,119,575
Compuware Corp.2		180,500		1,218,375
Concur Technologies, Inc.1,2		11,700		383,994
FactSet Research Systems, Inc.1		18,800		831,712
Fair Isaac Corp.		65,100		1,097,586
Henry (Jack) & Associates, Inc.		23,600		458,076
Informatica Corp.2		34,300		470,939
Lawson Software, Inc.2		48,800		231,312
Mentor Graphics Corp.2		37,100		191,807
MICROS Systems, Inc.2		33,400		545,088
Microsoft Corp.		1,673,700		32,536,728
MicroStrategy, Inc., Cl. A2		2,200		81,686
Net 1 UEPS Technologies, Inc.2		35,900		491,830
Nuance Communications, Inc.2		79,200		820,512
Oracle Corp.2		813,267		14,419,224
Parametric Technology Corp.2		88,400		1,118,260
Progress Software Corp.2		18,100		348,606
Quest Software, Inc.2		66,200		833,458
Solera Holdings, Inc.2		12,300		296,430
Sybase, Inc.2		50,000		1,238,500
Symantec Corp.1,2		1,007,800		13,625,456
Synopsys, Inc.2		61,500		1,138,980
Take-Two Interactive Software, Inc.		65,800		497,448
THQ, Inc.2		15,900		66,621
TIBCO Software, Inc.2		218,400		1,133,496
Wind River Systems, Inc.2		76,700		692,601
				85,040,624
Materials—5.5%
Chemicals—1.7%
Air Products & Chemicals, Inc.		8,900		447,403
Ashland, Inc.		90,258		948,612
Cabot Corp.		8,000		122,400
Celanese Corp., Series A		52,500		652,575
CF Industries Holdings, Inc.		18,700		919,292
Chemtura Corp.		161,700		226,380
Cytec Industries, Inc.		25,100		532,622
Dow Chemical Co. (The)		66,500		1,003,485
E.I. du Pont de Nemours & Co.		27,900		705,870
Eastman Chemical Co.		23,000		729,330
Ferro Corp.		28,200		198,810
Fuller (H.B.) Co.		46,600		750,726
Koppers Holdings, Inc.		9,300		201,066
Minerals Technologies, Inc.		15,800		646,220
Monsanto Co.		67,700		4,762,695
Mosaic Co. (The)		197,900		6,847,340
Nalco Holding Co.1		51,600		595,464
NewMarket Corp.		10,000		349,100
NOVA Chemicals Corp.		56,200		268,074
Olin Corp.		28,700		518,896
OM Group, Inc.2		1,200		25,332
Rockwood Holdings, Inc.2		24,000		259,200
RPM International, Inc.		56,000		744,240
Scotts Miracle-Gro Co. (The), Cl. A		15,700		466,604
Terra Industries, Inc.		55,300		921,851
Valhi, Inc.1		3,000		32,100
Valspar Corp. (The)		42,000		759,780
W.R. Grace & Co.2		6,400		38,208
Westlake Chemical Corp.1		20,200		329,058
				25,002,733
Containers & Packaging—0.4%
Owens-Illinois, Inc.2		53,800		1,470,354
Packaging Corp. of America		25,700		345,922
Rock-Tenn Co., Cl. A		17,900		611,822
Sealed Air Corp.		64,900		969,606

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Containers & Packaging Continued
Smurfit-Stone Container Corp.2		123,300	$	31,442
Sonoco Products Co.		43,000		995,880
Temple-Inland, Inc.1		161,300		774,240
				5,199,266
Metals & Mining—3.2%
AK Steel Holding Corp.		112,900		1,052,228
Alcoa, Inc.1		714,800		8,048,648
Allegheny Technologies, Inc.		34,200		873,126
Carpenter Technology Corp.		56,600		1,162,564
Century Aluminum Co.1,2		62,200		622,000
Commercial Metals Co.		77,400		918,738
Compass Minerals International, Inc.		4,900		287,434
Freeport-McMoRan Copper & Gold, Inc., Cl. B1		292,900		7,158,476
Kaiser Aluminum Corp.		9,000		202,680
Nucor Corp.		239,000		11,041,800
Olympic Steel, Inc.		2,500		50,925
Reliance Steel & Aluminum Co.		43,200		861,408
RTI International Metals, Inc.1,2		1,700		24,327
Schnitzer Steel Industries, Inc.1		32,600		1,227,390
Southern Copper Corp.1		669,500		10,752,170
United States Steel Corp.		39,600		1,473,120
Worthington Industries, Inc.1		47,400		522,348
				46,279,382
Paper & Forest Products—0.2%
Domtar Corp.2		369,000		616,230
International Paper Co.		148,900		1,757,020
Louisiana-Pacific Corp.		28,900		45,084
MeadWestvaco Corp.		31,100		348,009
				2,766,343
Telecommunication Services—3.3%
Diversified Telecommunication Services—2.9%
AT&T, Inc.		866,128		24,684,648
Cincinnati Bell, Inc.2		108,300		209,019
Embarq Corp.		50,200		1,805,192
Global Crossing Ltd.2		7,800		61,932
NTELOS Holdings Corp.		25,000		616,500
Premiere Global Services, Inc.2		30,500		262,605
Qwest Communications International, Inc.1		375,200		1,365,728
tw telecom, Inc.2		107,800		913,066
Verizon Communications, Inc.		334,656		11,344,838
Windstream Corp.		122,100		1,123,320
				42,386,848
Wireless Telecommunication Services—0.4%
Centennial Communications Corp.2		35,800		288,548
NII Holdings, Inc.2		44,500		809,010
Sprint Nextel Corp.2		951,023		1,740,372
Syniverse Holdings, Inc.2		49,000		585,060
Telephone & Data Systems, Inc.		42,300		1,343,025
United States Cellular Corp.2		16,800		726,432
				5,492,447
Utilities—0.6%
Electric Utilities—0.3%
Duke Energy Corp.		269,500		4,045,195
UniSource Energy Corp.		17,400		510,864
				4,556,059
Energy Traders—0.1%
Mirant Corp.2		40,900		771,783
Reliant Energy, Inc.2		104,400		603,432
				1,375,215
Gas Utilities—0.1%
Laclede Group, Inc. (The)		10,900		510,556
South Jersey Industries, Inc.		300		11,955
Southwest Gas Corp.		9,700		244,634
WGL Holdings, Inc.		10,900		356,321
				1,123,466
Multi-Utilities—0.1%
Avista Corp.		37,000		717,060
CH Energy Group, Inc.		2,700		138,753
Integrys Energy Group, Inc.		8,100		348,139
				1,203,952
Total Common Stocks (Cost $1,817,887,648)				1,441,273,187
Other Securities—0.0%
Seagate Technology International, Inc.2,3,4 (Cost $0)		31,000		3,100
Preferred Stocks—0.0%
Wachovia Corp., Dividend Equalization Preferred Shares2,3 (Cost $0)		6,000		8
	Units
Rights, Warrants and Certificates—0.0%
Dime Bancorp, Inc. Wts., Strike Price $1, Exp. 1/2/102		31,900		638
Progress Energy, Inc., Contingent Value Obligation2,3		32,000		10,560
Total Rights, Warrants and Certificates (Cost $0)				11,198

	Shares			Value
Investment Company—0.5%
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%5,6 (Cost $7,043,996)		7,043,996		$	7,043,996
Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $1,824,931,644)					1,448,331,489
	Principal
	Amount/Shares
Investments Purchased with Cash Collateral from Securities Loaned—7.2%7
ANZ National (Int’l) Ltd., 0.34%, 3/6/09	$	4,000,000			3,999,064
CAM US Finance SA Unipersonal, 3.24%, 2/2/09		4,500,000			4,493,547
CC USA, Inc., 0.35%, 2/13/09		1,500,000			1,492,944
GSAA Home Equity Trust, Series 2005-15, Cl. 2A1, 0.56%, 1/26/09		510,456			451,277
OFI Liquid Assets Fund, LLC, 1.71% 5,6		93,229,008			93,229,008
Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $103,739,160)					103,665,840
Total Investments, at Value (Cost $1,928,670,804)		106.9	%		1,551,997,329
Liabilities in Excess of Other Assets		(6.9	)		(99,534,290	)
Net Assets		100.0	%	$	1,452,463,039

Industry classifications are unaudited.

Footnotes to Statement of Investments
1.	Partial or fully-loaned security. See Note 6 of accompanying Notes.
2.	Non-income producing security.
3.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2008 was $13,668, which represents less than 0.005% of the Fund’s net assets. See Note 5 of accompanying Notes.
4.	Escrow shares received as the result of issuer reorganization.
5.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
OFI Liquid Assets Fund, LLC		—		880,960,875		787,731,867		93,229,008
Oppenheimer Institutional Money Market Fund, Cl. E		15,628,720		535,769,480		544,354,204		7,043,996
					Value		Income
OFI Liquid Assets Fund, LLC					$	93,229,008	$	855,830	a
Oppenheimer Institutional Money Market Fund, Cl. E						7,043,996		363,249
					$	100,273,004	$	1,219,079

a.	Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.
6.	Rate shown is the 7-day yield as of December 31, 2008.
7.	The security/securities have been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 6 of accompanying Notes.

STATEMENT OF INVESTMENTS Continued

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments in		Other Financial
Valuation Description	Securities		Instruments*
Level 1—Quoted Prices	$	1,541,546,199	$	—
Level 2—Other Significant Observable Inputs		10,451,130		—
Level 3—Significant Unobservable Inputs		—		—
Total	$	1,551,997,329	$	—

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $1,828,397,800)	$	1,451,724,325
Affiliated companies (cost $100,273,004)		100,273,004
		1,551,997,329
Cash		1,934,570
Receivables and other assets:
Dividends		2,240,977
Investments sold		1,155,974
Due from Manager		19
Other		236,560
Total assets		1,557,565,429
Liabilities
Return of collateral for securities loaned		103,600,720
Payables and other liabilities:
Shares of beneficial interest redeemed		721,396
Distribution and service plan fees		597,492
Shareholder communications		86,063
Investments purchased		32,123
Trustees’ compensation		13,276
Transfer and shareholder servicing agent fees		1,720
Other		49,600
Total liabilities		105,102,390
Net Assets	$	1,452,463,039
Composition of Net Assets
Par value of shares of beneficial interest	$	100,405
Additional paid-in capital		2,086,211,841
Accumulated net investment income		24,769,636
Accumulated net realized loss on investments		(281,945,368	)
Net unrealized depreciation on investments		(376,673,475	)
Net Assets	$	1,452,463,039
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $432,360,158 and 29,686,094 shares of beneficial interest outstanding)	$	14.56
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $1,020,102,881 and 70,718,803 shares of beneficial interest outstanding)	$	14.42

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $2,950)	$	38,981,517
Affiliated companies		363,249
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		527,756
Affiliated companies		855,830
Interest		26,476
Total investment income		40,754,828
Expenses
Management fees		12,491,552
Distribution and service plan fees—Service shares		3,174,088
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,994
Shareholder communications:
Non-Service shares		53,996
Service shares		112,985
Trustees’ compensation		46,079
Custodian fees and expenses		11,848
Other		83,054
Total expenses		15,993,590
Less reduction to custodian expenses		(857	)
Less waivers and reimbursements of expenses		(11,091	)
Net expenses		15,981,642
Net Investment Income		24,773,186
Realized and Unrealized Loss
Net realized loss on investments from unaffiliated companies		(267,651,680	)
Net change in unrealized depreciation on investments		(632,729,270	)
Net Decrease in Net Assets Resulting from Operations	$	(875,607,764	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	24,773,186		$	26,378,059
Net realized gain (loss)		(267,651,680	)		194,658,587
Net change in unrealized appreciation (depreciation)		(632,729,270	)		(129,622,213	)
Net increase (decrease) in net assets resulting from operations		(875,607,764	)		91,414,433
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(10,725,797	)		(10,356,753	)
Service shares		(15,635,174	)		(9,852,371	)
		(26,360,971	)		(20,209,124	)
Distributions from net realized gain:
Non-Service shares		(46,604,473	)		—
Service shares		(82,181,746	)		—
		(128,786,219	)		—
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(112,358,225	)		(175,658,859	)
Service shares		223,159,438			331,431,603
		110,801,213			155,772,744
Net Assets
Total increase (decrease)		(919,953,741	)		226,978,053
Beginning of period		2,372,416,780			2,145,438,727
End of period (including accumulated net investment income of $24,769,636 and $26,296,748, respectively)	$	1,452,463,039		$	2,372,416,780

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	25.61		$	24.78		$	21.79		$	20.84		$	19.20
Income (loss) from investment operations:
Net investment income1		.29			.33			.27			.26			.27
Net realized and unrealized gain (Loss)		(9.64	)		.75			2.98			.97			1.53
Total from investment operations		(9.35	)		1.08			3.25			1.23			1.80
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.32	)		(.25	)		(.26	)		(.28	)		(.16	)
Distributions from net realized gain		(1.38	)		—			—			—			—
Total dividends and/or distributions to shareholders		(1.70	)		(.25	)		(.26	)		(.28	)		(.16	)
Net asset value, end of period	$	14.56		$	25.61		$	24.78		$	21.79		$	20.84
Total Return, at Net Asset Value2		(38.47	)%		4.43	%		15.03	%		5.98	%		9.46	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	432,360		$	907,727		$	1,046,146		$	1,121,476		$	1,238,948
Average net assets (in thousands)	$	670,994		$	1,006,655		$	1,054,522		$	1,156,299		$	1,216,081
Ratios to average net assets:3
Net investment income		1.42	%		1.28	%		1.19	%		1.26	%		1.39	%
Total expenses		0.66	%4,5,6		0.65	%4,5,6		0.66	%4,5		0.67	%6		0.67	%6
Portfolio turnover rate		132	%		111	%		100	%		88	%		82	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.66	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

5.	Waiver or reimbursement of indirect management fees less than 0.005%.
6.	Reduction to custodian expenses less than 0.005%.

See accompanying Notes to Financial Statements.

Service Shares    Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	25.38		$	24.58		$	21.63		$	20.70		$	19.10
Income (loss) from investment operations:
Net investment income1		.24			.26			.22			.21			.25
Net realized and unrealized gain (loss)		(9.56	)		.75			2.95			.96			1.49
Total from investment operations		(9.32	)		1.01			3.17			1.17			1.74
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.26	)		(.21	)		(.22	)		(.24	)		(.14	)
Distributions from net realized gain		(1.38	)		—			—			—			—
Total dividends and/or distributions to shareholders		(1.64	)		(.21	)		(.22	)		(.24	)		(.14	)
Net asset value, end of period	$	14.42		$	25.38		$	24.58		$	21.63		$	20.70
Total Return, at Net Asset Value2		(38.63	)%		4.15	%		14.76	%		5.74	%		9.15	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,020,103		$	1,464,690		$	1,099,293		$	598,348		$	372,845
Average net assets (in thousands)	$	1,268,430		$	1,315,488		$	810,181		$	462,272		$	262,660
Ratios to average net assets:3
Net investment income		1.20	%		1.03	%		0.95	%		1.02	%		1.30	%
Total expenses		0.91	%4,5,6		0.90	%4,5,6		0.91	%4,5		0.91	%6		0.92	%6
Portfolio turnover rate		132	%		111	%		100	%		88	%		82	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.90	%
Year Ended December 31, 2006	0.91	%

5.	Waiver or reimbursement of indirect management fees less than 0.005%.
6.	Reduction to custodian expenses less than 0.005%.

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Main Street Fund/VA (the “Fund”), is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek high total return. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

     In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments in OFI Liquid Assets Fund, LLC. The Fund is permitted to invest cash collateral received in connection with its securities lending activities. Pursuant to the Fund’s Securities Lending Procedures, the Fund may invest cash collateral in, among other investments, an affiliated money market fund. OFI Liquid Assets Fund, LLC (“LAF”) is a limited liability company whose investment objective is to seek current income and stability of principal. The Manager is also the investment adviser of LAF. LAF is not registered under the Investment Company Act of 1940. However, LAF does comply with the investment restrictions applicable to registered money market funds set forth in Rule 2a-7 adopted under the Investment Company Act. The Fund’s investment in LAF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation
					Based on Cost
Undistributed	Undistributed		Accumulated		of Securities and Other
Net Investment	Long-Term		Loss		Investments for Federal
Income	Gain		Carryforward1,2,3,4		Income Tax Purposes
$24,782,907	$	—	$	248,263,528	$	410,355,317

1. As of December 31, 2008, the Fund had $217,993,206 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2008, details of the capital loss carryforward were as follows:

Expiring
2016	$	217,993,206

2.	As of December 31, 2008, the Fund had $30,270,322 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
3.	During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.
4.	During the fiscal year ended December 31, 2007, the Fund utilized $51,195,980 of capital loss carryforward to offset capital gains realized in that fiscal year.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Increase
Increase	to Accumulated
to Accumulated	Net Realized Loss
Net Investment Income	on Investments
|
$60,673	$	60,673

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	48,772,351	$	20,209,124
Long-term capital gain		106,374,839		—
Total	$	155,147,190	$	20,209,124

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	1,962,352,646
Federal tax cost of other investments		(69,838	)
Total federal tax cost	$	1,962,282,808
Gross unrealized appreciation	$	98,174,535
Gross unrealized depreciation		(508,529,852	)
Net unrealized depreciation	$	(410,355,317	)

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		4,118,231		$	80,935,200			2,948,386		$	76,016,214
Dividends and/or distributions reinvested		2,774,941			57,330,270			425,853			10,356,753
Redeemed		(12,645,946	)		(250,623,695	)		(10,151,162	)		(262,031,826	)
Net decrease		(5,752,774	)	$	(112,358,225	)		(6,776,923	)	$	(175,658,859	)
Service Shares
Sold		17,273,881		$	299,271,029			18,707,352		$	478,137,931
Dividends and/or distributions reinvested		4,768,240			97,748,917			407,708			9,846,137
Redeemed		(9,024,762	)		(173,860,508	)		(6,139,866	)		(156,552,465	)
Net increase		13,017,359		$	223,159,438			12,975,194		$	331,431,603

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	2,588,552,424	$	2,601,405,624

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $20,065 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $11,091 for IMMF management fees.

5. Illiquid Securities

As of December 31, 2008, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

6. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand. As of December 31, 2008, the Fund had on loan securities valued at $103,659,542. Collateral of $103,600,720 was received for the loans, all of which was received in cash and subsequently invested in approved instruments or held as cash.

NOTES TO FINANCIAL STATEMENTS Continued

7. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

8. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.   

  Conclusions. These factors were also considered by the independent Trustees meeting separately from the full Board, assisted by experienced counsel to the Fund and to the independent Trustees. Fund counsel and the independent Trustees’ counsel are independent of the Manager within the meaning and intent of the Securities and Exchange Commission Rules.

     Based on its review of the information it received and its evaluations described above, the Board, including a majority of the independent Trustees, decided to continue the Agreement for another year. In arriving at this decision, the Board did not single out any factor or factors as being more important than others, but considered all of the above information, and considered the terms and conditions of the Agreement, including the management fee, in light of all of the surrounding circumstances.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Main Street Small Cap Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Main Street Small Cap Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Shares		Value
Common Stocks—98.2%
Consumer Discretionary—16.3%
Auto Components—1.0%
American Axle & Manufacturing Holdings, Inc.1		137,800	$	398,242
Amerigon, Inc.1,2		2,800		9,128
ArvinMeritor, Inc.1		140,271		399,772
Autoliv, Inc.		57,800		1,240,388
Cooper Tire & Rubber Co.		116,476		717,492
Drew Industries, Inc.2		34,800		417,600
Exide Technologies2		42,200		223,238
Fuel Systems Solutions, Inc.2		579		18,968
Goodyear Tire & Rubber Co. (The)2		30,500		182,085
Hayes Lemmerz International, Inc.2		7,500		3,375
Lear Corp.2		146,400		206,424
Modine Manufacturing Co.		28,374		138,181
Shiloh Industries, Inc.		2,700		8,100
Stoneridge, Inc.2		44,487		202,861
Superior Industries International, Inc.1		32,100		337,692
Tenneco, Inc.1,2		145,900		430,405
TRW Automotive Holdings Corp.2		168,600		606,960
Visteon Corp.2		15,700		5,495
WABCO Holdings, Inc.		42,500		671,075
				6,217,481
Automobiles—0.2%
Thor Industries, Inc.1		66,000		869,880
Winnebago Industries, Inc.		31,500		189,945
				1,059,825
Distributors—0.0%
Core-Mark Holding Co., Inc.2		4,900		105,448
Diversified Consumer Services—0.6%
Career Education Corp.1,2		41,700		748,098
Coinstar, Inc.2		3,000		58,530
Noah Education Holdings Ltd., ADR1		19,500		61,425
Pre-Paid Legal Services, Inc.1,2		7,105		264,945
Regis Corp.		66,800		970,604
Service Corp. International		38,600		191,842
Steiner Leisure Ltd.2		23,738		700,746
Stewart Enterprises, Inc.1		97,800		294,378
Universal Technical Institute, Inc.2		19,400		333,098
				3,623,666
Hotels, Restaurants & Leisure—2.5%
AFC Enterprises, Inc.2		5,200		24,388
Ameristar Casinos, Inc.1		19,900		171,936
Bally Technologies, Inc.2		15,400		370,062
BJ’s Restaurants, Inc.2		9,100		98,007
Bob Evans Farms, Inc.		69,014		1,409,956
Boyd Gaming Corp.1		115,617		546,868
Brinker International, Inc.1		110,920		1,169,097
California Pizza Kitchen, Inc.2		39,200		420,224
CEC Entertainment, Inc.2		53,070		1,286,948
Cheesecake Factory, Inc. (The)2		37,042		374,124
Churchill Downs, Inc.		4,100		165,722
CKE Restaurants, Inc.		74,000		642,320
Cracker Barrel Old Country Store, Inc.1		41,550		855,515
Denny’s Corp.2		186,300		370,737
DineEquity, Inc.1		13,400		154,904
Domino’s Pizza, Inc.2		6,200		29,202
Dover Downs Gaming & Entertainment, Inc.		2,100		6,678
International Speedway Corp., Cl. A		21,200		609,076
Interval Leisure Group, Inc.2		14,720		79,341
Isle of Capri Casinos, Inc.1,2		16,500		52,800
Jack in the Box, Inc.2		46,000		1,016,140
Krispy Kreme Doughnuts, Inc.1,2		57,700		96,936
Life Time Fitness, Inc.1,2		16,821		217,832
Marcus Corp. (The)		19,500		316,485
Morgans Hotel Group Co.2		3,500		16,310
O’Charley’s, Inc.		5,400		10,800
Orient-Express Hotel Ltd., Cl. A1		25,600		196,096
Panera Bread Co., Cl. A1,2		14,800		773,152
Peet’s Coffee & Tea, Inc.2		3,900		90,675
Pinnacle Entertainment, Inc.1,2		36,100		277,248
Red Robin Gourmet Burgers, Inc.2		16,500		277,695
Riviera Holdings Corp.2		700		2,100
Ruby Tuesday, Inc.2		52,000		81,120
Shuffle Master, Inc.2		20,096		99,676
Sonic Corp.2		13,600		165,512
Speedway Motorsports, Inc.		25,479		410,467
Steak n Shake Co. (The)1,2		20,800		123,760
Town Sports International Holdings, Inc.2		9,300		29,667
Vail Resorts, Inc.1,2		19,500		518,700
WMS Industries, Inc.1,2		49,314		1,326,547
Wyndham Worldwide Corp.		72,643		475,812
				15,360,635
Household Durables—1.6%
American Greetings Corp., Cl. A1		99,355		752,117
Beazer Homes USA, Inc.2		78,000		123,240

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Household Durables Continued
Blyth, Inc.		66,080	$	518,067
Brookfield Homes Corp.		3,300		14,256
Cavco Industries, Inc.1,2		3,900		104,871
Centex Corp.1		43,000		457,520
Champion Enterprises, Inc.2		132,900		74,424
CSS Industries, Inc.1		12,350		219,089
Ethan Allen Interiors, Inc.1		26,800		385,116
Furniture Brands International, Inc.1		81,300		179,673
Harman International Industries, Inc.		46,700		781,291
Helen of Troy Ltd.2		44,710		776,166
Hooker Furniture Corp.1		20,210		154,809
Hovnanian Enterprises, Inc., Cl. A1,2		164,798		283,453
Jarden Corp.2		10,300		118,450
KB Home1		31,200		424,944
La-Z-Boy, Inc.1		98,749		214,285
Lennar Corp., Cl. A1		123,900		1,074,213
M/I Homes, Inc.		29,836		314,471
MDC Holdings, Inc.		3,600		109,080
Meritage Homes Corp.2		44,400		540,348
National Presto Industries, Inc.		8,100		623,700
Palm Harbor Homes, Inc.1,2		6,600		32,868
Ryland Group, Inc. (The)1		49,900		881,733
Sealy Corp.		59,220		148,642
Standard Pacific Corp.2		27,900		49,662
Tempur-Pedic International, Inc.1		75,500		535,295
Universal Electronics, Inc.2		300		4,866
				9,896,649
Internet & Catalog Retail—0.9%
1-800-FLOWERS.com, Inc.2		68,600		262,052
Bidz.com, Inc.1,2		4,100		18,860
Blue Nile, Inc.1,2		10,400		254,696
Expedia, Inc.2		43,400		357,616
Gaiam, Inc.2		8,300		38,346
HSN, Inc.2		13,420		97,563
Liberty Media Corp.-Interactive, Series A2		71,700		223,704
NetFlix.com, Inc.1,2		57,700		1,724,653
NutriSystem, Inc.1		51,050		744,820
Orbitz Worldwide, Inc.2		32,500		126,100
Overstock.com, Inc.2		25,789		278,005
PetMed Express, Inc.1,2		32,800		578,264
Priceline.com, Inc.1,2		2,700		198,855
Shutterfly, Inc.2		9,300		65,007
Stamps.com, Inc.2		36,083		354,696
Ticketmaster Entertainment, Inc.2		20,220		129,812
				5,453,049
Leisure Equipment & Products—0.8%
Brunswick Corp.1		230,000		968,300
Callaway Golf Co.1		165,300		1,535,637
JAKKS Pacific, Inc.1,2		40,700		839,641
Leapfrog Enterprises, Inc.1,2		70,700		247,450
Polaris Industries, Inc.1		25,800		739,170
Pool Corp.		8,700		156,339
RC2 Corp.2		14,000		149,380
Steinway Musical Instruments, Inc.2		10,627		186,079
				4,821,996
Media—1.2%
Arbitron, Inc.		8,000		106,240
Ascent Media Corp., Cl. A2		1,900		41,496
Belo Corp., Cl. A		139,600		217,776
Cablevision Systems Corp. New York Group, Cl. A		9,800		165,032
CBS Corp., Cl. B		22,400		183,456
Central European Media Enterprises Ltd., Cl. A1,2		4,500		97,740
Charter Communications, Inc., Cl. A2		358,100		29,293
Clear Channel Outdoor Holdings, Inc., Cl. A2		10,200		62,730
Cox Radio, Inc., Cl. A1,2		50,585		304,016
CTC Media, Inc.2		3,900		18,720
Cumulus Media, Inc., Cl. A2		24,100		60,009
Dish Network Corp., Cl. A2		21,100		233,999
Entercom Communications Corp.		10,300		12,669
Entravision Communications Corp.2		133,515		208,283
EW Scripps Co. (The), Cl. A		60,700		134,147
Fisher Communications, Inc.		900		18,576
Gannett Co., Inc.1		13,600		108,800
Global Sources Ltd.1,2		46,536		253,621
Harte-Hanks, Inc.1		34,300		214,032
Hearst-Argyle Television, Inc.1		4,100		24,846
Journal Communications, Inc.		22,100		54,145
Knology, Inc.2		16,600		85,656
Lamar Advertising Co., Cl. A1,2		38,800		487,328
Liberty Media Holding Corp.-Capital, Series A2		8,600		40,506
Lin TV Corp., Cl. A2		27,500		29,975
McClatchy Co., Cl. A1		71,300		57,040

	Shares		Value
Media Continued
McGraw-Hill Cos., Inc. (The)		12,100	$	280,599
Media General, Inc., Cl. A1		21,400		37,450
Mediacom Communications Corp.2		59,400		255,420
Meredith Corp.1		83,300		1,426,096
National CineMedia, Inc.		35,510		360,071
RCN Corp.2		3,300		19,470
Scholastic Corp.		66,600		904,428
Sinclair Broadcast Group, Inc., Cl. A1		111,099		344,407
Valassis Communications, Inc.2		9,000		11,880
Warner Music Group Corp.		75,500		228,010
				7,117,962
Multiline Retail—0.5%
Big Lots, Inc.1,2		81,700		1,183,833
Dillard’s, Inc., Cl. A1		174,986		694,694
Fred’s, Inc.		84,798		912,426
Macy’s, Inc.		19,200		198,720
Nordstrom, Inc.1		10,800		143,748
Retail Ventures, Inc.2		2,500		8,675
				3,142,096
Specialty Retail—5.3%
Abercrombie & Fitch Co., Cl. A1		15,400		355,278
Aeropostale, Inc.2		101,400		1,632,540
America’s Car-Mart, Inc.1,2		19,530		269,709
American Eagle Outfitters, Inc.		13,900		130,104
AnnTaylor Stores Corp.2		164,500		949,165
Asbury Automotive Group, Inc.1		61,400		280,598
AutoNation, Inc.1,2		134,600		1,329,848
Barnes & Noble, Inc.1		62,500		937,500
bebe stores, inc.		61,300		457,911
Big 5 Sporting Goods Corp.		2,826		14,723
Blockbuster, Inc., Cl. A1,2		180,600		222,138
Books-A-Million, Inc.		3,100		7,905
Borders Group, Inc.2		69,792		27,917
Brown Shoe Co., Inc.1		107,375		909,466
Buckle, Inc. (The)1		61,500		1,341,930
Cato Corp., Cl. A		36,200		546,620
Charlotte Russe Holding, Inc.2		29,300		190,157
Charming Shoppes, Inc.1,2		104,127		254,070
Chico’s FAS, Inc.2		52,800		220,704
Children’s Place Retail Stores, Inc.2		61,600		1,335,488
Christopher & Banks Corp.		41,300		231,280
Citi Trends, Inc.1,2		37,527		552,397
Coldwater Creek, Inc.2		78,600		224,010
Conn’s, Inc.1,2		18,197		154,311
Dress Barn, Inc. (The)1,2		124,704		1,339,321
Finish Line, Inc. (The), Cl. A		122,100		683,760
Foot Locker, Inc.		52,300		383,882
Genesco, Inc.1,2		37,600		636,192
Group 1 Automotive, Inc.1		42,600		458,802
Guess?, Inc.		7,700		118,195
Gymboree Corp.1,2		13,100		341,779
Haverty Furniture Cos., Inc.1		52,400		488,892
hhgregg, Inc.2		2,300		19,964
Hibbett Sports, Inc.1,2		28,000		439,880
Hot Topic, Inc.2		89,220		827,069
J. Crew Group, Inc.2		4,400		53,680
Jo-Ann Stores, Inc.2		59,317		918,820
Limited Brands, Inc.		21,700		217,868
Lumber Liquidators, Inc.1,2		14,300		151,008
Men’s Wearhouse, Inc. (The)1		65,400		885,516
Monro Muffler Brake, Inc.		5,180		132,090
New York & Co., Inc.2		69,200		160,544
Office Depot, Inc.2		263,900		786,422
OfficeMax, Inc.		117,700		899,228
Pacific Sunwear of California, Inc.2		122,000		193,980
Penske Automotive Group, Inc.1		89,700		688,896
Pep Boys-Manny, Moe & Jack1		71,988		297,310
Pier 1 Imports, Inc.2		16,000		5,920
RadioShack Corp.		60,400		721,176
Rent-A-Center, Inc.2		103,100		1,819,715
Sally Beauty Holdings, Inc.1,2		122,300		695,887
Sonic Automotive, Inc.1		56,300		224,074
Stage Stores, Inc.		71,400		589,050
Systemax, Inc.1		34,600		372,642
Talbots, Inc. (The)1		88,200		210,798
Tractor Supply Co.1,2		54,505		1,969,811
Tween Brands, Inc.2		45,600		196,992
Wet Seal, Inc., Cl. A2		164,800		489,456
Williams-Sonoma, Inc.1		140,100		1,101,186
Zale Corp.1,2		74,400		247,752
Zumiez, Inc.2		17,300		128,885
				32,472,211
Textiles, Apparel & Luxury Goods—1.7%
American Apparel, Inc.2		11,500		22,885
Coach, Inc.2		15,800		328,166
Crocs, Inc.1,2		36,900		45,756
FGX International Holdings Ltd.2		3,500		48,090
Jones Apparel Group, Inc.		169,400		992,684
K-Swiss, Inc., Cl. A		7,100		80,940

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Textiles, Apparel & Luxury Goods Continued
Kenneth Cole Productions, Inc., Cl. A		11,200	$	79,296
Liz Claiborne, Inc.1		308,903		803,148
Maidenform Brands, Inc.2		26,500		268,975
Movado Group, Inc.		9,300		87,327
Oxford Industries, Inc.		25,300		221,881
Perry Ellis International, Inc.2		35,100		222,534
Phillips/Van Heusen Corp.		49,000		986,370
Polo Ralph Lauren Corp., Cl. A		3,500		158,935
Quicksilver, Inc.2		249,800		459,632
Steven Madden Ltd.2		35,000		746,200
Timberland Co., Cl. A2		71,800		829,290
True Religion Apparel, Inc.1,2		30,900		384,396
Unifi, Inc.2		58,100		163,842
UniFirst Corp.		15,754		467,736
Volcom, Inc.2		2,700		29,430
Warnaco Group, Inc. (The)2		72,104		1,415,402
Wolverine World Wide, Inc.		65,450		1,377,068
				10,219,983
Consumer Staples—2.1%
Beverages—0.0%
Boston Beer Co., Inc., Cl. A1,2		6,400		181,760
Coca-Cola Bottling Co. Consolidated		600		27,576
				209,336
Food & Staples Retailing—0.5%
Andersons, Inc. (The)		1,600		26,368
Arden Group, Inc., Cl. A		1,405		177,030
Casey’s General Stores, Inc.		8,100		184,437
Ingles Markets, Inc., Cl. A		8,100		142,479
Nash Finch Co.1		19,800		888,822
Pantry, Inc. (The)2		46,700		1,001,715
Spartan Stores, Inc.		19,400		451,050
SUPERVALU, Inc.		11,700		170,820
Winn-Dixie Stores, Inc.2		1,100		17,710
				3,060,431
Food Products—0.5%
Agria Corp., ADR2		965		1,438
B&G Foods, Inc., Cl. A		4,100		22,140
Bunge Ltd.		1,900		98,363
Chiquita Brands International, Inc.1,2		48,300		713,874
Darling International, Inc.2		166,000		911,340
Del Monte Foods Co.		31,400		224,196
Diamond Foods, Inc.		23,200		467,480
J&J Snack Foods Corp.		1,600		57,408
Omega Protein Corp.2		36,622		146,854
Ralcorp Holdings, Inc.2		5,000		292,000
Reddy Ice Holdings, Inc.		5,400		7,776
				2,942,869
Household Products—0.1%
Central Garden & Pet Co., Cl. A2		39,663		234,012
WD-40 Co.		16,886		477,705
				711,717
Personal Products—0.8%
American Oriental Bioengineering, Inc.1,2		138,700		941,773
Bare Escentuals, Inc.2		34,800		182,004
Elizabeth Arden, Inc.2		25,335		319,474
Herbalife Ltd.		50,900		1,103,512
Inter Parfums, Inc.		27,450		210,816
NBTY, Inc.2		77,300		1,209,745
Nu Skin Asia Pacific, Inc., Cl. A		20,400		212,772
Prestige Brands Holdings, Inc.2		71,300		752,215
Revlon, Inc., Cl. A2		1,888		12,593
				4,944,904
Tobacco—0.2%
Universal Corp.1		32,000		955,840
Energy—6.4%
Energy Equipment & Services—2.9%
Allis-Chalmers Energy, Inc.1,2		51,400		282,700
Basic Energy Services, Inc.1,2		53,100		692,424
BJ Services Co.		24,300		283,581
Bronco Drilling Co., Inc.2		7,834		50,608
Complete Production Services, Inc.2		108,000		880,200
Dawson Geophysical Co.1,2		11,200		199,472
Dresser-Rand Group, Inc.2		24,300		419,175
Dril-Quip, Inc.2		14,600		299,446
ENGlobal Corp.2		37,100		120,575
ENSCO International, Inc.		13,465		382,271
Exterran Holdings, Inc.1,2		28,500		607,050
Forbes Energy Services Ltd.2		23,600		29,871
Forbes Energy Services Ltd., Legend Shares2,3		101,800		128,850
Global Industries Ltd.2		36,300		126,687
Gulf Island Fabrication, Inc.		35,874		516,944
Gulfmark Offshore, Inc.2		26,900		639,951
Helix Energy Solutions Group, Inc.2		36,400		263,536
Helmerich & Payne, Inc.		3,700		84,175

	Shares		Value
Energy Equipment & Services Continued
Hercules Offshore, Inc.1,2		55,358	$	262,951
Hornbeck Offshore Services, Inc.2		22,000		359,480
ION Geophysical Corp.1,2		54,600		187,278
Key Energy Services, Inc.2		187,700		827,757
Matrix Service Co.2		15,600		119,652
Nabors Industries Ltd.2		33,400		399,798
NATCO Group, Inc., Cl. A2		10,128		153,743
Natural Gas Services Group2		17,200		174,236
Newpark Resources, Inc.2		117,097		433,259
Noble Corp.		11,200		247,408
North American Energy Partners, Inc.2		18,900		63,126
Oceaneering International, Inc.2		9,200		268,088
Oil States International, Inc.1,2		89,400		1,670,886
Parker Drilling Co.2		202,800		588,120
Patterson-UTI Energy, Inc.		58,900		677,939
Pioneer Drilling Co.2		58,900		328,073
Precision Drilling Trust1		57,868		478,944
Pride International, Inc.2		15,700		250,886
Seacor Holdings, Inc.1,2		21,800		1,452,970
Smith International, Inc.		2,500		57,225
Superior Energy Services, Inc.2		21,900		348,867
T-3 Energy Services, Inc.2		600		5,664
Technicoil Corp.2		126,700		41,914
Technicoil Corp., Legend Shares2		7,100		2,349
Tetra Technologies, Inc.2		76,350		371,061
Tidewater, Inc.		4,400		177,188
Union Drilling, Inc.2		30,948		160,620
Unit Corp.2		33,900		905,808
Weatherford International Ltd.2		23,800		257,516
Willbros Group, Inc.2		30,650		259,606
				17,539,928
Oil, Gas & Consumable Fuels—3.5%
Abraxas Petroleum Corp.2		14,300		10,296
Alberta Clipper Energy, Inc.2		3,287		1,216
Alon USA Energy, Inc.1		3,300		30,195
Alpha Natural Resources, Inc.2		8,000		129,520
Arena Resources, Inc.2		4,600		129,214
ATP Oil & Gas Corp.1,2		66,300		387,855
Berry Petroleum Co., Cl. A		106,900		808,164
Bill Barrett Corp.2		45,200		955,076
BPZ Resources, Inc.1,2		14,800		94,720
Brigham Exploration Co.2		75,900		242,880
Callon Petroleum Co.2		49,004		127,410
Cano Petroleum, Inc.2		6,500		2,860
Carrizo Oil & Gas, Inc.2		7,600		122,360
Celtic Exploration Ltd., Legend Shares2		2,800		29,019
Cimarex Energy Co.1		30,700		822,146
Contango Oil & Gas Co.2		1,100		61,930
Crosstex Energy, Inc.		10,000		39,000
CVR Energy, Inc.2		67,800		271,200
Delek US Holdings, Inc.		40,022		211,716
Delphi Energy Corp., Legend Shares2		3,700		3,011
Denbury Resources, Inc.2		34,700		378,924
DHT Maritime, Inc.		2,100		11,634
Enbridge Energy Management LLC2		419		10,245
Encore Acquisition Co.2		9,800		250,096
Energy Partners Ltd.2		64,732		87,388
Foundation Coal Holdings, Inc.		93,500		1,310,870
Frontier Oil Corp.		79,500		1,004,085
Frontline Ltd.1		3,800		112,518
Galleon Energy, Inc., Cl. A2		14,350		60,150
Galleon Energy, Inc., Subscription Receipts, Legend Shares2		11,250		47,156
Gasco Energy, Inc.2		89,600		34,944
General Maritime Corp.1		41,086		443,729
GeoResources, Inc.2		8,400		72,996
Great Plains Exploration, Inc.2		32,360		7,447
Gulfport Energy Corp.2		8,624		34,065
Holly Corp.		23,600		430,228
Houston American Energy Corp.		1,600		5,408
International Coal Group, Inc.1,2		26,100		60,030
Jura Energy Corp., Legend Shares2		110,300		8,612
Knightsbridge Tankers Ltd.1		29,300		429,245
Mariner Energy, Inc.2		130,500		1,331,100
Massey Energy Co.		32,900		453,691
McMoRan Exploration Co.2		28,200		276,360
Meridian Resource Corp. (The)2		44,200		25,194
Midnight Oil Exploration Ltd.2		45,050		27,770
Overseas Shipholding Group, Inc.1		18,503		779,161
Paramount Resources Ltd., Cl. A2		4,500		25,409
PetroQuest Energy, Inc.2		73,300		495,508
Pioneer Natural Resources Co.		7,400		119,732
Plains Exploration & Production Co.2		18,700		434,588
Quicksilver Resources, Inc.2		56,500		314,705
Rentech, Inc.2		11,700		7,956
Rosetta Resources, Inc.2		105,300		745,524
St. Mary Land & Exploration Co.		5,900		119,829
Stone Energy Corp.2		95,284		1,050,030
Sunoco, Inc.1		6,600		286,836
Swift Energy Co.2		60,800		1,022,048
Teekay Tankers Ltd., Cl. A1		25,600		325,120

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Oil, Gas & Consumable Fuels Continued
Tesoro Corp.		78,121	$	1,028,854
Tristar Oil & Gas Ltd.2		4,800		45,014
Tusk Energy Corp.2		38,312		28,969
Tusk Energy Corp., Legend Shares2,4		21,300		16,106
Tusk Energy Corp., Legend Shares2		77,900		58,904
VAALCO Energy, Inc.2		127,200		946,368
Venoco, Inc.1,2		7,500		20,325
Vero Energy, Inc.2		22,282		99,625
W&T Offshore, Inc.		78,900		1,129,848
Walter Industries, Inc.		11,700		204,867
Warren Resources, Inc.2		25,700		51,143
Western Refining, Inc.1		54,500		422,920
Westmoreland Coal Co.2		3,800		42,180
Williams (Clayton) Energy, Inc.2		2,400		109,056
World Fuel Services Corp.		3,400		125,800
				21,450,098
Financials—15.9%
Capital Markets—1.2%
Affiliated Managers Group, Inc.2		4,700		197,024
Ameriprise Financial, Inc.		12,400		289,664
BGC Partners, Inc., Cl. A		7,000		19,320
Cohen & Steers, Inc.1		6,518		71,633
E*TRADE Financial Corp.1,2		461,200		530,380
GAMCO Investors, Inc., Cl. A		7,840		214,189
GFI Group, Inc.		8,800		31,152
Investment Technology Group, Inc.2		13,000		295,360
Janus Capital Group, Inc.		54,400		436,832
KBW, Inc.1,2		10,000		230,000
Knight Capital Group, Inc., Cl. A2		40,342		651,523
LaBranche & Co., Inc.2		124,900		598,271
Legg Mason, Inc.		8,700		190,617
NGP Capital Resources Co.		4,600		38,502
Penson Worldwide, Inc.2		22,900		174,498
Piper Jaffray Cos., Inc.2		21,000		834,960
Sanders Morris Harris Group, Inc.		5,700		34,143
SEI Investments Co.		2,800		43,988
Stifel Financial Corp.2		24,150		1,107,278
SWS Group, Inc.		56,556		1,071,736
TD Ameritrade Holding Corp.2		200		2,850
thinkorswim Group, Inc.2		23,300		130,946
Thomas Weisel Partners Group, Inc.2		4,600		21,712
Tradestation Group, Inc.2		14,900		96,105
U.S. Global Investors, Inc., Cl. A		1,200		5,868
Waddell & Reed Financial, Inc., Cl. A		20,500		316,930
				7,635,481
Commercial Banks—4.5%
1st Source Corp.		2,964		70,039
Amcore Financial, Inc.		6,534		23,653
BancFirst Corp.		3,800		201,096
Banco Latinoamericano de Exportaciones SA, Cl. E		12,900		185,244
Boston Private Financial Holdings, Inc.1		39,678		271,398
Capitol Bancorp Ltd.1		2,860		22,308
Cascade Bancorp1		6,900		46,575
Cathay Bancorp, Inc.1		26,200		622,250
Central Pacific Financial Corp.1		52,900		531,116
Chemical Financial Corp.		10,700		298,316
Citizens Republic Bancorp, Inc.		43,500		129,630
City Bank Lynnwood, WA		4,100		21,320
City Holding Co.		21,500		747,770
CoBiz Financial, Inc.1		9,500		92,530
Colonial BancGroup, Inc. (The)1		157,600		326,232
Columbia Banking System, Inc.		7,900		94,247
Community Bank System, Inc.		35,600		868,284
Community Trust Bancorp, Inc.		13,800		507,150
East West Bancorp, Inc.		77,018		1,229,977
F.N.B. Corp.		3,700		48,840
First Community Bancshares, Inc.1		5,800		202,246
First Financial Bancorp		15,800		195,762
First Horizon National Corp.1		162,415		1,716,727
First Merchants Corp.		18,100		402,001
First Midwest Bancorp, Inc.1		30,700		613,079
First Security Group, Inc.1		14,300		66,066
Frontier Financial Corp.1		53,070		231,385
Glacier Bancorp, Inc.		2,500		47,550
Greene Bankshares, Inc.1		7,550		102,227
Guaranty Bancorp2		11,100		22,200
Hancock Holding Co.1		1,700		77,282
Hanmi Financial Corp.		16,100		33,166
Huntington Bancshares, Inc.		45,100		345,466
IBERIABANK Corp.		5,000		240,000
Independent Bank Corp.		4,800		125,568
International Bancshares Corp.		15,000		327,450
MainSource Financial Group, Inc.		8,700		134,850
MB Financial, Inc.1		3,700		103,415
National Penn Bancshares, Inc.1		80,700		1,170,957
NBT Bancorp, Inc.1		17,400		486,504
Old National Bancorp1		32,390		588,202
Old Second Bancorp, Inc.		600		6,960
Oriental Financial Group, Inc.		31,100		188,155
Pacific Capital Bancorp1		90,300		1,524,264
PacWest Bancorp1		32,200		866,180

	Shares		Value
Commercial Banks Continued
Park National Corp.1		2,700	$	193,725
Popular, Inc.1		161,900		835,404
Porter Bancorp, Inc.		2,520		38,682
Prosperity Bancshares, Inc.		6,100		180,499
Provident Bankshares Corp.1		76,100		735,126
Regions Financial Corp.		42,400		337,504
Renasant Corp.		5,900		100,477
Republic Bancorp, Inc., Cl. A1		4,700		127,840
Sandy Spring Bancorp, Inc.1		7,100		154,993
Santander BanCorp1		8,600		107,414
Signature Bank2		1,800		51,642
Simmons First National Corp.		9,600		282,912
South Financial Group, Inc. (The)		75,000		324,000
Southside Bancshares, Inc.		8,400		197,400
Southwest Bancorp, Inc.		400		5,184
Sterling Bancorp		34,300		481,229
Sterling Financial Corp., Western US		32,700		287,760
Susquehanna Bancshares, Inc.1		106,800		1,699,188
Tompkins Financial Corp.1		8,830		511,699
TowneBank		700		17,353
Trustmark Corp.		4,200		90,678
UCBH Holdings, Inc.		84,700		582,736
UMB Financial Corp.		3,900		191,646
Umpqua Holdings Corp.1		25,200		364,644
United Bankshares, Inc.		1,200		39,864
United Community Banks, Inc.1		34,296		465,740
Webster Financial Corp.1		87,000		1,198,860
WesBanco, Inc.		18,800		511,548
West Coast Bancorp		4,208		27,731
Westamerica Bancorp		1,800		92,070
Western Alliance Bancorp1,2		15,808		159,503
Whitney Holding Corp.1		37,900		606,021
Wintrust Financial Corp.1		25,000		514,250
				27,670,959
Consumer Finance—0.8%
Advance America Cash Advance Centers, Inc.		3,500		6,615
Advanta Corp., Cl. B		38,250		79,943
AmeriCredit Corp.1,2		131,200		1,002,368
Cash America International, Inc.		48,682		1,331,453
Discover Financial Services		42,200		402,166
Dollar Financial Corp.2		3,085		31,776
EZCORP, Inc., Cl. A2		27,590		419,644
First Cash Financial Services, Inc.2		37,500		714,750
First Marblehead Corp. (The)1,2		42,200		54,438
Nelnet, Inc., Cl. A		19,400		278,002
Student Loan Corp. (The)		1,100		45,100
World Acceptance Corp.1,2		30,500		602,680
				4,968,935
Diversified Financial Services—0.7%
Asset Acceptance Capital Corp.1,2		23,000		117,530
CIT Group, Inc.		144,100		654,214
Encore Capital Group, Inc.1,2		4,600		33,120
Financial Federal Corp.1		38,586		897,896
Interactive Brokers Group, Inc., Cl. A2		38,800		694,132
Life Partners Holdings, Inc.1		1,700		74,188
MarketAxess Holdings, Inc.2		16,900		137,904
NewStar Financial, Inc.2		3,500		13,965
NYSE Euronext		10,100		276,538
PHH Corp.1,2		88,800		1,130,424
Pico Holdings, Inc.2		4,200		111,636
				4,141,547
Insurance—4.8%
Allied World Assurance Holdings Ltd.		24,340		988,204
American Equity Investment Life Holding Co.1		64,800		453,600
American Financial Group, Inc.		11,700		267,696
American Physicians Capital, Inc.		21,150		1,017,315
Amerisafe, Inc.2		42,900		880,737
AmTrust Financial Services, Inc.		57,500		667,000
Aspen Insurance Holdings Ltd.		72,800		1,765,400
Assured Guaranty Ltd.		6,400		72,960
Axis Capital Holdings Ltd.		6,200		180,544
Citizens, Inc.1,2		5,300		51,410
CNA Financial Corp.		20,700		340,308
CNA Surety Corp.2		31,100		597,120
Conseco, Inc.2		218,900		1,133,902
Delphi Financial Group, Inc., Cl. A		48,950		902,638
Donegal Group, Inc., Cl. A		1,066		17,877
eHealth, Inc.2		2,400		31,872
EMC Insurance Group, Inc.		1,492		38,270
Employers Holdings, Inc.		47,900		790,350
Endurance Specialty Holdings Ltd.		10,300		314,459
FBL Financial Group, Inc., Cl. A		27,510		425,030
First Mercury Financial Corp.2		3,100		44,206
FPIC Insurance Group, Inc.2		16,900		739,882
Genworth Financial, Inc., Cl. A		85,700		242,531
Hallmark Financial Services, Inc.2		7,400		64,898
Harleysville Group, Inc.		19,000		659,870

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Insurance Continued
Horace Mann Educators Corp.		45,707	$	420,047
Infinity Property & Casualty Corp.		16,200		757,026
IPC Holdings Ltd.		54,500		1,629,550
Lincoln National Corp.		9,700		182,748
Maiden Holdings Ltd.		2,200		6,886
Max Capital Group Ltd.1		103,500		1,831,950
Meadowbrook Insurance Group, Inc.		39,405		253,768
National Financial Partners Corp.		27,000		82,080
National Interstate Corp.1		10,000		178,700
National Western Life Insurance Co., Cl. A		500		84,585
Nationwide Financial Services, Inc., Cl. A		13,600		710,056
Navigators Group, Inc. (The)2		12,200		669,902
NYMAGIC, Inc.		500		9,525
Old Republic International Corp.		4,200		50,064
OneBeacon Insurance Group Ltd.		18,880		197,107
Phoenix Cos., Inc. (The)1		86,994		284,470
Platinum Underwriters Holdings Ltd.		45,200		1,630,816
PMA Capital Corp., Cl. A2		12,500		88,500
Presidential Life Corp.		6,083		60,161
ProAssurance Corp.1,2		25,300		1,335,334
Protective Life Corp.		68,700		985,845
RLI Corp.1		13,700		837,892
Safety Insurance Group, Inc.		15,300		582,318
Seabright Insurance Holdings, Inc.2		21,000		246,540
Selective Insurance Group, Inc.1		43,272		992,227
StanCorp Financial Group, Inc.		6,500		271,505
State Auto Financial Corp.		2,800		84,168
Stewart Information Services Corp.		7,574		177,913
Transatlantic Holdings, Inc.		3,200		128,192
United America Indemnity Ltd., Cl. A2		31,973		409,574
United Fire & Casualty Co.		6,700		208,169
Unitrin, Inc.		44,500		709,330
UnumProvident Corp.		21,400		398,040
Zenith National Insurance Corp.		4,276		134,993
				29,318,060
Real Estate Investment Trusts—2.9%
Acadia Realty Trust		2,400		34,248
Agree Realty Corp.		9,000		163,170
Alexander’s, Inc.1		300		76,470
Alexandria Real Estate Equities, Inc.		10,600		639,604
American Campus Communities, Inc.		4,300		88,064
Arbor Realty Trust, Inc.1		3,800		11,210
Ashford Hospitality Trust		48,200		55,430
Associated Estates Realty Corp.		5,700		52,041
BioMed Realty Trust, Inc.		49,430		579,320
Brandywine Realty Trust1		22,814		175,896
Capital Lease Funding, Inc.1		16,900		29,237
CBL & Associates Properties, Inc.		18,400		119,600
Cedar Shopping Centers, Inc.		10,400		73,632
Colonial Properties Trust1		9,800		81,634
Corporate Office Properties Trust1		13,110		402,477
DCT Industrial Trust, Inc.		11,400		57,684
DiamondRock Hospitality Co.		86,200		437,034
Digital Realty Trust, Inc.1		17,800		584,730
EastGroup Properties, Inc.		13,600		483,888
Entertainment Properties Trust		21,340		635,932
Equity Lifestyle Properties, Inc.		4,600		176,456
Equity One, Inc.1		3,700		65,490
Extra Space Storage, Inc.		26,900		277,608
FelCor Lodging Trust, Inc.		71,500		131,560
First Industrial Realty Trust, Inc.1		43,800		330,690
First Potomac Realty Trust		4,900		45,570
Glimcher Realty Trust		4,800		13,488
Gramercy Capital Corp.		5,800		7,424
Healthcare Realty Trust, Inc.		15,900		373,332
Hersha Hospitality Trust		10,300		30,900
Highwoods Properties, Inc.		31,000		848,160
Home Properties of New York, Inc.1		15,400		625,240
Inland Real Estate Corp.		39,200		508,816
Investors Real Estate Trust		1,900		20,349
Kite Realty Group Trust		21,900		121,764
LaSalle Hotel Properties1		19,800		218,790
Lexington Realty Trust1		32,000		160,000
LTC Properties, Inc.		14,800		300,144
Medical Properties Trust, Inc.1		30,400		191,824
Mid-America Apartment Communities, Inc.		16,600		616,856
National Health Investors, Inc.		8,300		227,669
National Retail Properties, Inc.		50,900		874,971
Nationwide Health Properties, Inc.		29,400		844,368
Omega Healthcare Investors, Inc.		50,240		802,333
Parkway Properties, Inc.		12,300		221,400
Pennsylvania Real Estate Investment Trust1		23,400		174,330
Post Properties, Inc.		4,900		80,850
Potlatch Corp.		14,210		369,602
PS Business Parks, Inc.		6,500		290,290
Ramco-Gershenson Properties Trust		7,400		45,732

	Shares		Value
Real Estate Investment Trusts Continued
Realty Income Corp.1		23,900	$	553,285
Saul Centers, Inc.		3,200		126,400
Senior Housing Properties Trust1		64,900		1,163,008
SL Green Realty Corp.		13,300		344,470
Sovran Self Storage, Inc.		4,900		176,400
Strategic Hotels & Resorts, Inc.		39,700		66,696
Sunstone Hotel Investors, Inc.		35,179		217,758
Tanger Factory Outlet Centers, Inc.		9,700		364,914
Taubman Centers, Inc.		10,300		262,238
Universal Health Realty Income Trust		500		16,455
Urstadt Biddle Properties, Inc., Cl. A		1,200		19,116
Washington Real Estate Investment Trust		14,100		399,030
				17,487,077
Real Estate Management & Development—0.1%
Avatar Holdings, Inc.2		2,446		64,868
CB Richard Ellis Group, Inc., Cl. A2		40,700		175,824
Consolidated-Tomoka Land Co.		400		15,276
Forest City Enterprises, Inc., Cl. A1		22,100		148,070
Forestar Group, Inc.2		2,600		24,752
Jones Lang LaSalle, Inc.		9,400		260,380
Tejon Ranch Co.2		100		2,474
				691,644
Thrifts & Mortgage Finance—0.9%
Anchor BanCorp Wisconsin, Inc.1		10,500		28,980
Bank Mutual Corp.		33,100		381,974
BankFinancial Corp.		2,684		27,350
Corus Bankshares, Inc.1		4,000		4,440
Dime Community Bancshares, Inc.		49,200		654,360
Doral Financial Corp.2		800		6,000
Encore Bancshares, Inc.2		8,400		92,400
First Niagara Financial Group, Inc.		5,000		80,850
First Place Financial Corp.		4,648		17,802
Flagstar Bancorp, Inc.2		15,900		11,289
Flushing Financial Corp.		26,800		320,528
MGIC Investment Corp.1		227,599		792,045
NewAlliance Bancshares, Inc.		11,000		144,870
OceanFirst Financial Corp.		4,800		79,680
Ocwen Financial Corp.1,2		54,200		497,556
PMI Group, Inc. (The)		164,500		320,775
Provident Financial Services, Inc.1		39,500		604,350
Provident New York Bancorp		34,100		422,840
Radian Group, Inc.1		157,100		578,128
TierOne Corp.		8,100		30,375
Tree.com, Inc.2		1,386		3,604
Trustco Bank Corp. NY		3,100		29,481
WSFS Financial Corp.		4,100		196,759
				5,326,436
Health Care—7.5%
Biotechnology—1.3%
Acorda Therapeutics, Inc.2		10,500		215,355
Alexion Pharmaceuticals, Inc.1,2		11,900		430,661
Allos Therapeutics, Inc.2		33,870		207,284
Alnylam Pharmaceuticals, Inc.1,2		4,300		106,339
Array BioPharma, Inc.2		5,300		21,465
Celldex Therapeutics, Inc.2		9,375		74,250
Cepheid, Inc.2		7,900		82,002
Cubist Pharmaceuticals, Inc.2		46,800		1,130,688
CV Therapeutics, Inc.2		38,900		358,269
Dendreon Corp.2		48,700		223,046
Emergent Biosolutions, Inc.2		31,910		833,170
Enzon Pharmaceuticals, Inc.1,2		72,400		422,092
Facet Biotech Corp.2		23,120		221,721
Geron Corp.1,2		17,200		80,324
GTx, Inc.1,2		11,400		191,976
Halozyme Therapeutics, Inc.2		4,500		25,200
Human Genome Sciences, Inc.2		50,400		106,848
Incyte Corp.2		25,300		95,887
Isis Pharmaceuticals, Inc.2		4,900		69,482
Ligand Pharmaceuticals, Inc., Cl. B2		8,400		23,016
MannKind Corp.1,2		29,592		101,501
Martek Biosciences Corp.1		19,019		576,466
Momenta Pharmaceuticals, Inc.1,2		43,300		502,280
Myriad Genetics, Inc.2		7,400		490,324
Nabi Biopharmaceuticals, Inc.2		7,800		26,130
NPS Pharmaceuticals, Inc.2		9,000		55,890
OSI Pharmaceuticals, Inc.2		2,400		93,720
Osiris Therapeutics, Inc.1,2		5,500		105,380
PDL BioPharma, Inc.		115,600		714,408
Progenics Pharmaceuticals, Inc.1,2		23,589		243,203
Rigel Pharmaceuticals, Inc.2		10,600		84,800
RXi Pharmaceuticals Corp.1,2		3,885		22,339
Savient Pharmaceuticals, Inc.1,2		50,185		290,571
ZymoGenetics, Inc.1,2		8,200		24,600
				8,250,687
Health Care Equipment & Supplies—1.6%
Abaxis, Inc.2		7,690		123,271
Advanced Medical Optics, Inc.2		32,512		214,904
Align Technology, Inc.1,2		35,300		308,875

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Health Care Equipment & Supplies Continued
American Medical Systems Holdings, Inc.2		7,900	$	71,021
Analogic Corp.		30,900		842,952
AngioDynamics, Inc.2		12,200		167,018
Cardiac Science Corp.2		1,398		10,485
ConMed Corp.2		23,700		567,378
CryoLife, Inc.2		42,800		415,588
Cyberonics, Inc.1,2		42,403		702,618
Datascope Corp.		13,900		726,136
Exactech, Inc.2		11,100		186,924
Invacare Corp.1		5,200		80,704
Inverness Medical Innovations, Inc.2		6,500		122,915
IRIS International, Inc.2		8,600		119,884
Kensey Nash Corp.2		26,700		518,247
Merit Medical Systems, Inc.2		38,800		695,684
Natus Medical, Inc.2		27,000		349,650
Neogen Corp.2		1,910		47,712
Orthofix International NV2		7,500		114,975
Palomar Medical Technologies, Inc.2		11,000		126,830
Quidel Corp.2		42,200		551,554
Sirona Dental Systems, Inc.1,2		7,000		73,500
Somanetics Corp.2		24,000		396,240
SonoSite, Inc.1,2		14,417		275,076
Spectranetics Corp. (The)2		1,700		4,437
Stereotaxis, Inc.1,2		4,900		21,560
Steris Corp.		19,800		473,022
Symmetry Medical, Inc.2		13,900		110,783
Synovis Life Technologies, Inc.2		15,300		286,722
VNUS Medical Technologies, Inc.2		15,460		250,761
Volcano Corp.2		5,600		84,000
Zoll Medical Corp.2		31,700		598,813
				9,640,239
Health Care Providers & Services—3.2%
Air Methods Corp.2		2,000		31,980
Alliance Imaging, Inc.2		42,900		341,913
Almost Family, Inc.1,2		4,200		188,916
AMERIGROUP Corp.2		70,500		2,081,160
AMN Healthcare Services, Inc.2		36,400		307,944
Assisted Living Concepts, Inc.1,2		11,600		48,140
athenahealth, Inc.2		1,800		67,716
Brookdale Senior Living, Inc.1		44,300		247,194
Catalyst Health Solutions, Inc.2		25,448		619,659
Centene Corp.2		87,100		1,716,741
Chemed Corp.		25,360		1,008,567
Chindex International, Inc.1,2		4,750		37,763
CIGNA Corp.		18,300		308,355
Community Health Systems, Inc.2		7,700		112,266
CorVel Corp.2		5,900		129,682
Coventry Health Care, Inc.2		7,900		117,552
Cross Country Healthcare, Inc.2		25,700		225,903
Enstar Group, Inc. (The)		2,300		38,502
Gentiva Health Services, Inc.2		9,500		277,970
Hanger Orthopedic Group, Inc.2		45,800		664,558
Health Management Associates, Inc., Cl. A2		31,900		57,101
Health Net, Inc.2		43,400		472,626
HEALTHSOUTH Corp.2		3,700		40,552
Healthspring, Inc.2		70,700		1,411,879
Healthways, Inc.2		24,137		277,093
InVentiv Health, Inc.2		20,582		237,516
Kindred Healthcare, Inc.2		59,700		777,294
Landauer, Inc.		13,200		967,560
LifePoint Hospitals, Inc.1,2		76,800		1,754,112
Lincare Holdings, Inc.1,2		31,100		837,523
MedCath Corp.2		10,800		112,752
Molina Healthcare, Inc.1,2		36,200		637,482
Odyssey Healthcare, Inc.2		18,700		172,975
Owens & Minor, Inc.		1,100		41,415
Pediatrix Medical Group, Inc.2		9,700		307,490
PharMerica Corp.1,2		43,900		687,913
Providence Service Corp.2		4,400		6,380
RehabCare Group, Inc.2		37,500		568,500
Res-Care, Inc.2		23,156		347,803
Skilled Healthcare Group, Inc., Cl. A2		7,300		61,612
Sun Healthcare Group, Inc.2		7,792		68,959
Universal American Corp.2		26,507		233,792
WellCare Health Plans, Inc.2		48,440		622,938
				19,275,748
Health Care Technology—0.1%
Allscripts-Misys Healthcare Solutions, Inc.		26,200		259,904
Computer Programs & Systems, Inc.		7,100		190,280
IMS Health, Inc.		4,600		69,736
Omnicell, Inc.2		23,187		283,113
				803,033
Life Sciences Tools & Services—0.6%
Albany Molecular Research, Inc.2		38,600		375,964
Bio-Rad Laboratories, Inc., Cl. A2		3,700		278,647
Bruker Corp.2		6,100		24,644

	Shares		Value
Life Sciences Tools & Services Continued
Dionex Corp.2		900	$	40,365
Enzo Biochem, Inc.2		2,300		11,247
eResearch Technology, Inc.2		65,800		436,254
Kendle International, Inc.2		3,700		95,164
Life Sciences Research, Inc.2		6,600		62,040
Luminex Corp.1,2		24,600		525,456
Medivation, Inc.1,2		20,300		295,771
Nektar Therapeutics2		36,000		200,160
Parexel International Corp.2		53,600		520,456
Sequenom, Inc.2		8,700		172,608
Varian, Inc.2		10,900		365,259
				3,404,035
Pharmaceuticals—0.7%
Adolor Corp.2		47,440		78,750
Auxilium Pharmaceuticals, Inc.2		14,100		401,004
BioMimetic Therapeutics, Inc.1,2		4,500		41,490
CPEX Pharmaceuticals, Inc.2		350		3,413
Cypress Bioscience, Inc.2		9,800		67,032
Durect Corp.2		4,298		14,570
Forest Laboratories, Inc.2		11,710		298,254
K-V Pharmaceutical Co., Cl. A2		7,313		21,061
King Pharmaceuticals, Inc.1,2		35,700		379,134
Medicis Pharmaceutical Corp., Cl. A1		106,400		1,478,960
MiddleBrook Pharmaceuticals, Inc.1,2		20,000		30,000
Noven Pharmaceuticals, Inc.2		32,877		361,647
Optimer Pharmaceuticals, Inc.2		2,400		29,064
Pain Therapeutics, Inc.1,2		30,001		177,606
Par Pharmaceutical Cos., Inc.2		21,700		290,997
Pozen, Inc.1,2		16,800		84,672
Questcor Pharmaceuticals, Inc.2		4,900		45,619
Salix Pharmaceuticals Ltd.1,2		20,600		181,898
Valeant Pharmaceuticals International, Inc.2		3,700		84,730
ViroPharma, Inc.2		5,500		71,610
Vivus, Inc.1,2		43,000		228,760
				4,370,271
Industrials—21.0%
Aerospace & Defense—1.5%
Aerovironment, Inc.1,2		9,268		341,155
American Science & Engineering, Inc.		1,600		118,336
Applied Signal Technology, Inc.		1,000		17,940
Argon ST, Inc.2		12,700		239,522
Astronics Corp., Cl. B2		812		6,975
Axsys Technologies, Inc.2		3,113		170,779
BE Aerospace, Inc.2		98,700		759,003
Ceradyne, Inc.1,2		57,240		1,162,544
Cubic Corp.		41,030		1,116,016
Ducommun, Inc.		30,400		507,680
DynCorp International, Inc., Cl. A2		46,800		709,956
Esterline Technologies Corp.2		45,500		1,723,995
Gencorp, Inc.1,2		56,000		206,080
Goodrich Corp.		6,400		236,928
Herley Industries, Inc.2		3,000		36,840
Ladish Co., Inc.2		6,900		95,565
Precision Castparts Corp.		5,300		315,244
Taser International, Inc.2		21,444		113,224
Triumph Group, Inc.1		23,600		1,002,056
				8,879,838
Air Freight & Logistics—0.3%
Air Transport Services Group, Inc.2		11,100		1,998
Atlas Air Worldwide Holdings, Inc.2		30,000		567,000
Hub Group, Inc., Cl. A2		8,844		234,631
Pacer International, Inc.		86,200		899,066
				1,702,695
Airlines—0.8%
Continental Airlines, Inc., Cl. B1,2		23,310		420,979
Hawaiian Holdings, Inc.2		86,900		554,422
Republic Airways Holdings, Inc.2		70,500		752,235
SkyWest, Inc.		77,000		1,432,200
UAL Corp.		72,900		803,358
US Airways Group, Inc.2		158,500		1,225,205
				5,188,399
Building Products—1.3%
Aaon, Inc.		29,500		615,960
American Woodmark Corp.1		10,835		197,522
Ameron International Corp.		16,614		1,045,353
Apogee Enterprises, Inc.		44,600		462,056
Armstrong World Industries, Inc.		27,700		598,874
Gibraltar Industries, Inc.		61,100		729,534
Griffon Corp.1,2		51,119		476,940
Insteel Industries, Inc.1		53,600		605,144
Lennox International, Inc.		9,100		293,839
NCI Building Systems, Inc.1,2		49,600		808,480
Quanex Building Products Corp.		71,730		672,110
Trex Co., Inc.1,2		31,460		517,832
Universal Forest Products, Inc.1		31,920		858,967
				7,882,611

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Commercial Services & Supplies—5.3%
Acco Brands Corp.2		38,513	$	132,870
Administaff, Inc.		55,800		1,209,744
Advisory Board Co. (The)2		2,100		46,830
American Ecology Corp.		30,700		621,061
American Reprographics Co.2		50,300		347,070
AMREP Corp.1,2		1,676		52,425
ATC Technology Corp.2		25,500		373,065
Bowne & Co., Inc.		41,600		244,608
Brink’s Co. (The)		10,100		271,488
Casella Waste Systems, Inc., Cl. A2		10,475		42,738
CBIZ, Inc.1,2		90,600		783,690
CDI Corp.		48,187		623,540
Cenveo, Inc.1,2		40,300		179,335
Clean Harbors, Inc.2		3,700		234,728
Comfort Systems USA, Inc.1		86,700		924,222
COMSYS IT Partners, Inc.2		9,500		21,280
Consolidated Graphics, Inc.2		28,900		654,296
Copart, Inc.2		2,000		54,380
Cornell Corrections, Inc.2		25,900		481,481
Corporate Executive Board Co. (The)		23,800		525,028
CoStar Group, Inc.2		17,100		563,274
Courier Corp.		4,424		79,190
CRA International, Inc.2		21,500		578,995
Deluxe Corp.		124,000		1,855,040
EnergySolutions, Inc.		39,600		223,740
Ennis, Inc.		19,700		238,567
Equifax, Inc.		7,300		193,596
Exponent, Inc.2		32,880		989,030
First Advantage Corp., Cl. A2		13,300		188,195
G&K Services, Inc., Cl. A		23,000		465,060
Heidrick & Struggles International, Inc.1		26,600		572,964
Hill International, Inc.2		41,000		288,640
HNI Corp.1		73,400		1,162,656
Hudson Highland Group, Inc.2		29,000		97,150
ICF International, Inc.2		17,600		432,432
Interface, Inc., Cl. A		128,800		597,632
Kelly Services, Inc., Cl. A		37,585		488,981
Kforce, Inc.2		22,026		169,160
Kimball International, Inc., Cl. B		22,400		192,864
Knoll, Inc.		61,478		554,532
Korn-Ferry International2		102,300		1,168,266
M&F Worldwide Corp.2		3,541		54,708
Manpower, Inc.		11,400		387,486
McGrath Rentcorp		12,800		273,408
Metalico, Inc.1,2		37,700		58,435
Miller (Herman), Inc.		101,300		1,319,939
Monster Worldwide, Inc.1,2		125,940		1,522,615
MPS Group, Inc.2		204,700		1,541,391
On Assignment, Inc.2		35,200		199,584
PRG-Schultz International, Inc.2		1,300		5,304
R.R. Donnelley & Sons Co.		33,600		456,288
Resources Connection, Inc.2		79,900		1,308,762
Schawk, Inc.		27,300		312,858
School Specialty, Inc.2		22,300		426,376
Spherion Corp.2		53,700		118,677
Standard Parking Corp.2		6,200		119,908
Standard Register Co. (The)		43,710		390,330
Steelcase, Inc., Cl. A		185,400		1,041,948
Sykes Enterprises, Inc.2		23,100		441,672
Team, Inc.1,2		18,834		521,702
TrueBlue, Inc.2		105,700		1,011,549
United Stationers, Inc.2		24,788		830,150
Viad Corp.		42,900		1,061,346
Waste Services, Inc.2		13,300		87,514
				32,415,793
Construction & Engineering—1.9%
Baker (Michael) Corp.2		14,800		546,268
Chicago Bridge & Iron Co. NV1		80,180		805,809
Dycom Industries, Inc.2		103,700		852,414
EMCOR Group, Inc.2		114,900		2,577,207
Fluor Corp.1		6,800		305,116
Furmanite Corp.2		7,800		42,042
Granite Construction, Inc.1		22,766		1,000,110
Insituform Technologies, Inc., Cl. A1,2		38,600		760,034
Integrated Electrical Services, Inc.1,2		16,186		141,789
KBR, Inc.		1,300		19,760
Layne Christensen Co.2		3,970		95,320
MasTec, Inc.2		92,000		1,065,360
Northwest Pipe Co.1,2		14,700		626,367
Orion Marine Group, Inc.2		1,200		11,592
Perini Corp.2		80,171		1,874,398
Pike Electric Corp.2		35,406		435,494
Shaw Group, Inc. (The)1,2		16,400		335,708
				11,494,788
Electrical Equipment—2.0%
Acuity Brands, Inc.1		54,600		1,906,086
Advanced Battery Technologies, Inc.1,2		7,000		18,620

	Shares		Value
Electrical Equipment Continued
AZZ, Inc.1,2		23,200	$	582,320
Baldor Electric Co.1		81,290		1,451,027
Belden, Inc.		84,900		1,772,712
Brady Corp., Cl. A		13,100		313,745
C&D Technologies, Inc.1,2		19,000		59,470
Day4 Energy, Inc., Legend Shares2		82,300		58,849
Encore Wire Corp.1		44,300		839,928
EnerSys, Inc.2		12,200		134,200
FuelCell Energy, Inc.2		7,300		28,324
Fushi Copperweld, Inc.2		2,100		11,067
GrafTech International Ltd.1,2		230,100		1,914,432
Hubbell, Inc., Cl. B		4,000		130,720
II-VI, Inc.2		5,100		97,359
LSI Industries, Inc.		14,900		102,363
Plug Power, Inc.2		3,900		3,978
Polypore International, Inc.2		5,534		41,837
Powell Industries, Inc.2		19,300		560,086
Regal-Beloit Corp.1		1,500		56,985
Rockwell Automation, Inc.		7,400		238,576
Smith (A.O.) Corp.		43,000		1,269,360
Valence Technology, Inc.1,2		50,000		91,000
Vicor Corp.		17,370		114,816
Woodward Governor Co.		12,200		280,844
				12,078,704
Industrial Conglomerates—0.3%
McDermott International, Inc.2		6,100		60,268
Raven Industries, Inc.		20,300		489,230
Standex International Corp.		11,000		218,240
Tredegar Corp.		44,127		802,229
				1,569,967
Machinery—5.2%
3D Systems Corp.2		600		4,764
Actuant Corp., Cl. A1		65,239		1,240,846
AGCO Corp.2		2,100		49,539
Albany International Corp., Cl. A		2,100		26,964
Altra Holdings, Inc.2		31,950		252,725
American Railcar Industries, Inc.		3,100		32,643
Ampco-Pittsburgh Corp.		26,100		566,370
Astec Industries, Inc.2		1,480		46,368
Badger Meter, Inc.1		26,720		775,414
Barnes Group, Inc.1		77,700		1,126,650
Blount International, Inc.2		70,100		664,548
Briggs & Stratton Corp.1		33,100		582,229
Bucyrus International, Inc., Cl. A		17,900		331,508
Cascade Corp.		4,946		147,688
Chart Industries, Inc.2		61,800		656,934
CIRCOR International, Inc.		35,699		981,723
Colfax Corp.2		11,400		118,446
Columbus McKinnon Corp.2		42,570		581,081
Commercial Vehicle Group, Inc.2		3,600		3,348
Crane Co.		37,200		641,328
Cummins, Inc.1		17,100		457,083
Dover Corp.		12,900		424,668
Dynamic Materials Corp.		5,400		104,274
EnPro Industries, Inc.2		53,400		1,150,236
Federal Signal Corp.		86,400		709,344
Flowserve Corp.		1,200		61,800
Gardner Denver, Inc.2		84,000		1,960,560
Gorman-Rupp Co. (The)1		29,843		928,714
Graco, Inc.		28,300		671,559
Graham Corp.1		12,500		135,250
Greenbrier Cos., Inc.1		6,000		41,220
Harsco Corp.		11,800		326,624
Hurco Cos., Inc.1,2		5,076		60,912
IDEX Corp.		7,100		171,465
Ingersoll-Rand Co. Ltd., Cl. A		44,000		763,400
John Bean Technologies Corp.		15,513		126,741
Joy Global, Inc.		6,400		146,496
K-Tron International, Inc.2		1,000		79,900
Kadant, Inc.2		31,500		424,620
Kennametal, Inc.		47,700		1,058,463
L.B. Foster Co., Cl. A2		11,700		365,976
Lincoln Electric Holdings, Inc.		4,200		213,906
Lydall, Inc.2		16,100		92,575
Manitowoc Co., Inc. (The)		97,178		841,561
McCoy Corp., Legend Shares3		46,600		51,705
Met-Pro Corp.		2,100		27,972
Mueller Industries, Inc.		57,200		1,434,576
Mueller Water Products, Inc., Cl. A1		94,400		792,960
NACCO Industries, Inc., Cl. A		3,200		119,712
Navistar International Corp.2		9,700		207,386
NN, Inc.		11,000		25,190
Nordson Corp.		2,600		83,954
Oshkosh Corp.		143,200		1,273,048
Parker-Hannifin Corp.		4,800		204,192
RBC Bearings, Inc.2		4,200		85,176
Robbins & Myers, Inc.		46,549		752,697
Sauer-Danfoss, Inc.		19,437		170,074
Sun Hydraulics Corp.1		32,750		617,010

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Machinery Continued
Tecumseh Products Co., Cl. A2		40,500	$	387,990
Tennant Co.		11,100		170,940
Terex Corp.2		20,240		350,557
Thermadyne Holdings Corp.2		5,800		39,846
Timken Co.		75,745		1,486,874
Titan International, Inc.1		91,849		757,754
Toro Co. (The)1		55,900		1,844,700
TriMas Corp.2		600		828
Trinity Industries, Inc.1		31,500		496,440
Twin Disc, Inc.		4,400		30,316
Wabash National Corp.		41,000		184,500
Watts Water Technologies, Inc., Cl. A		1,513		37,780
Xerium Technologies, Inc.2		34,952		23,068
				31,805,708
Marine—0.4%
Alexander & Baldwin, Inc.		2,800		70,168
American Commercial Lines, Inc.1,2		71,800		351,820
Excel Maritime Carriers Ltd.1		18,000		126,720
Genco Shipping & Trading Ltd.1		49,600		734,080
Horizon Lines, Inc., Cl. A		11,700		40,833
Kirby Corp.2		9,100		248,976
Safe Bulkers, Inc.1		54,100		361,388
Star Bulk Carriers Corp.1		56,694		145,704
TBS International Ltd., Cl. A1,2		50,900		510,527
Ultrapetrol Ltd. (Bahamas)2		2,500		7,975
				2,598,191
Road & Rail—0.8%
Amerco2		3,800		131,214
Arkansas Best Corp.1		51,100		1,538,621
Avis Budget Group, Inc.2		220,400		154,280
Celadon Group, Inc.2		14,200		121,126
Hertz Global Holdings, Inc.1,2		70,400		356,928
Marten Transport Ltd.2		35,400		671,184
Werner Enterprises, Inc.1		80,100		1,388,934
YRC Worldwide, Inc.1,2		128,700		369,369
				4,731,656
Trading Companies & Distributors—1.2%
Applied Industrial Technologies, Inc.		64,675		1,223,651
Beacon Roofing Supply, Inc.1,2		38,300		531,604
BlueLinx Holdings, Inc.2		3,600		6,804
DXP Enterprises, Inc.2		6,500		94,965
GATX Corp.		20,428		632,655
H&E Equipment Services, Inc.2		25,867		199,435
Houston Wire & Cable Co.1		40,000		372,400
Interline Brands, Inc.2		10,100		107,363
MSC Industrial Direct Co., Inc., Cl. A1		6,200		228,346
RSC Holdings, Inc.2		12,000		102,240
Rush Enterprises, Inc., Cl. A2		54,200		464,494
TAL International Group, Inc.		9,511		134,105
Textainer Group Holdings Ltd.		12,568		133,221
United Rentals, Inc.1,2		149,643		1,364,744
Watsco, Inc.		3,000		115,200
WESCO International, Inc.2		89,800		1,726,854
				7,438,081
Transportation Infrastructure—0.0%
CAI International, Inc.2		33,400		105,878
Information Technology—21.0%
Communications Equipment—3.1%
3Com Corp.2		324,830		740,612
Acme Packet, Inc.2		26,900		141,494
ADTRAN, Inc.		60,000		892,800
Avocent Corp.2		97,900		1,753,389
Bel Fuse, Inc., Cl. A		4,800		86,592
BigBand Networks, Inc.2		19,500		107,640
Black Box Corp.		16,320		426,278
Brocade Communications Systems, Inc.2		356,800		999,040
Ciena Corp.1,2		119,600		801,320
CommScope, Inc.2		56,400		876,456
Comtech Telecommunications Corp.2		6,300		288,666
DG Fastchannel, Inc.1,2		1,300		16,224
Digi International, Inc.2		15,400		124,894
EchoStar Holding Corp.1,2		8,900		132,343
EMS Technologies, Inc.2		22,100		571,727
Emulex Corp.2		189,938		1,325,767
Extreme Networks, Inc.2		21,620		50,591
F5 Networks, Inc.2		8,700		198,882
Finisar Corp.2		102,000		38,760
Harris Stratex Networks, Inc., Cl. A2		10,800		55,728
Hughes Communications, Inc.2		4,300		68,542
InterDigital, Inc.2		46,206		1,270,665
Ixia2		63,100		364,718
JDS Uniphase Corp.2		358,314		1,307,846
Loral Space & Communications Ltd.2		400		5,812
Netgear, Inc.2		14,700		167,727
Oplink Communications, Inc.2		6,664		57,310
ParkerVision, Inc.1,2		15,500		38,285
Performance Technologies, Inc.2		3,200		10,688
Plantronics, Inc.1		117,800		1,554,960

	Shares		Value
Communications Equipment Continued
Polycom, Inc.2		33,000	$	445,830
Powerwave Technologies, Inc.2		230,900		115,450
SeaChange International, Inc.2		33,855		244,095
ShoreTel, Inc.1,2		13,600		61,064
Sonus Networks, Inc.2		33,300		52,614
Starent Networks Corp.2		8,000		95,440
Symmetricom, Inc.2		5,300		20,935
Tekelec, Inc.1,2		81,953		1,093,253
Tellabs, Inc.2		392,066		1,615,312
UTStarcom, Inc.2		123,192		227,905
ViaSat, Inc.2		22,800		549,024
				18,996,678
Computers & Peripherals—1.6%
3PAR, Inc.1,2		27,250		207,918
Adaptec, Inc.2		127,100		419,430
Avid Technology, Inc.1,2		45,200		493,132
Compellent Technologies, Inc.2		3,400		33,082
Electronics for Imaging, Inc.2		73,200		699,792
Hutchinson Technology, Inc.1,2		14,900		51,852
Hypercom Corp.2		1,900		2,052
Imation Corp.		44,500		603,865
Intermec, Inc.2		12,800		169,984
Lexmark International, Inc., Cl. A1,2		12,600		338,940
NCR Corp.2		23,500		332,290
NetApp, Inc.2		5,100		71,247
Netezza Corp.2		49,000		325,360
Palm, Inc.1,2		56,700		174,069
QLogic Corp.2		171,050		2,298,912
Rackable Systems, Inc.2		10,400		40,976
Seagate Technology		91,600		405,788
STEC, Inc.1,2		90,700		386,382
Stratasys, Inc.2		4,400		47,300
Sun Microsystems, Inc.2		61,900		236,458
Synaptics, Inc.1,2		79,550		1,317,348
Teradata Corp.2		9,700		143,851
Western Digital Corp.2		68,100		779,745
Xyratex Ltd.2		14,200		41,890
				9,621,663
Electronic Equipment & Instruments—3.1%
Acacia Research Corp.2		16,300		49,552
Agilent Technologies, Inc.2		21,700		339,171
Agilysys, Inc.		4,734		20,309
Amphenol Corp., Cl. A		15,500		371,690
Anixter International, Inc.1,2		16,200		487,944
Arrow Electronics, Inc.2		49,100		925,044
Avnet, Inc.2		10,400		189,384
Benchmark Electronics, Inc.2		138,209		1,764,929
Brightpoint, Inc.2		57,500		250,125
Cogent, Inc.1,2		24,450		331,787
Cognex Corp.		37,000		547,600
Coherent, Inc.2		26,300		564,398
CPI International, Inc.2		100		866
CTS Corp.		69,700		384,047
Daktronics, Inc.1		18,000		168,480
DTS, Inc.1,2		30,400		557,840
Electro Rent Corp.		500		5,580
Electro Scientific Industries, Inc.2		26,900		182,651
Gerber Scientific, Inc.2		9,700		49,567
Ingram Micro, Inc., Cl. A2		23,800		318,682
Insight Enterprises, Inc.2		52,800		364,320
Itron, Inc.1,2		2,500		159,350
Jabil Circuit, Inc.		19,700		132,975
L-1 Identity Solutions, Inc.2		2,812		18,953
Littlefuse, Inc.2		31,263		518,966
Measurement Specialties, Inc.2		300		2,085
Methode Electronics, Inc.		76,090		512,847
Molex, Inc.		20,200		292,698
MTS Systems Corp.		19,800		527,472
Multi-Fineline Electronix, Inc.2		42,234		493,715
NAM TAI Electronics, Inc.		16,200		89,100
National Instruments Corp.		5,300		129,108
Newport Corp.2		28,000		189,840
OSI Systems, Inc.2		18,000		249,300
Park Electrochemical Corp.		24,000		455,040
PC Connection, Inc.2		7,100		36,352
Plexus Corp.2		62,190		1,054,121
RadiSys Corp.2		800		4,424
Rofin-Sinar Technologies, Inc.1,2		56,000		1,152,480
Rogers Corp.2		19,200		533,184
Sanmina-SCI Corp.2		369,600		173,712
ScanSource, Inc.2		26,010		501,213
SYNNEX Corp.1,2		59,500		674,135
Tech Data Corp.2		56,168		1,002,037
Technitrol, Inc.		58,900		204,972
Trimble Navigation Ltd.2		16,800		363,048
TTM Technologies, Inc.1,2		92,500		481,925
Universal Display Corp.2		2,600		24,570
Vishay Intertechnology, Inc.2		314,740		1,076,411
Zygo Corp.2		1,500		10,365
				18,938,364

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Internet Software & Services—2.0%
Akamai Technologies, Inc.1,2		7,100	$	107,139
Art Technology Group, Inc.2		54,200		104,606
AsiaInfo Holdings, Inc.2		59,000		698,560
Digital River, Inc.2		63,300		1,569,840
EarthLink, Inc.1,2		126,364		854,221
Imergent, Inc.1		12,700		52,705
Interwoven, Inc.2		25,390		319,914
j2 Global Communications, Inc.2		86,100		1,725,444
Knot, Inc. (The)2		13,000		108,160
Limelight Networks, Inc.2		1,300		3,185
LoopNet, Inc.1,2		34,400		234,608
Marchex, Inc., Cl. B		37,037		215,926
ModusLink Global Solutions, Inc.2		32,210		93,087
Move, Inc.2		11,900		19,040
National Information Consortium, Inc.1		39,800		183,080
NaviSite, Inc.2		11,700		4,680
Open Text Corp.1,2		52,600		1,584,838
Perficient, Inc.2		6,900		32,982
RealNetworks, Inc.2		44,672		157,692
S1 Corp.2		113,800		897,882
Sohu.com, Inc.2		5,000		236,700
SonicWALL, Inc.2		65,860		262,123
SoundBite Communications, Inc.1,2		17,200		22,188
Switch & Data Facilities Co.2		9,892		73,102
TheStreet.com, Inc.1		16,150		46,835
United Online, Inc.		107,742		653,994
ValueClick, Inc.2		145,400		994,536
VeriSign, Inc.2		9,900		188,892
Vignette Corp.2		54,240		510,398
VistaPrint Ltd.2		12,550		233,556
Vocus, Inc.2		17,000		309,570
Zix Corp.1,2		12,600		14,994
				12,514,477
IT Services—2.1%
Acxiom Corp.		156,400		1,268,404
Cass Information Systems, Inc.		200		6,092
CIBER, Inc.2		138,373		665,574
Computer Sciences Corp.2		9,600		337,344
Convergys Corp.2		227,567		1,458,704
CSG Systems International, Inc.1,2		71,900		1,256,093
DST Systems, Inc.1,2		3,300		125,334
Euronet Worldwide, Inc.2		10,589		122,938
Exlservice Holdings, Inc.2		12,900		110,553
Forrester Research, Inc.2		19,374		546,541
Gartner, Inc.1,2		25,900		461,797
Global Cash Access, Inc.2		56,312		125,013
Hackett Group, Inc. (The)2		3,700		10,804
Heartland Payment Systems, Inc.1		13,300		232,750
Hewitt Associates, Inc.2		9,700		275,286
iGate Corp.2		31,656		206,081
infoGROUP, Inc.		16,300		77,262
Integral Systems, Inc.1,2		36,154		435,656
Mastech Holdings, Inc.2		540		1,285
Maximus, Inc.		5,600		196,616
NCI, Inc., Cl. A2		7,100		213,923
Ness Technologies, Inc.2		19,500		83,460
NeuStar, Inc., Cl. A2		43,200		826,416
Online Resources & Communications Corp.2		1,000		4,740
Perot Systems Corp., Cl. A2		89,800		1,227,566
RightNow Technologies, Inc.2		45,470		351,483
Sapient Corp.2		176,800		784,992
Syntel, Inc.		5,700		131,784
TeleTech Holdings, Inc.2		82,500		688,875
TNS, Inc.2		400		3,756
Total System Services, Inc.		11,000		154,000
Unisys Corp.2		252,700		214,795
Wright Express Corp.2		9,600		120,960
				12,726,877
Office Electronics—0.2%
Xerox Corp.		41,400		329,958
Zebra Technologies Corp., Cl. A2		47,400		960,324
				1,290,282
Semiconductors & Semiconductor Equipment—5.6%
Actel Corp.2		46,840		548,965
Advanced Analogic Technologies, Inc.2		2,300		6,946
Advanced Energy Industries, Inc.2		70,700		703,465
Advanced Micro Devices, Inc.1,2		25,000		54,000
Amkor Technology, Inc.2		366,600		799,188
Analog Devices, Inc.		21,000		399,420
Applied Micro Circuits Corp.2		83,400		327,762
Atheros Communications, Inc.2		25,160		360,040
Atmel Corp.2		536,800		1,680,184
ATMI, Inc.2		51,200		790,016
Broadcom Corp., Cl. A2		23,000		390,310
Brooks Automation, Inc.2		97,291		565,261
Cabot Microelectronics Corp.1,2		36,000		938,520
Cirrus Logic, Inc.2		106,129		284,426
Cohu, Inc.		19,200		233,280

	Shares		Value
Semiconductors & Semiconductor Equipment Continued
Conexant Systems, Inc.2		16,820	$	11,522
Cymer, Inc.1,2		34,900		764,659
DSP Group, Inc.2		17,801		142,764
Entegris, Inc.2		279,000		611,010
Exar Corp.2		38,000		253,460
Fairchild Semiconductor International, Inc., Cl. A2		258,400		1,263,576
FEI Co.2		15,100		284,786
Integrated Device Technology, Inc.2		301,600		1,691,976
Intellon Corp.2		17,600		44,176
International Rectifier Corp.2		35,000		472,500
Intersil Corp., Cl. A		76,600		703,954
IXYS Corp.		19,800		163,548
KLA-Tencor Corp.		9,300		202,647
Kulicke & Soffa Industries, Inc.2		19,600		33,320
Lattice Semiconductor Corp.2		199,389		301,077
LSI Corp.2		186,100		612,269
Marvell Technology Group Ltd.2		64,000		426,880
Mattson Technology, Inc.2		10,700		15,087
MEMC Electronic Materials, Inc.2		15,100		215,628
Micrel, Inc.1		119,900		876,469
Microtune, Inc.2		15,500		31,620
MKS Instruments, Inc.2		94,000		1,390,260
Monolithic Power Systems, Inc.2		59,100		745,251
National Semiconductor Corp.		13,400		134,938
Netlogic Microsystems, Inc.2		31,000		682,310
Novellus Systems, Inc.2		66,500		820,610
NVIDIA Corp.2		29,000		234,030
OmniVision Technologies, Inc.1,2		68,500		359,625
ON Semiconductor Corp.2		66,800		227,120
Pericom Semiconductor Corp.2		68,808		377,068
PMC-Sierra, Inc.2		268,300		1,303,938
RF Micro Devices, Inc.2		273,500		213,330
Rudolph Technologies, Inc.2		5,200		18,356
Semtech Corp.2		115,900		1,306,193
Silicon Image, Inc.2		173,300		727,860
Silicon Laboratories, Inc.1,2		56,600		1,402,548
Silicon Storage Technology, Inc.2		60,800		139,232
Skyworks Solutions, Inc.1,2		225,200		1,247,608
Spansion, Inc., Cl. A2		9,800		1,855
Standard Microsystems Corp.2		26,500		433,010
Supertex, Inc.2		19,666		472,181
Techwell, Inc.2		6,200		40,300
Teradyne, Inc.2		305,496		1,289,193
Tessera Technologies, Inc.2		4,500		53,460
TriQuint Semiconductor, Inc.2		74,400		255,936
Ultra Clean Holdings, Inc.2		4,100		8,241
Ultratech, Inc.1,2		45,475		543,881
Varian Semiconductor Equipment Associates, Inc.2		37,400		677,688
Veeco Instruments, Inc.1,2		71,100		450,774
Verigy Ltd.2		49,000		471,380
Volterra Semiconductor Corp.1,2		60,000		429,000
Zoran Corp.2		37,736		257,737
				33,919,624
Software—3.3%
Actuate Corp.2		2,421		7,166
Advent Software, Inc.1,2		6,800		135,796
ArcSight, Inc.2		1,600		12,816
Aspen Technology, Inc.2		96,400		715,288
Autodesk, Inc.2		17,700		347,805
Blackbaud, Inc.		7,300		98,550
Bottomline Technologies, Inc.2		9,300		66,030
Cadence Design Systems, Inc.2		269,674		987,007
Commvault Systems, Inc.2		6,410		85,958
Compuware Corp.2		64,700		436,725
DemandTec, Inc.2		2,800		22,596
Double-Take Software, Inc.2		5,820		52,205
EPIQ Systems, Inc.1,2		27,476		459,124
FactSet Research Systems, Inc.1		3,300		145,992
Fair Isaac Corp.		101,100		1,704,546
FalconStor Software, Inc.2		12,500		34,750
Henry (Jack) & Associates, Inc.1		8,200		159,162
i2 Technologies, Inc.1,2		5,700		36,423
Interactive Intelligence, Inc.1,2		12,400		79,484
JDA Software Group, Inc.2		55,300		726,089
Kenexa Corp.2		22,900		182,742
Lawson Software, Inc.2		30,819		146,082
Manhattan Associates, Inc.2		46,740		738,959
Mentor Graphics Corp.1,2		88,400		457,028
MICROS Systems, Inc.2		17,100		279,072
MicroStrategy, Inc., Cl. A2		16,400		608,932
MSC.Software Corp.2		11,200		74,816
Net 1 UEPS Technologies, Inc.2		77,500		1,061,750
NetScout Systems, Inc.2		27,500		237,050
Nuance Communications, Inc.2		4,100		42,476
Parametric Technology Corp.2		117,200		1,482,580
Pegasystems, Inc.1		8,800		108,768
Phoenix Technologies Ltd.2		3,800		13,300
Progress Software Corp.2		29,500		568,170

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Software Continued
PROS Holdings, Inc.2		3,250	$	18,688
Quest Software, Inc.2		109,400		1,377,346
Radiant Systems, Inc.2		36,300		122,331
Renaissance Learning, Inc.		400		3,596
Smith Micro Software, Inc.2		15,600		86,736
Solera Holdings, Inc.2		3,000		72,300
SPSS, Inc.2		21,800		587,728
Sybase, Inc.2		13,600		336,872
Symyx Technologies, Inc.2		6,900		40,986
Synchronoss Technologies, Inc.1,2		22,700		241,982
Synopsys, Inc.2		9,000		166,680
Take-Two Interactive Software, Inc.		71,100		537,516
Taleo Corp., Cl. A2		28,340		221,902
The9 Ltd., ADR2		2,700		35,964
TIBCO Software, Inc.2		350,900		1,821,171
Tyler Technologies, Inc.1,2		41,400		495,972
Ultimate Software Group, Inc. (The)2		7,500		109,500
Wind River Systems, Inc.2		140,100		1,265,103
				19,857,610
Materials—5.6%
Chemicals—2.7%
American Vanguard Corp.		6,600		77,220
Arch Chemicals, Inc.		300		7,821
Ashland, Inc.		115,159		1,210,321
Balchem Corp.		10,430		259,811
Cabot Corp.		8,200		125,460
Calgon Carbon Corp.2		29,180		448,205
Celanese Corp., Series A		4,400		54,692
CF Industries Holdings, Inc.		7,100		349,036
Chemtura Corp.		419,800		587,720
Cytec Industries, Inc.		15,600		331,032
Eastman Chemical Co.		4,500		142,695
Ferro Corp.1		76,438		538,888
Fuller (H.B.) Co.		73,300		1,180,863
GenTek, Inc.1,2		2,600		39,130
ICO, Inc.1,2		32,600		103,016
Innophos Holdings, Inc.		35,900		711,179
Innospec, Inc.		37,888		223,160
Koppers Holdings, Inc.		48,600		1,050,732
Landec Corp.2		21,200		139,496
LSB Industries, Inc.1,2		18,700		155,584
Minerals Technologies, Inc.		17,800		728,020
NewMarket Corp.1		18,000		628,380
NOVA Chemicals Corp.		97,500		465,075
Olin Corp.		70,300		1,271,024
OM Group, Inc.1,2		35,140		741,805
Penford Corp.1		1,500		15,180
PolyOne Corp.2		147,300		463,995
Quaker Chemical Corp.		15,300		251,685
Rockwood Holdings, Inc.2		34,300		370,440
Schulman (A.), Inc.		40,111		681,887
ShengdaTech, Inc.1,2		5,882		20,705
Spartech Corp.		39,800		249,148
Stepan Co.		10,400		488,696
Terra Industries, Inc.		32,300		538,441
Valhi, Inc.		1,200		12,840
Valspar Corp. (The)		36,400		658,476
W.R. Grace & Co.2		8,400		50,148
Zep, Inc.		39,300		758,883
Zoltek Cos., Inc.1,2		23,400		210,366
				16,341,255
Construction Materials—0.1%
Headwaters, Inc.1,2		94,100		635,175
Containers & Packaging—0.4%
Myers Industries, Inc.		42,200		337,600
Packaging Corp. of America		1,500		20,190
Rock-Tenn Co., Cl. A		21,600		738,288
Sealed Air Corp.		8,500		126,990
Smurfit-Stone Container Corp.2		246,900		62,960
Sonoco Products Co.		9,700		224,652
Temple-Inland, Inc.1		230,843		1,108,046
				2,618,726
Metals & Mining—1.9%
A. M. Castle & Co.		33,827		366,346
AK Steel Holding Corp.		112,800		1,051,296
Allegheny Technologies, Inc.		8,400		214,452
Amerigo Resources Ltd.		118,700		37,072
Brush Engineered Materials, Inc.2		29,600		376,512
Carpenter Technology Corp.		75,900		1,558,986
Century Aluminum Co.1,2		100,800		1,008,000
Farallon Resources Ltd.2		156,700		19,319
General Steel Holdings, Inc.1,2		13,700		53,978
Haynes International, Inc.2		18,900		465,318
Hecla Mining Co.1,2		133,800		374,640
Kaiser Aluminum Corp.		11,543		259,948
Olympic Steel, Inc.1		26,200		533,694
Redcorp Ventures Ltd., Legend Shares2,3		666,400		21,908

	Shares		Value
Metals & Mining Continued
Reliance Steel & Aluminum Co.		30,700	$	612,158
RTI International Metals, Inc.1,2		62,400		892,944
Schnitzer Steel Industries, Inc.1		47,800		1,799,670
Sims Metal Management Ltd., Sponsored ADR		65,825		817,547
Stillwater Mining Co.2		26,042		128,647
Sutor Technology Group Ltd.2		1,400		3,234
United States Steel Corp.		5,600		208,320
Universal Stainless & Alloy Products, Inc.2		4,700		68,103
Worthington Industries, Inc.1		56,398		621,506
Yamana Gold, Inc.		2,011		15,619
				11,509,217
Paper & Forest Products—0.5%
Buckeye Technologies, Inc.2		47,027		171,178
Clearwater Paper Corp.2		4,060		34,063
Deltic Timber Corp.		3,300		150,975
Domtar Corp.2		208,300		347,861
Glatfelter		54,000		502,200
International Paper Co.		27,000		318,600
Louisiana-Pacific Corp.		83,000		129,480
MeadWestvaco Corp.		7,700		86,163
Mercer International, Inc.2		12,300		23,616
Neenah Paper, Inc.		11,800		104,312
Schweitzer-Mauduit International, Inc.		12,850		257,257
Verso Paper Corp.		3,700		3,811
Wausau Paper Corp.		73,100		836,264
				2,965,780
Telecommunication Services—1.9%
Diversified Telecommunication Services—1.4%
Alaska Communications Systems Group, Inc.1		31,100		291,718
Atlantic Tele-Network, Inc.		16,400		435,420
Cbeyond, Inc.1,2		21,500		343,570
Cincinnati Bell, Inc.2		434,500		838,585
Cogent Communications Group, Inc.1,2		38,478		251,261
Embarq Corp.		19,700		708,412
General Communication, Inc., Cl. A2		16,200		131,058
Global Crossing Ltd.2		20,644		163,913
Iowa Telecommunications Services, Inc.1		48,337		690,252
NTELOS Holdings Corp.		63,000		1,553,580
PAETEC Holding Corp.2		9,600		13,824
Premiere Global Services, Inc.2		160,300		1,380,183
Qwest Communications International, Inc.		87,500		318,500
tw telecom, Inc.2		154,000		1,304,380
				8,424,656
Wireless Telecommunication Services—0.5%
Centennial Communications Corp.2		179,900		1,449,994
ICO Global Communication Holdings Ltd.2		8,200		9,266
iPCS, Inc.1,2		17,534		120,283
NII Holdings, Inc.2		8,400		152,712
Syniverse Holdings, Inc.2		68,600		819,084
Telephone & Data Systems, Inc.		6,400		203,200
United States Cellular Corp.2		6,600		285,384
USA Mobility, Inc.		33,300		385,281
				3,425,204
Utilities—0.5%
Energy Traders—0.1%
Canadian Hydro Developers, Inc., Legend Shares2		14,000		34,289
Mirant Corp.2		10,500		198,135
				232,424
Gas Utilities—0.1%
Laclede Group, Inc. (The)		5,000		234,200
Northwest Natural Gas Co.		1,080		47,768
WGL Holdings, Inc.		15,500		506,695
				788,663
Multi-Utilities—0.2%
Avista Corp.		42,200		817,836
CH Energy Group, Inc.		9,848		506,089
				1,323,925
Water Utilities—0.1%
Cascal NV		46,800		188,136
SJW Corp.		14,700		440,115
				628,251
Total Common Stocks (Cost $836,165,654)				598,941,436

	Units
Rights, Warrants and Certificates—0.0%
Redcorp Ventures Ltd. Wts., Strike Price 0.65CAD, Exp. 7/5/092,4 (Cost $0)		333,200	—

STATEMENT OF INVESTMENTS Continued

	Shares			Value
Investment Companies—1.0%
Capital Southwest Corp.		200		$	21,632
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%5,6		6,344,806			6,344,806
Total Investment Companies (Cost $6,370,123)					6,366,438
Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $842,535,777)					605,307,874
	Principal
	Amount/Shares
Investments Purchased with Cash Collateral from Securities Loaned—18.4%7
American General Finance Corp., 4.34%, 1/9/09	$	6,500,000			6,465,927
American Honda Finance Corp., 2.25%, 3/9/09		6,500,000			6,493,039
ANZ National (Int’l) Ltd., 0.34%, 3/6/09		8,000,000			7,998,128
Beta Finance, Inc., 0.35%, 2/17/09		5,000,000			4,974,015
CAM US Finance SA Unipersonal, 3.24%, 2/2/09	$	6,000,000		$	5,991,396
CC USA, Inc., 0.35%, 2/13/09		4,500,000			4,478,832
GSAA Home Equity Trust, Series 2005-15, Cl. 2A1, 0.56%, 1/26/09		510,456			451,277
MBIA Global Funding LLC, 0.37%, 3/13/09		4,000,000			3,950,512
OFI Liquid Assets Fund, LLC, 1.71%5,6		65,710,173			65,710,173
Wachovia Bank NA, 0.36%, 2/23/09		6,000,000			5,962,992
Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $112,720,343)					112,476,291
Total Investments, at Value (Cost $955,256,120)		117.6	%		717,784,165
Liabilities in Excess of Other Assets		(17.6	)		(107,661,684	)
Net Assets		100.0	%	$	610,122,481

Industry classifications are unaudited.

Footnotes to Statement of Investments

Strike Price is reported in U.S. Dollars, except for those denoted in the following currency:
CAD      Canadian Dollar

1.	Partial or fully-loaned security. See Note 7 of accompanying Notes.
2.	Non-income producing security.
3.	Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $202,463 or 0.03% of the Fund’s net assets as of December 31, 2008.
4.	Illiquid or restricted security. The aggregate value of illiquid or restricted securities as of December 31, 2008 was $16,106, which represents less than 0.005% of the Fund’s net assets, all of which is considered restricted. See Note 6 of accompanying Notes. Information concerning restricted securities is as follows:

	Acquisition						Unrealized
Security	Date		Cost		Value		Depreciation
Tusk Energy Corp., Legend Shares		11/15/04	$	38,148	$	16,106	$	22,042

5. Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
OFI Liquid Assets Fund, LLC		—		439,699,213		373,989,040		65,710,173
Oppenheimer Institutional Money Market Fund, Cl. E		10,327,619		290,890,004		294,872,817		6,344,806

	Value		Income
OFI Liquid Assets Fund, LLC	$	65,710,173	$	1,425,660	a
Oppenheimer Institutional Money Market Fund, Cl. E		6,344,806		241,632
	$	72,054,979	$	1,667,292

     a.  Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

6.	Rate shown is the 7-day yield as of December 31, 2008.
7.	The security/securities have been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 7 of accompanying Notes.

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments in		Other Financial
Valuation Description	Securities		Instruments*
Level 1—Quoted Prices	$	671,016,762	$	—
Level 2—Other Significant Observable Inputs		46,767,403		—
Level 3—Significant Unobservable Inputs		—		—
Total	$	717,784,165	$	—

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $883,201,141)	$	645,729,186
Affiliated companies (cost $72,054,979)		72,054,979
		717,784,165
Cash		3,527,345
Receivables and other assets:
Dividends and interest		674,171
Investments sold		627,153
Shares of beneficial interest sold		452,800
Due from Manager		17
Other		325,250
Total assets		723,390,901
Liabilities
Return of collateral for securities loaned		112,509,871
Payables and other liabilities:
Distribution and service plan fees		338,590
Shares of beneficial interest redeemed		233,823
Shareholder communications		87,648
Investments purchased		35,138
Trustees’ compensation		4,337
Transfer and shareholder servicing agent fees		1,720
Other		57,293
Total liabilities		113,268,420
Net Assets	$	610,122,481
Composition of Net Assets
Par value of shares of beneficial interest	$	57,827
Additional paid-in capital		977,246,157
Accumulated net investment income		4,880,816
Accumulated net realized loss on investments and foreign currency transactions		(134,590,364	)
Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies		(237,471,955	)
Net Assets	$	610,122,481
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $58,478,295 and 5,491,620 shares of beneficial interest outstanding)	$	10.65
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $551,644,186 and 52,335,848 shares of beneficial interest outstanding)	$	10.54

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $10,042)	$	10,073,374
Affiliated companies		241,632
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		1,086,082
Affiliated companies		1,425,660
Interest		14,692
Total investment income		12,841,440
Expenses
Management fees		5,909,561
Distribution and service plan fees - Service shares		1,924,705
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,994
Shareholder communications:
Non-Service shares		23,257
Service shares		219,530
Trustees’ compensation		21,873
Custodian fees and expenses		5,592
Other		78,911
Total expenses		8,203,417
Less reduction to custodian expenses		(1,682	)
Less waivers and reimbursements of expenses		(7,346	)
Net expenses		8,194,389
Net Investment Income		4,647,051
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies		(131,278,404	)
Foreign currency transactions		18,140
Net realized loss		(131,260,264	)
Net change in unrealized depreciation on:
Investments		(252,024,252	)
Translation of assets and liabilities denominated in foreign currencies		(701,011	)
Net change in unrealized depreciation		(252,725,263	)
Net Decrease in Net Assets Resulting from Operations	$	(379,338,476	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	4,647,051		$	2,253,546
Net realized gain (loss)		(131,260,264	)		50,386,224
Net change in unrealized appreciation (depreciation)		(252,725,263	)		(75,276,464	)
Net decrease in net assets resulting from operations		(379,338,476	)		(22,636,694	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(406,564	)		(284,891	)
Service shares		(2,093,583	)		(1,096,034	)
		(2,500,147	)		(1,380,925	)
Distributions from net realized gain:
Non-Service shares		(4,514,393	)		(3,038,041	)
Service shares		(43,539,151	)		(23,704,364	)
		(48,053,544	)		(26,742,405	)
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions:
Non-Service shares		5,447,779			17,695,373
Service shares		118,985,953			230,810,116
		124,433,732			248,505,489
Net Assets
Total increase (decrease)		(305,458,435	)		197,745,465
Beginning of period		915,580,916			717,835,451
End of period (including accumulated net investment income of $4,880,816 and $2,449,399, respectively)	$	610,122,481		$	915,580,916

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	18.20		$	19.15		$	17.18		$	16.05		$	13.44
Income (loss) from investment operations:
Net investment income1		.12			.09			.08			.04			.01
Net realized and unrealized gain (loss)		(6.73	)		(.30	)		2.46			1.51			2.60
Total from investment operations		(6.61	)		(.21	)		2.54			1.55			2.61
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.08	)		(.06	)		(.03	)		—			—
Distributions from net realized gain		(.86	)		(.68	)		(.54	)		(.42	)		—
Total dividends and/or distributions to shareholders		(.94	)		(.74	)		(.57	)		(.42	)		—
Net asset value, end of period	$	10.65		$	18.20		$	19.15		$	17.18		$	16.05
Total Return, at Net Asset Value2		(37.83	)%		(1.21	)%		15.00	%		9.92	%		19.42	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	58,478		$	93,939		$	81,405		$	44,820		$	38,636
Average net assets (in thousands)	$	80,406		$	94,815		$	62,659		$	39,708		$	30,871
Ratios to average net assets:3
Net investment income		0.80	%		0.48	%		0.46	%		0.23	%		0.06	%
Total expenses		0.75	%4,5,6		0.73	%4,5,6		0.77	%4,5		0.81	%6		0.83	%6
Portfolio turnover rate		130	%		115	%		110	%		110	%		147	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total Expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.75	%
Year Ended December 31, 2007	0.73	%
Year Ended December 31, 2006	0.77	%

5.	Waiver or reimbursement of indirect management fees less than 0.005%.
6.	Reduction to custodian expenses less than 0.005%.

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares    Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	18.03		$	18.98		$	17.06		$	15.97		$	13.40
Income (loss) from investment operations:
Net investment income (loss)1		.08			.05			.04			—	2		(.02	)
Net realized and unrealized gain (loss)		(6.67	)		(.29	)		2.42			1.51			2.59
Total from investment operations		(6.59	)		(.24	)		2.46			1.51			2.57
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.04	)		(.03	)		—	2		—			—
Distributions from net realized gain		(.86	)		(.68	)		(.54	)		(.42	)		—
Total dividends and/or distributions to shareholders		(.90	)		(.71	)		(.54	)		(.42	)		—
Net asset value, end of period	$	10.54		$	18.03		$	18.98		$	17.06		$	15.97
Total Return, at Net Asset Value3		(38.00	)%		(1.39	)%		14.66	%		9.71	%		19.18	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	551,644		$	821,642		$	636,430		$	314,868		$	173,612
Average net assets (in thousands)	$	769,150		$	766,102		$	479,456		$	221,324		$	112,279
Ratios to average net assets:4
Net investment income (loss)		0.52	%		0.23	%		0.23	%		0.02	%		(0.14	)%
Total expenses		0.99	%5,6,7		0.97	%5,6,7		1.00	%5,6		1.04	%7		1.06	%7
Portfolio turnover rate		130	%		115	%		110	%		110	%		147	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
3.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4.	Annualized for periods less than one full year.
5.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	0.99	%
Year Ended December 31, 2007	0.97	%
Year Ended December 31, 2006	1.00	%

6.	Waiver or reimbursement of indirect management fees less than 0.005%.
7.	Reduction to custodian expenses less than 0.005%.

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Main Street Small Cap Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek capital appreciation. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

     In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Concentration of Risks. The Fund from time to time may have elements of concentration risk due to the value of certain securities held compared to the overall net investments value of the Fund. Such concentrations may subject the Fund to additional risks.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments in OFI Liquid Assets Fund, LLC. The Fund is permitted to invest cash collateral received in connection with its securities lending activities. Pursuant to the Fund’s Securities Lending Procedures, the Fund may invest cash collateral in, among other investments, an affiliated money market fund. OFI Liquid Assets Fund, LLC (“LAF”) is a limited

liability company whose investment objective is to seek current income and stability of principal. The Manager is also the investment adviser of LAF. LAF is not registered under the Investment Company Act of 1940. However, LAF does comply with the investment restrictions applicable to registered money market funds set forth in Rule 2a-7 adopted under the Investment Company Act. The Fund’s investment in LAF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

Allocation of Income, Expenses, Gains and Losses Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation Based
					on Cost of Securities
Undistributed	Undistributed		Accumulated		and Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3,4,5,6		Tax Purposes
$4,877,031	$	—	$	113,847,637	$	258,206,559

1. As of December 31, 2008, the Fund had $91,820,783 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2008, details of the capital loss carryforward were as follows:

Expiring
2016	$	91,820,783

2. As of December 31, 2008, the Fund had $22,025,415 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.

3. The Fund had $57 of post-October foreign currency losses which were deferred.

4. The Fund had $1,382 of post-October passive foreign investment company losses which were deferred.

5. During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

6. During the fiscal year ended December 31, 2007, the Fund did not utilize any capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Increase
Increase	to Accumulated Net
to Accumulated Net	Realized Loss
Investment Income	on Investments
$284,513		$284,513

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	7,557,183	$	2,813,251
Long-term capital gain		42,996,508		25,310,079
Total	$	50,553,691	$	28,123,330

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	975,990,724
Federal tax cost of other investments		(781,938	)
Total federal tax cost	$	975,208,786
Gross unrealized appreciation	$	24,051,648
Gross unrealized depreciation		(282,258,207	)
Net unrealized depreciation	$	(258,206,559	)

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		1,628,830		$	24,176,255			1,931,787		$	37,725,561
Dividends and/or distributions reinvested		326,974			4,920,957			177,034			3,322,932
Redeemed		(1,624,446	)		(23,649,433	)		(1,200,537	)		(23,353,120	)
Net increase		331,358		$	5,447,779			908,284		$	17,695,373
Service Shares
Sold		14,415,062		$	222,143,048			15,587,096		$	300,314,601
Dividends and/or distributions reinvested		3,047,035			45,492,232			1,328,184			24,744,065
Redeemed		(10,696,966	)		(148,649,327	)		(4,874,156	)		(94,248,550	)
Net increase		6,765,131		$	118,985,953			12,041,124		$	230,810,116

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	1,177,910,057	$	1,100,973,230

NOTES TO FINANCIAL STATEMENTS Continued

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $20,063 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $7,346 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into foreign currency exchange contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

     Risks to the Fund include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received.

     As of December 31, 2008, the Fund had no outstanding forward contracts.

6. Illiquid or Restricted Securities

As of December 31, 2008, investments in securities included issues that are illiquid or restricted. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security may have a contractual restriction on its resale and is valued under methods approved by the Board of Trustees as reflecting fair value. The Fund will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid and restricted securities. Certain restricted securities, eligible for resale to qualified institutional purchasers, may not be subject to that limitation. Securities that are illiquid or restricted are marked with an applicable footnote on the Statement of Investments. Restricted securities are reported on a schedule following the Statement of Investments.

7. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand. As of December 31, 2008, the Fund had on loan securities valued at $112,421,328. Collateral of $112,509,871 was received for the loans, all of which was received in cash and subsequently invested in approved instruments or held as cash.

8. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

9. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Money Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Money Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Principal
	Amount		Value
Certificates of Deposit—22.9%
Domestic Certificates of Deposit—3.7%
Citibank NA:
1.40%, 3/20/09	$	3,000,000	$	3,000,000
1.45%, 3/20/09		3,000,000		3,000,000
1.65%, 1/8/09		1,000,000		1,000,000
1.85%, 3/12/09		2,000,000		2,000,000
				9,000,000
Yankee Certificates of Deposit—19.2%
Bank of Nova Scotia, Houston, TX:
2.46%, 9/4/091		3,000,000		3,000,000
2.501%, 9/8/091		3,000,000		3,000,000
BNP Paribas, New York:
1.97%, 2/12/09		6,000,000		6,000,000
2.12%, 3/6/09		1,500,000		1,500,000
2.29%, 2/10/09		2,000,000		2,000,552
3.10%, 2/27/09		1,800,000		1,800,000
Lloyds TSB Bank plc:
0.33%, 1/22/09		3,000,000		3,000,000
3.50%, 1/23/09		3,000,000		3,001,089
Rabobank Nederland NV, New York:
0.75%, 6/24/09		2,000,000		2,000,000
1.25%, 6/16/09		4,000,000		4,000,000
Royal Bank of Canada, New York,
2.71%, 8/7/091		5,000,000		5,000,000
Societe Generale:
4%, 1/16/09		5,000,000		5,000,000
4%, 1/20/09		2,000,000		2,000,000
Toronto Dominion Bank, New York:
3.03%, 2/5/09		3,000,000		3,000,000
3.13%, 1/30/09		2,500,000		2,500,000
				46,801,641
Total Certificates of Deposit (Cost $55,801,641)				55,801,641
Direct Bank Obligations—15.6%
Bank of America NA, 2.18%, 2/27/09		5,000,000		4,999,849
Barclays US Funding LLC, 1.55%, 1/5/09		1,000,000		999,828
Calyon North America, Inc.:
0.44%, 1/21/09		1,500,000		1,499,633
0.45%, 1/12/09		1,000,000		999,704
Danske Corp.:
1.285%, 3/30/092		2,000,000		1,993,718
1.79%, 3/12/092		1,000,000		995,975
1.80%, 1/5/092		2,000,000		1,999,600
2.03%, 3/9/092		2,000,000		1,992,444
2.03%, 3/10/092		2,000,000		1,992,331
Deutsche Bank Financial LLC,
0.39%, 1/13/09		1,000,000		999,870
HSBC Bank USA NA, 2.53%, 8/14/091		3,000,000		2,970,267
National Australia Funding (Delaware), Inc.:
0.69%, 3/18/092	$	2,000,000	$	1,997,087
1.25%, 3/2/092		3,000,000		2,993,750
1.75%, 2/11/092		1,000,000		998,007
Nordea North America, Inc.:
1.02%, 3/17/09		2,500,000		2,494,688
2.04%, 3/11/09		2,000,000		1,992,180
Rabobank USA Financial Corp.,
1.30%, 2/4/09		3,000,000		2,996,317
Royal Bank of Canada, 4.95%, 7/15/091		3,000,000		3,000,000
Total Direct Bank Obligations (Cost $37,915,248)				37,915,248
Short-Term Notes—58.9%
Air Freight & Couriers—0.8%
United Parcel Service, Inc.,
0.40%, 1/8/09		2,000,000		1,999,844
Automobiles—2.9%
BMW US Capital LLC, 2%, 1/8/092		7,000,000		6,997,278
Building Products—0.8%
Illinois Tool Works, Inc., 1.20%, 2/2/09		2,000,000		1,997,867
Capital Markets—2.1%
Banc of America Securities LLC,
0.19%, 1/1/091		5,000,000		5,000,000
Chemicals—0.4%
BASF AG, 1.47%, 1/7/09		1,000,000		999,755
Commercial Finance—0.8%
Private Export Funding Corp.,
0.80%, 1/13/092		2,000,000		1,999,467
Diversified Financial Services—4.6%
General Electric Capital Corp.:
2.60%, 1/29/09		4,300,000		4,291,304
3%, 1/27/09		5,000,000		4,989,167
3.10%, 1/23/09		2,000,000		1,996,211
				11,276,682
Diversified Telecommunication Services—0.8%
AT&T, Inc., 1.15%, 1/30/09		2,000,000		1,998,147
Food Products—1.0%
Nestle Capital Corp.:
2.395%, 3/13/092		1,500,000		1,492,915
2.40%, 3/6/092		1,000,000		995,733
				2,488,648
Insurance—5.3%
Jackson National Life Global Funding,
Series 2004-6, 1.29%, 8/15/091,3		2,500,000		2,500,000
Jackson National Life Global Funding,
Series 2008-1, 2.69%, 2/10/091,4		1,000,000		1,000,000
MetLife Funding, Inc.:
0.40%, 1/28/09		4,500,000		4,498,650
1%, 1/14/09		1,000,000		999,639

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Insurance Continued
Security Life of Denver, 2.13%, 9/8/091,3	$	2,000,000	$	2,000,000
United of Omaha Life Insurance Co.,
1.64%, 12/28/091		2,000,000		2,000,000
				12,998,289
Leasing & Factoring—6.3%
American Honda Finance Corp.:
1.998%, 9/18/091,4		1,000,000		1,000,000
2.989%, 5/5/091,4		3,000,000		3,000,000
Toyota Motor Credit Corp.:
1.25%, 3/23/09		3,000,000		2,991,563
2.50%, 2/2/09		2,900,000		2,892,009
2.65%, 1/26/09		2,400,000		2,395,583
3.55%, 1/22/09		3,000,000		2,993,788
				15,272,943
Municipal—1.9%
Alta Mira LLC, Series 2004,
2.29%, 1/2/091		2,205,000		2,205,000
Hayward, CA Multifamily Housing
Revenue Bonds, Lord Tennyson Apts.
Project, Series A-T, 1.75%, 1/2/091		710,000		710,000
St. Johns Cnty., FL Industrial
Development Authority Revenue Bonds,
Presbyterian Retirement Communities
Project, Series 2004B, 3.38%, 1/7/091		1,000,000		1,000,000
Taxable Adjustable Demand
Health Care Revenue Bonds,
SFO Associates Project, Series 1994,
10%, 1/1/091		785,000		785,000
				4,700,000
Oil, Gas & Consumable Fuels—2.1%
BP Capital Markets plc, 1.15%, 3/2/09		2,000,000		1,996,167
Shell International Finance BV,
0.40%, 4/3/092		1,000,000		998,978
Total Capital, 1.10%, 1/5/092		2,000,000		1,999,733
				4,994,878
Personal Products—2.9%
Kimberly-Clark Worldwide,
0.45%, 2/9/092		1,000,000		999,513
Procter & Gamble Co., 1%, 1/21/092		2,000,000		1,998,889
Reckitt Benckiser Treasury Services plc:
2.27%, 2/13/092		2,000,000		1,994,577
2.30%, 3/3/092		2,000,000		1,992,206
				6,985,185
Pharmaceuticals—2.1%
Johnson & Johnson, 0.50%, 1/27/09	$	2,000,000	$	1,999,278
Merck & Co., Inc., 0.15%, 2/5/09		1,000,000		999,854
Pfizer, Inc., 0.85%, 2/2/092		2,000,000		1,998,489
				4,997,621
Receivables Finance—23.5%
Amsterdam Funding Corp.,
3.08%, 3/5/092		3,000,000		2,983,830
Barton Capital Corp., 1.10%, 1/15/092		1,000,000		999,572
Chariot Funding LLC, 1.40%, 1/2/094		1,500,000		1,499,942
Falcon Asset Securitization Co. LLC:
1.40%, 1/28/092		5,000,000		4,994,750
1.40%, 2/9/092		5,000,000		4,992,417
Gemini Securitization Corp.:
0.75%, 3/19/092		6,000,000		5,990,375
3.25%, 1/27/092		2,000,000		1,995,306
4.35%, 1/15/092		1,600,000		1,597,293
4.35%, 1/16/092		2,000,000		1,996,375
Legacy Capital LLC, 2.70%, 1/12/09		5,000,000		4,995,875
Lexington Parker Capital Co. LLC:
2.50%, 1/9/092		9,000,000		8,995,000
3.10%, 1/6/092		2,000,000		1,999,139
Old Line Funding Corp.,
0.50%, 1/22/092		1,000,000		999,708
Park Avenue Receivables Co. LLC,
1.40%, 1/6/09		3,000,000		2,999,417
Ranger Funding Co. LLC,
1.55%, 1/5/094		4,150,000		4,149,354
Sheffield Receivables Corp.,
0.60%, 1/13/092		1,000,000		999,800
Thunder Bay Funding LLC,
3%, 1/23/094		3,000,000		2,994,500
Windmill Funding Corp.,
3.10%, 1/7/092		2,000,000		1,998,967
				57,181,620
Special Purpose Financial—0.6%
Ticonderoga Funding LLC,
0.35%, 1/22/09		1,500,000		1,499,694
Total Short-Term Notes (Cost $143,387,918)				143,387,918
U.S. Government Agencies—2.5%
Federal Home Loan Bank,
2.75%, 4/27/09		4,000,000		3,964,551
Federal Home Loan Mortgage Corp.,
0.12%, 2/2/09		1,000,000		999,893

	Principal
	Amount			Value
U.S. Government Agencies Continued
Federal National Mortgage Assn.,
0.10%, 2/2/09	$	1,000,000		$	999,911
Total U.S. Government Agencies (Cost $5,964,355)					5,964,355
Total Investments, at Value (Cost $243,069,162)		99.9	%		243,069,162
Other Assets Net of Liabilities		0.1			287,222
Net Assets		100.0	%	$	243,356,384

Industry classifications are unaudited.

Footnotes to Statement of Investments

Short-term notes and direct bank obligations are generally traded on a discount basis; the interest rate shown is the discount rate received by the Fund at the time of purchase. Other securities normally bear interest at the rates shown.

1.   Represents the current interest rate for a variable or increasing rate security.

2.   Security issued in an exempt transaction without registration under the Securities Act of 1933. Such securities amount to $78,973,222, or 32.45% of the Fund’s net assets, and have been determined to be liquid pursuant to guidelines adopted by the Board of Trustees.

3.   Illiquid security. The aggregate value of illiquid securities as of December 31, 2008 was $4,500,000, which represents 1.85% of the Fund’s net assets. See Note 4 of accompanying Notes.

4.   Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $13,643,796 or 5.61% of the Fund’s net assets as of December 31, 2008.

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1–quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2–inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3–unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments		Other Financial
Valuation Description	in Securities		Instruments*
Level 1—Quoted Prices	$	—	$	—
Level 2—Other Significant Observable Inputs		243,069,162		—
Level 3—Significant Unobservable Inputs		—		—
Total	$	243,069,162	$	—

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value (cost $243,069,162)—see accompanying statement of investments	$	243,069,162
Cash		491,436
Receivables and other assets:
Interest		337,885
Shares of beneficial interest sold		20,525
Other		34,425
Total assets		243,953,433
Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed		449,341
Dividends		103,648
Shareholder communications		12,874
Trustees’ compensation		2,460
Transfer and shareholder servicing agent fees		860
Other		27,866
Total liabilities		597,049
Net Assets	$	243,356,384
Composition of Net Assets
Par value of shares of beneficial interest	$	243,331
Additional paid-in capital		243,113,801
Accumulated net investment loss		(1,067	)
Accumulated net realized gain on investments		319
Net Assets—applicable to 243,331,044 shares of beneficial interest outstanding	$	243,356,384
Net Asset Value, Redemption Price Per Share and Offering Price Per Share	$	1.00

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Interest	$	6,843,139
Expenses
Management fees		955,875
Shareholder communications		24,894
Insurance expense		23,373
Transfer and shareholder servicing agent fees		9,994
Trustees’ compensation		6,792
Custodian fees and expenses		1,257
Other		33,803
Total expenses		1,055,988
Net Investment Income		5,787,151
Net Realized Gain on Investments		321
Net Increase in Net Assets Resulting from Operations	$	5,787,472

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	5,787,151		$	8,813,949
Net realized gain (loss)		321			(2	)
Net increase in net assets resulting from operations		5,787,472			8,813,947
Dividends and/or Distributions to Shareholders
Dividends from net investment income		(5,787,153	)		(8,813,949	)
Distributions from net realized gain		—			(3,645	)
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions		53,607,490			18,231,526
Net Assets
Total increase		53,607,809			18,227,879
Beginning of period		189,748,575			171,520,696
End of period (including accumulated net investment loss of $1,067 and $1,065, respectively)	$	243,356,384		$	189,748,575

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Income from investment operations–net investment income and net realized gain1		.03			.05			.05			.03			.01
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.03	)		(.05	)		(.05	)		(.03	)		(.01	)
Distributions from net realized gain		—			—	2		—	2		—			—
Total dividends and/or distributions to shareholders		(.03	)		(.05	)		(.05	)		(.03	)		(.01	)
Net asset value, end of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return3		2.78	%		4.98	%		4.71	%		2.86	%		0.98	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	243,356		$	189,749		$	171,521		$	173,162		$	196,503
Average net assets (in thousands)	$	212,564		$	181,271		$	171,118		$	186,453		$	218,243
Ratios to average net assets:4
Net investment income		2.72	%		4.86	%		4.61	%		2.80	%		0.97	%
Total expenses		0.50	%		0.50	%5		0.49	%		0.48	%5		0.48	%5

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
3.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4.	Annualized for periods less than one full year.
5.	Reduction to custodian expenses less than 0.005%.

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Money Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek maximum current income from investments in “money market” securities consistent with low capital risk and the maintenance of liquidity. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. Securities are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. If amortized cost is determined not to approximate market value, the fair value of the portfolio securities will be determined under procedures approved by the Fund’s Board of Trustees.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     “Money market-type” instruments are typically designated as Level 2.

     In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years for federal income tax purposes.

Undistributed Net	Undistributed		Accumulated Loss
Investment Income	Long-Term Gains		Carryforward1,2
$152,499		$—		$—

1.	During the fiscal year ended December 31, 2008, the Fund utilized $2 of capital loss carryforward to offset capital gains realized in that fiscal year.
2.	During the fiscal year ended December 31, 2007, the Fund did not utilize any capital loss carryforwards.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income		$5,787,153		$8,817,594

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income distributions, if any, are declared daily and paid monthly. Capital gain distributions, if any, are declared and paid annually but may be paid at other times to maintain the net asset value per share at $1.00.

Investment Income. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Sold		163,835,502		$	163,835,502			142,287,227		$	142,287,227
Dividends and/or distributions reinvested		5,787,153			5,787,153			8,817,594			8,817,594
Redeemed		(116,015,165	)		(116,015,165	)		(132,873,295	)		(132,873,295	)
Net increase		53,607,490		$	53,607,490			18,231,526		$	18,231,526

3. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $500 million	0.450	%
Next $500 million	0.425
Next $500 million	0.400
Over $1.5 billion	0.375

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $10,017 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 for assets of $10 million or more. The Fund is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Waivers and Reimbursements of Expenses. The Manager has voluntarily undertaken to waive fees to the extent necessary to assist the Fund in attempting to maintain a positive yield. There is no guarantee that the Fund will maintain a positive yield. That undertaking may be amended or withdrawn at any time.

     OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees to 0.35% of average annual net assets of the Fund. This undertaking may be amended or withdrawn at any time.

4. Illiquid Securities

As of December 31, 2008, investments in securities included issues that are illiquid. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. The Fund will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with an applicable footnote on the Statement of Investments.

5. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

6. Temporary Guarantee Program for Money Market Funds

The Fund’s Board of Trustees has elected for the Fund to participate in the Temporary Guarantee Program for Money Market Funds (the “Program”) established by the U.S. Treasury Department. The Treasury Department has accepted the Fund’s application to participate in the Program and entered into a Guarantee Agreement with the Fund dated as of September 19, 2008. The Fund has also notified the Treasury Department of its intent to continue its participation in the Program through April 30, 2009.

     Under the Program, shareholders of the Fund as of the close of business on September 19, 2008 may be guaranteed against loss in the event that the Fund’s net asset value falls below $0.995. The Program applies only to shareholders of record as of the close of business on September 19, 2008. The number of shares covered by the Program will be the lesser of (a) the number of shares of the Fund owned by the shareholder on September 19, 2008 or (b) the number of shares owned by the shareholder on the date the Fund’s net asset value falls below $0.995. If the number of shares of the Fund a shareholder holds after September 19, 2008 fluctuates during the Program period due to purchases or redemptions of shares, any shares in excess of the amount held as of the close of business on September 19, 2008 will not be covered.

     The Fund has paid a fee to participate in the Program’s initial term in the amount equal to 0.01% of the Fund’s net assets as of the close of business on September 19, 2008. The Fund has paid an additional fee to continue its participation in the Program through April 30, 2009 in the amount of 0.015% of the Fund’s net assets as of the close of business on September 19, 2008. Fees paid by the Fund to participate in the Program are shown as insurance expense on the Statement of Operations. Participation in any further extension of the Program would require payment of an additional fee.

7. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Strategic Bond Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Strategic Bond Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Principal
	Amount		Value
Asset-Backed Securities—1.4%
Ace Securities Corp. Home Equity Loan Trust, Asset-Backed Pass-Through Certificates, Series 2005-HE7, Cl. A2B, 0.651%, 11/25/351	$	3,298	$	3,267
AmeriCredit Prime Automobile Receivables Trust 2007-1, Automobile Receivables Nts., Series 2007-1, Cl. D, 5.62%, 9/8/142		1,319,000		854,053
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.951%, 5/25/341		924,857		714,313
Argent Securities Trust 2006-M3, Asset-Backed Pass-Through Certificates, Series 2006-M3, Cl. A2B, 0.571%, 9/25/361		530,000		424,829
Argent Securities Trust 2006-W5, Asset-Backed Pass-Through Certificates, Series 2006-W5, Cl. A2B, 0.571%, 5/26/361		418,823		382,802
Capital Auto Receivables Asset Trust 2007-1, Automobile Asset-Backed Securities, Series 2007-1, Cl. B, 5.15%, 9/17/12		262,000		200,549
Capital Auto Receivables Asset Trust 2008-2, Automobile Asset-Backed Securities, Series 2008-2, Cl. A2A, 3.74%, 3/15/11		2,950,000		2,889,639
Capital One Auto Finance Trust, Automobile Receivables, Series 2006-C, Cl. A4, 1.225%, 5/15/131		1,312,000		912,432
Capital One Prime Auto Receivables Trust, Automobile Asset-Backed Certificates, Series 2005-1, Cl. A4, 1.215%, 4/15/111		5,278,299		5,124,536
Centex Home Equity Loan Trust 2006-A, Asset-Backed Certificates, Series 2006-A, Cl. AV2, 0.571%, 5/16/361		460,392		441,089
Citigroup Mortgage Loan Trust, Inc. 2006-WFH3, Asset-Backed Pass-Through Certificates, Series 2006-WFH3, Cl. A2, 0.571%, 10/31/361		603,989		554,084
Countrywide Home Loans, Asset-Backed Certificates:
Series 2005-16, Cl. 2AF2, 5.382%, 5/25/361		1,530,000		1,223,613
Series 2005-17, Cl. 1AF2, 5.363%, 5/25/361		233,158		201,064
CWABS, Inc. Asset-Backed Certificates Trust, Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.591%, 12/5/291		1,050,000		807,320
CWHEQ Revolving Home Equity Loan Trust, Asset-Backed Certificates:
Series 2005-G, Cl. 2A, 1.425%, 12/15/351		269,812		105,890
Series 2006-H, Cl. 2A1A, 1.345%, 11/15/361		96,537		25,010
DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates, Series 2008-B, Cl. A2A, 3.81%, 6/8/11		2,950,000		2,887,528
Embarcadero Aircraft Securitization Trust, Airplane Receivable Nts., Series 2000-A, Cl. B, 8/15/252,3,4		1,820,063		13,650
First Franklin Mortgage Loan Trust 2005-FF10, Mtg. Pass-Through Certificates, Series 2005-FF10, Cl. A3, 0.681%, 11/25/351		112,308		110,855
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through Certificates, Series 2006-FF10, Cl. A3, 0.561%, 7/25/361		1,000,000		867,049
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through Certificates, Series 2006-FF9, Cl. 2A2, 0.581%, 7/7/361		430,000		366,527
First Franklin Mortgage Loan
Trust 2006-FFA, Mtg. Pass-Through Certificates, Series 2006-FFA, Cl. A3, 0.591%, 9/25/361		1,027,653		240,410
Harley-Davidson Motorcycle
Trust, Motorcycle Receivable Nts., Series 2007-3, Cl. A3, 1.545%, 6/15/121		8,340,000		7,983,594
Home Equity Mortgage Trust 2005-1, Mtg. Pass-Through Certificates, Series 2005-1, Cl. M6, 5.363%, 6/1/35		1,046,000		332,257
Home Equity Mortgage Trust 2006-5, Mtg. Pass-Through Certificates, Series 2006-5, Cl. A1, 5.50%, 1/25/37		443,748		104,160

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Asset-Backed Securities Continued
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Nts., Series 2005-3, Cl. A1, 0.768%, 1/20/351	$	235,534	$	167,442
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.618%, 3/20/361		440,000		368,666
Hyundai Auto Receivables Trust 2008-A, Asset-Backed Automobile Securities, Series 2008-A, Cl. A2, 4.16%, 5/16/11		4,160,000		4,085,053
Ice Em CLO, Collateralized Loan Obligations:
Series 2007-1A, Cl. B, 4.795%, 8/15/221,2		7,870,000		3,541,500
Series 2007-1A, Cl. C, 6.095%, 8/15/221,2		5,270,000		1,224,748
Series 2007-1A, Cl. D, 8.095%, 8/15/221,2		5,270,000		909,602
Lehman XS Trust, Mtg. Pass-Through Certificates:
Series 2005-2, Cl. 2A1B, 5.18%, 8/25/351		74,150		72,760
Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35		101,682		92,689
Mastr Asset-Backed Securities Trust 2006-WMC3, Mtg. Pass-Through Certificates, Series 2006-WMC3, Cl. A3, 0.571%, 8/25/361		1,310,000		390,146
NC Finance Trust, CMO Pass-Through Certificates, Series 1999-I, Cl. ECFD, 6.368%, 1/25/291,2		66,744		8,510
Option One Mortgage Loan Trust, Asset-Backed Certificates, Series 2006-2, Cl. 2A2, 0.571%, 7/1/361		2,879,098		2,537,112
Popular ABS Mortgage Pass-Through Trust 2005-6, Mtg. Pass-Through Certificates, Series 2005-6, Cl. A3, 5.68%, 1/25/361		394,533		358,623
RAMP Series 2006-RS4 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2006-RS4, Cl. A1, 0.551%, 7/25/361		42,744		42,341
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass-Through Certificates, Series 2006-KS7, Cl. A2, 0.571%, 9/25/361		1,097,501		998,574
Securitized Asset-Backed Receivables LLC Trust 2007-BR2, Asset-Backed Securities, Series 2007-BR2, Cl. A2, 0.701%, 2/25/371		786,579		365,811
SLM Student Loan Trust, Student Loan Receivables, Series 2005-B, Cl. B, 2.396%, 6/15/391		2,487,000		722,984
Specialty Underwriting & Residential Finance Trust, Home Equity Asset-Backed Obligations:
Series 2005-BC3, Cl. A2B, 0.721%, 6/25/361		7,489		7,421
Series 2006-BC1, Cl. A2B, 0.621%, 12/25/361		960,290		918,516
Start CLO Ltd., Asset-Backed Credit Linked Securities, Series 2006-3A, Cl. F, 19.193%, 6/7/111,2		1,630,000		1,075,800
Taganka Car Loan Finance plc, Automobile Asset-Backed Certificates, Series 2006-1A, Cl. C, 4.739%, 11/14/131,2		503,102		457,823
Terwin Mortgage Trust, Home Equity Asset-Backed Securities, Series 2006-4SL, Cl. A1, 4.50%, 5/1/37		217,897		56,554
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 0.571%, 7/25/361		839,051		791,865
Total Asset-Backed Securities (Cost $66,300,323)				46,965,060
Mortgage-Backed Obligations—27.5%
Government Agency—15.1%
FHLMC/FNMA/Sponsored—14.8%
Federal Home Loan Mortgage Corp.:
4.50%, 12/15/18-5/15/19		1,409,950		1,451,275
5%, 8/15/33-9/15/33		4,030,980		4,130,036
6%, 5/15/18-3/15/33		2,706,039		2,805,117
6.50%, 3/15/18-6/15/35		5,673,041		5,927,302
7%, 12/1/23-10/1/31		376,154		395,682
7.50%, 4/25/36		1,250,923		1,320,646
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Participation Certificates, Series 1897, Cl. K, 7%, 9/15/26		2,894,861		3,105,296

	Principal
	Amount		Value
FHLMC/FNMA/Sponsored Continued
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 1360, Cl. PZ, 7.50%, 9/15/22	$	1,525,940	$	1,645,370
Series 151, Cl. F, 9%, 5/15/21		39,507		39,495
Series 1674, Cl. Z, 6.75%, 2/15/24		1,161,700		1,237,551
Series 2006-11, Cl. PS, 22.839%, 3/25/361		709,683		809,089
Series 2043, Cl. ZP, 6.50%, 4/15/28		854,683		891,040
Series 2106, Cl. FG, 1.645%, 12/15/281		2,033,041		1,904,899
Series 2122, Cl. F, 1.645%, 2/15/291		66,133		62,467
Series 2135, Cl. OH, 6.50%, 3/15/29		1,141,881		1,195,930
Series 2148, Cl. ZA, 6%, 4/15/29		1,958,086		2,027,023
Series 2173, Cl. Z, 6.50%, 7/15/29		725,872		752,313
Series 2195, Cl. LH, 6.50%, 10/15/29		869,205		912,782
Series 2326, Cl. ZP, 6.50%, 6/15/31		141,676		148,349
Series 2344, Cl. FP, 2.145%, 8/15/311		613,095		597,326
Series 2351, Cl. PZ, 6.50%, 8/15/31		1,216,486		1,279,087
Series 2368, Cl. PR, 6.50%, 10/15/31		583,773		611,665
Series 2410, Cl. PF, 2.175%, 2/15/321		2,936,062		2,864,436
Series 2412, Cl. GF, 2.145%, 2/15/321		1,431,199		1,396,539
Series 2415, Cl. ZA, 6.50%, 2/15/32		1,660,399		1,739,055
Series 2435, Cl. EQ, 6%, 5/15/31		1,167,194		1,183,899
Series 2449, Cl. FL, 1.745%, 1/15/321		800,029		778,460
Series 2451, Cl. FD, 2.195%, 3/15/321		451,300		440,214
Series 2453, Cl. BD, 6%, 5/15/17		239,763		251,377
Series 2461, Cl. PZ, 6.50%, 6/15/32		1,767,878		1,865,446
Series 2464, Cl. FI, 2.195%, 2/15/321		467,954		456,308
Series 2470, Cl. AF, 2.195%, 3/15/321		774,589		765,985
Series 2470, Cl. LF, 2.195%, 2/15/321		478,884		459,586
Series 2471, Cl. FD, 2.195%, 3/15/321		870,843		829,863
Series 2477, Cl. FZ, 1.745%, 6/15/311		1,765,378		1,714,782
Series 2500, Cl. FD, 1.695%, 3/15/321		45,676		44,219
Series 2517, Cl. GF, 2.195%, 2/15/321		416,365		400,642
Series 2526, Cl. FE, 1.595%, 6/15/291		65,532		63,207
Series 2551, Cl. FD, 1.595%, 1/15/331		50,652		49,290
Series 2641, Cl. CE, 3.50%, 9/15/25		524,202		523,789
Series 2676, Cl. KY, 5%, 9/15/23		3,843,000		3,860,902
Series 2727, Cl. UA, 3.50%, 10/15/22		141,251		141,184
Series 2736, Cl. DB, 3.30%, 11/15/26		2,527,797		2,522,031
Series 2750, Cl. XG, 5%, 2/1/34		6,037,000		6,243,903
Series 2777, Cl. PJ, 4%, 5/15/24		158,227		158,301
Series 2857, Cl. MG, 5%, 9/1/34		2,045,000		2,101,682
Series 2890, Cl. PE, 5%, 11/1/34		6,120,000		6,283,610
Series 2934, Cl. NA, 5%, 4/15/24		697,933		702,854
Series 2936, Cl. PE, 5%, 2/1/35		4,858,000		4,975,906
Series 2939, Cl. PE, 5%, 2/15/35		1,585,000		1,626,874
Series 2947, Cl. HE, 5%, 3/1/35		1,650,000		1,689,966
Series 2991, Cl. QG, 5%, 8/1/34		2,430,000		2,501,430
Series 3015, Cl. GM, 5%, 8/1/35		3,480,000		3,552,410
Series 3022, Cl. HU, 5%, 8/1/35		3,300,000		3,369,499
Series 3025, Cl. SJ, 20.368%, 8/15/351		867,796		992,159
Series 3035, Cl. DM, 5.50%, 11/15/25		2,353,082		2,385,515
Series 3094, Cl. HS, 20.002%, 6/15/341		482,047		536,911
Series 3105, Cl. BD, 5.50%, 1/15/26		1,500,000		1,572,224
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 177, Cl. IO, 3.886%, 7/1/265		167,410		33,807
Series 192, Cl. IO, 4.761%, 2/1/285		43,815		6,190
Series 200, Cl. IO, 4.398%, 1/1/295		54,033		9,215
Series 2003-13, Cl. IO, 0.349%, 3/25/335		980,301		173,874
Series 2003-26, Cl. DI, 1.332%, 4/25/335		757,832		130,904
Series 205, Cl. IO, 0.467%, 9/1/295		226,100		50,485
Series 2074, Cl. S, 37.242%, 7/17/285		56,766		6,807
Series 2079, Cl. S, 43.579%, 7/17/285		90,719		10,722
Series 208, Cl. IO, (26.473)%, 6/1/305		251,734		43,292
Series 2136, Cl. SG, 77.287%, 3/15/295		2,479,485		231,093
Series 216, Cl. IO, 2.681%, 12/1/315		252,209		31,897

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
FHLMC/FNMA/Sponsored Continued
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security: Continued
Series 2177, Cl. S, 70.604%, 8/15/295	$	2,723,238	$	278,234
Series 224, Cl. IO, 0.314%, 3/1/335		1,695,804		252,829
Series 2399, Cl. SG, 57.918%, 12/15/265		1,475,093		145,661
Series 243, Cl. 6, 15.224%, 12/15/325		723,034		94,556
Series 2437, Cl. SB, 77.883%, 4/15/325		4,280,534		404,536
Series 2526, Cl. SE, 30.034%, 6/15/295		122,517		16,682
Series 2802, Cl. AS, 99.999%, 4/15/335		1,151,660		109,571
Series 2920, Cl. S, 54.415%, 1/15/355		989,338		97,233
Series 2989, Cl. TS, 77.854%, 6/15/255		22,612,207		1,667,234
Series 3000, Cl. SE, 99.999%, 7/15/255		1,156,231		92,509
Series 3110, Cl. SL, 99.999%, 2/15/265		657,294		47,251
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security, Series 192, Cl. PO, 8.464%, 2/1/286		43,815		39,381
Federal National Mortgage Assn.:
4.50%, 5/25/18-6/1/20		22,163,053		22,746,584
4.50%, 1/1/227		1,385,000		1,415,730
5%, 12/1/17-11/1/33		92,630,489		95,262,023
5%, 1/1/397		11,486,000		11,728,286
5.296%, 10/1/36		22,978,570		23,266,379
5.50%, 4/25/21-7/1/33		71,470,489		73,520,615
5.50%, 1/1/24-1/1/397		6,320,000		6,487,752
6%, 10/25/16-4/1/35		35,722,870		36,951,546
6%, 1/1/247		11,081,000		11,491,341
6.50%, 3/25/17-1/1/34		11,665,312		12,157,761
6.50%, 1/1/397		17,211,000		17,875,241
7%, 11/1/17-6/25/34		9,755,061		10,320,358
7%, 1/1/397		1,160,000		1,214,738
7.50%, 2/25/27-3/25/33		4,503,559		4,776,206
8.50%, 7/1/32		6,995		7,607
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1999-54, Cl. LH, 6.50%, 11/25/29		889,222		920,052
Trust 2001-44, Cl. QC, 6%, 9/25/16		1,682,087		1,760,238
Trust 2001-51, Cl. OD, 6.50%, 10/25/31		453,875		477,724
Trust 2001-69, Cl. PF, 1.471%, 12/25/311		1,057,081		1,030,468
Trust 2001-70, Cl. LR, 6%, 9/25/30		3,711		3,704
Trust 2001-74, Cl. QE, 6%, 12/25/31		5,476,298		5,671,183
Trust 2001-80, Cl. ZB, 6%, 1/25/32		1,134,985		1,175,699
Trust 2002-12, Cl. PG, 6%, 3/25/17		724,894		759,222
Trust 2002-29, Cl. F, 1.471%, 4/25/321		512,730		499,710
Trust 2002-56, Cl. KW, 6%, 4/25/23		3,432,792		3,493,134
Trust 2002-60, Cl. FH, 1.471%, 8/25/321		1,075,119		1,047,635
Trust 2002-64, Cl. FJ, 1.471%, 4/25/321		157,886		152,988
Trust 2002-66, Cl. FG, 1.471%, 9/25/321		2,107,148		2,053,255
Trust 2002-68, Cl. FH, 1.384%, 10/18/321		357,276		346,602
Trust 2002-71, Cl. UB, 5%, 11/25/15		2,028,560		2,045,921
Trust 2002-84, Cl. FB, 1.471%, 12/25/321		2,107,091		1,983,182
Trust 2002-9, Cl. PC, 6%, 3/25/17		746,746		782,112
Trust 2002-9, Cl. PR, 6%, 3/25/17		914,355		957,658
Trust 2002-90, Cl. FH, 0.971%, 9/25/321		1,178,923		1,140,384
Trust 2003-11, Cl. FA, 1.471%, 9/25/321		2,107,139		2,004,003
Trust 2003-116, Cl. FA, 0.871%, 11/25/331		130,250		126,657
Trust 2003-130, Cl. CS, 13.158%, 12/25/331		2,819,037		2,832,597
Trust 2003-17, Cl. EQ, 5.50%, 3/25/23		1,452,000		1,514,020
Trust 2003-23, Cl. EQ, 5.50%, 4/25/23		2,883,000		2,983,746
Trust 2003-73, Cl. HF, 0.921%, 1/25/311		7,222,409		7,051,647
Trust 2003-81, Cl. PW, 4%, 3/25/25		524,999		525,151
Trust 2004-101, Cl. BG, 5%, 1/25/20		1,825,000		1,850,602
Trust 2004-52, Cl. JR, 4.50%, 7/25/24		827,070		827,872
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25		571,000		584,471
Trust 2005-109, Cl. AH, 5.50%, 12/25/25		2,160,000		2,213,721
Trust 2005-25, Cl. PS, 26.087%, 4/25/351		742,013		876,789

	Principal
	Amount		Value
FHLMC/FNMA/Sponsored Continued
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates: Continued
Trust 2005-31, Cl. PB, 5.50%, 4/25/35	$	560,000	$	577,243
Trust 2005-71, Cl. DB, 4.50%, 8/25/25		480,000		477,512
Trust 2006-29, Cl. PA, 5.50%, 8/25/26		4,037,216		4,091,608
Trust 2006-46, Cl. SW, 22.471%, 6/25/361		1,218,794		1,362,048
Trust 2006-50, Cl. KS, 22.472%, 6/25/361		523,586		588,421
Trust 2007-79, Cl. ME, 5.50%, 8/1/37		4,155,000		4,205,404
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-61, Cl. SH, 41.60%, 11/18/315		582,527		78,586
Trust 2001-63, Cl. SD, 28.236%, 12/18/315		134,828		19,106
Trust 2001-68, Cl. SC, 22.655%, 11/25/315		93,596		12,893
Trust 2001-81, Cl. S, 25.023%, 1/25/325		106,304		15,002
Trust 2002-28, Cl. SA, 26.929%, 4/25/325		63,664		8,447
Trust 2002-38, Cl. IO, 39.536%, 4/25/325		308,450		33,345
Trust 2002-48, Cl. S, 24.46%, 7/25/325		101,573		14,097
Trust 2002-52, Cl. SL, 25.018%, 9/25/325		63,972		8,755
Trust 2002-56, Cl. SN, 27.036%, 7/25/325		139,574		19,266
Trust 2002-77, Cl. IS, 32.064%, 12/18/325		525,507		72,717
Trust 2002-77, Cl. SH, 29.712%, 12/18/325		140,087		17,604
Trust 2002-9, Cl. MS, 23.565%, 3/25/325		135,265		17,030
Trust 2003-117, Cl. KS, 42.312%, 8/25/335		10,763,425		966,465
Trust 2003-118, Cl. S, 32.829%, 12/25/335		1,222,012		147,602
Trust 2003-33, Cl. SP, 22.276%, 5/25/335		974,184		129,398
Trust 2003-38, Cl. SA, 32.155%, 3/25/235		1,772,110		191,154
Trust 2003-4, Cl. S, 37.988%, 2/25/335		294,688		37,799
Trust 2005-105, Cl. S, 95.971%, 12/25/355		2,843,627		242,790
Trust 2005-40, Cl. SA, 55.764%, 5/25/355		2,820,267		289,503
Trust 2005-40, Cl. SB, 88.518%, 5/25/355		4,507,788		444,182
Trust 2005-63, Cl. SA, 88.04%, 10/25/315		220,428		22,604
Trust 2005-71, Cl. SA, 73.09%, 8/25/255		731,570		54,853
Trust 2005-83, Cl. SL, 91.42%, 10/25/355		4,149,656		357,360
Trust 2005-85, Cl. SA, 99.999%, 10/25/355		11,172,208		860,528
Trust 2005-87, Cl. SE, 99.999%, 10/25/355		11,012,981		781,884
Trust 2005-87, Cl. SG, 98.88%, 10/25/355		2,956,356		250,580
Trust 2006-119, Cl. MS, 93.23%, 12/25/365		2,268,516		196,561
Trust 2006-33, Cl. SP, 65.426%, 5/25/365		2,728,083		284,226
Trust 2006-34, Cl. SK, 64.101%, 5/25/365		4,974,373		525,733
Trust 2006-42, Cl. CI, 26.305%, 6/25/365		7,263,196		844,126
Trust 2006-48, Cl. QA, 28.061%, 6/25/365		5,434,825		626,428
Trust 2006-90, Cl. SX, 99.999%, 9/25/365		2,723,625		311,039
Trust 214, Cl. 2, 17.299%, 3/1/235		685,768		154,573
Trust 221, Cl. 2, 13.048%, 5/1/235		75,389		17,110
Trust 240, Cl. 2, 15.05%, 9/1/235		145,978		22,654
Trust 254, Cl. 2, 7.227%, 1/1/245		1,206,632		275,472
Trust 2682, Cl. TQ, 99.999%, 10/15/335		1,066,707		121,362
Trust 2981, Cl. BS, 99.999%, 5/15/355		1,935,685		190,509
Trust 301, Cl. 2, (6.448)%, 4/1/295		317,378		63,814
Trust 302, Cl. 2, (9.691)%, 6/1/295		1,200,842		169,872
Trust 313, Cl. 2, 19.507%, 6/1/315		3,578,530		479,166
Trust 319, Cl. 2, (1.244)%, 2/1/325		103,187		14,546
Trust 321, Cl. 2, (1.40)%, 4/1/325		460,403		64,028
Trust 324, Cl. 2, (6.999)%, 7/1/325		798,261		113,018
Trust 328, Cl. 2, (10.302)%, 12/1/325		7,458,311		1,097,060
Trust 331, Cl. 5, 15.597%, 2/1/335		1,774,652		244,032
Trust 332, Cl. 2, (8.02)%, 3/1/335		5,898,199		851,996
Trust 333, Cl. 2, (12.058)%, 4/1/335		5,077,803		621,018
Trust 334, Cl. 12, 11.559%, 2/1/335		1,519,559		199,444
Trust 334, Cl. 3, 13.538%, 7/1/335		905,613		101,609
Trust 334, Cl. 5, 13.586%, 5/1/335		1,065,235		121,458
Trust 338, Cl. 2, (13.036)%, 7/1/335		1,163,300		140,405
Trust 339, Cl. 15, 18.711%, 7/1/335		3,938,661		479,246
Trust 339, Cl. 7, 11.479%, 7/1/335		7,345,028		813,156
Trust 339, Cl. 8, 12.211%, 8/1/335		499,871		56,097
Trust 342, Cl. 2, (3.295)%, 9/1/335		124,764		17,840
Trust 344, Cl. 2, (3.987)%, 12/1/335		4,341,032		621,658

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
FHLMC/FNMA/Sponsored Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Continued
Trust 345, Cl. 9, 13.498%, 1/1/345	$	1,901,595	$	207,692
Trust 346, Cl. 2, (12.874)%, 12/1/335		1,219,327		146,474
Trust 351, Cl. 10, 14.256%, 4/1/345		835,327		90,509
Trust 351, Cl. 11, 12.86%, 11/1/345		442,843		49,168
Trust 351, Cl. 8, 12.789%, 4/1/345		1,335,155		144,652
Trust 351, Cl. 9, 11.821%, 10/1/345		16,506,254		1,812,205
Trust 356, Cl. 10, 13.15%, 6/1/355		1,186,202		130,243
Trust 356, Cl. 12, 13.355%, 2/1/355		614,150		66,393
Trust 362, Cl. 12, 12.982%, 8/1/355		1,127,114		150,168
Trust 362, Cl. 13, 12.967%, 8/1/355		671,170		89,328
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security:
Trust 322, Cl. 1, 9.641%, 4/1/326		5,834,820		5,112,614
Trust 324, Cl. 1, 9.911%, 7/1/326		199,332		178,158
				511,595,121
GNMA/Guaranteed—0.3%
Government National Mortgage Assn.:
5.125%, 12/9/251		6,999		6,903
7%, 3/29/28-7/29/28		369,707		391,554
7.50%, 3/1/27		22,913		24,288
8%, 11/29/25-5/29/26		102,404		108,997
Government National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Series 1999-32, Cl. ZB, 8%, 9/16/29		1,427,484		1,567,336
Series 2000-12, Cl. ZA, 8%, 2/16/30		3,392,499		3,728,756
Series 2001-62, Cl. KZ, 6.50%, 12/16/31		2,932,808		3,072,529
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 1998-19, Cl. SB, 33.215%, 7/16/285		182,671		24,857
Series 1998-6, Cl. SA, 52.99%, 3/16/285		114,064		17,923
Series 2001-21, Cl. SB, 66.977%, 1/16/275		860,271		123,346
Series 2006-47, Cl. SA, 69.726%, 8/16/365		4,372,439		524,199
				9,590,688
Non-Agency—12.4%
Commercial—4.6%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates:
Series 2006-5, Cl. A2, 5.317%, 10/10/11		3,160,000		2,682,880
Series 2007-1, Cl. AMFX, 5.482%, 1/1/49		3,900,000		1,799,958
Series 2008-1, Cl. A4, 6.158%, 12/1/171		3,670,000		2,843,766
Series 2008-1, Cl. AJ, 6.201%, 1/1/181		940,000		262,950
Series 2008-1, Cl. AM, 6.201%, 1/1/181		2,920,000		1,371,131
Banc of America Funding Corp., Mtg. Pass-Through Certificates, Series 2004-2, Cl. 2A1, 6.50%, 7/20/32		284,215		272,117
Bear Stearns Commercial Mortgage Securities Trust 2006-PW13, Commercial Mtg. Pass-Through Certificates, Series PW13, Cl. A4, 5.54%, 9/1/41		5,760,000		4,535,937
ChaseFlex Trust 2006-2, Multiclass Mtg. Pass-Through Certificates, Series 2006-2, Cl. A1B, 1.495%, 9/25/361		141,158		135,246
CHL Mortgage Pass-Through Trust 2005-17, Mtg. Pass-Through Certificates, Series 2005-17, Cl. 1A8, 5.50%, 9/1/35		3,740,000		2,826,575
CHL Mortgage Pass-Through Trust 2005-HYB8, Mtg. Pass-Through Certificates, Series 2005-HYB8, Cl. 4A1, 5.563%, 12/20/351		214,205		120,659
Citigroup Commercial Mortgage Trust 2006-C4, Commercial Mtg. Pass-Through Certificates, Series 2006-C4, Cl. A3, 5.724%, 3/1/491		2,940,000		2,314,640
Citigroup Mortgage Loan Trust, Inc. 2006-WF1, Asset-Backed Pass-Through Certificates, Series 2006-WF1, Cl. A2B, 5.536%, 3/1/36		29,882		29,635
Citigroup/Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates:
Series 2007-CD4, Cl. A2B, 5.205%, 12/11/49		9,170,000		7,628,443
Series 2007-CD4, Cl. AJ, 5.398%, 12/1/49		2,680,000		686,722
CitiMortgage Alternative Loan Trust 2006-A5, Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2006-A5, Cl. 1A13, 0.921%, 10/25/361		2,451,010		1,001,393

	Principal
	Amount		Value
Commercial Continued
Credit Suisse Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-C3, Cl. A4, 5.723%, 6/1/391	$	1,560,000	$	995,246
CWABS, Inc. Asset-Backed Certificates Trust 2006-8, Asset-Backed Certificates, Series 2006-8, Cl. 2A1, 0.501%, 1/25/461		180,569		178,725
CWALT Alternative Loan Trust 2007-8CB, Mtg. Pass-Through Certificates, Series 2007-8CB, Cl. A1, 5.50%, 5/25/37		4,974,109		4,401,491
Deutsche Alt-A Securities Mortgage Loan Trust, Mtg. Pass-Through Certificates:
Series 2006-AB1, Cl. A2A, 5.50%, 2/25/36		784,112		761,790
Series 2006-AB2, Cl. A1, 5.888%, 6/25/36		1,327,246		1,069,485
Series 2006-AB2, Cl. A7, 5.961%, 6/25/36		268,944		247,545
Series 2006-AB3, Cl. A7, 6.36%, 7/1/36		114,365		110,222
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36		1,777,912		1,424,531
Series 2007-RS1, Cl. A2, 0.971%, 1/27/371,2		1,661,504		492,220
First Horizon Alternative Mortgage Securities Trust 2007-FA2, Mtg. Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37		1,129,157		1,061,539
First Horizon Mortgage Pass-Through Trust 2007-AR3, Mtg. Pass-Through Certificates, Series 2007-AR3, Cl. 1A1, 6.132%, 11/1/371		5,673,742		3,780,385
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2004-C3, Cl. A2, 4.433%, 7/10/39		2,135,000		2,101,586
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg. Pass-Through Certificates, Series 1998-C1, Cl. F, 6.987%, 5/15/301		1,567,000		1,562,299
Greenwich Capital Commercial Funding Corp., Commercial Mtg. Pass-Through Certificates, Series 2007-GG9, Cl. A2, 5.381%, 3/10/39		1,990,000		1,574,147
Greenwich Capital Commercial Mortgage 2007-GG11, Commercial Mtg. Pass-Through Certificates, Series 2007-GG11, Cl. A4, 5.736%, 8/1/17		7,325,000		5,491,435
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations, Series 2006-GG8, Cl. A4, 5.56%, 11/1/39		1,960,000		1,560,627
GSR Mortgage Loan Trust 2005-4F, Mtg. Pass-Through Certificates, Series 2005-4F, Cl. 6A1, 6.50%, 2/25/35		3,149,724		2,596,855
Indymac Index Mortgage Loan Trust 2005-AR31, Mtg. Pass-Through Certificates, Series 2005-AR31, Cl. 2 A2, 5.315%, 1/1/361		603,797		194,526
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2007-CB15, Cl. AJ, 5.502%, 6/1/47		630,000		164,850
Series 2007-CB18, Cl. A4, 5.44%, 6/1/47		5,600,000		4,058,180
Series 2007-CB18, Cl. AM, 5.466%, 6/1/47		6,380,000		2,941,707
Series 2008-C2, Cl. A4, 6.068%, 2/1/51		8,390,000		5,971,217
Series 2008-C2, Cl. AJ, 6.579%, 2/1/511		3,210,000		873,400
Series 2008-C2, Cl. AM, 6.579%, 2/1/51		4,990,000		2,389,482
JPMorgan Chase Commercial Mortgage Securities Trust 2007-LDPX, Commercial Mtg. Pass-Through Certificates, Series 2007-LDPX, Cl. A3, 5.42%, 1/15/49		4,410,000		3,131,400
JPMorgan Chase Commercial Mortgage Securities Trust, Commercial Mtg. Pass-Through Certificates:
Series 2007-LD11, Cl. A2, 5.804%, 6/15/491		5,390,000		4,136,691
Series 2007-LD12, Cl. A2, 5.827%, 2/15/51		5,682,000		4,447,080
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		2,380,000		1,881,445
JPMorgan Commercial Mortgage Finance Corp., Mtg. Pass-Through Certificates, Series 2000-C9, Cl. A2, 7.77%, 10/15/32		2,080,804		2,081,892

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Commercial Continued
JPMorgan Mortgage Trust 2006-A2, Mtg. Pass-Through Certificates, Series 2006-A2, Cl. 3A4, 5.678%, 4/1/361	$	2,853,741	$	959,358
JPMorgan Mortgage Trust 2006-A7, Mtg. Pass-Through Certificates, Series 2006-A7, Cl. 2A2, 5.793%, 1/1/371		1,087,383		798,668
LB-UBS Commercial Mortgage Trust 2006-C1, Commercial Mtg. Pass-Through Certificates, Series 2006-C1, Cl. A2, 5.084%, 2/11/31		1,650,000		1,440,966
LB-UBS Commercial Mortgage Trust 2007-C1, Commercial Mtg. Pass-Through Certificates, Series 2007-C1, Cl. A2, 5.318%, 1/15/12		8,330,000		6,664,892
LB-UBS Commercial Mortgage Trust 2008-C1, Commercial Mtg. Pass-Through Certificates, Series 2008-C1, Cl. AM, 6.15%, 4/11/411		2,610,000		1,207,298
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		415,749		303,965
Mastr Asset Securitization Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 0.921%, 10/25/361		6,433,152		4,055,539
Merrill Lynch Mortgage Investors Trust 2005-A9, Mtg. Asset-Backed Certificates, Series 2005-A9, Cl. 4A1, 5.492%, 12/1/351		3,185,002		2,083,083
Merrill Lynch Mortgage Trust 2006-C1, Commercial Mtg. Pass-Through Certificates, Series 2006-C1, Cl. AJ, 5.657%, 5/1/391		1,175,000		370,501
Morgan Stanley Capital I Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-IQ16, Cl. A4, 5.809%, 12/1/49		3,420,000		2,571,563
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30		329,712		329,273
Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15		556,000		484,416
RALI Series 2005-QA4 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2005-QA4, Cl. A32, 5.376%, 4/25/351		164,706		41,644
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A114, 5.75%, 4/25/37		1,583,844		691,645
Residential Asset Securitization Trust 2006-A9CB, Mtg. Pass-Through Certificates, Series 2006-A9CB, Cl. A5, 6%, 9/25/36		1,025,649		501,747
Residential Asset Securitization Trust, Mtg. Pass-Through Certificates, Series 2006-A12, Cl. 1A, 6.25%, 11/1/36		1,172,311		668,095
STARM Mortgage Loan Trust 2007-1, Mtg. Pass-Through Certificates, Series 2007-1, Cl. 2A1, 5.827%, 2/1/371		14,105,693		8,098,627
STARM Mortgage Loan Trust 2007-3, Mtg. Pass-Through Certificates, Series 2007-3, Cl. 1A1, 5.66%, 6/1/371,2		3,006,838		1,503,419
Structured Asset Mortgage Investments, Inc., Mtg. Pass-Through Certificates, Series 2002-AR3, Cl. A2, 1.081%, 9/19/321,2		670,350		375,396
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial Mtg. Pass-Through Certificates, Series 2006-C29, Cl. A2, 5.272%, 11/15/48		2,997,000		2,459,679
Wachovia Bank Commercial Mortgage Trust 2007-C33, Commercial Mtg. Pass-Through Certificates, Series 2007-C33, Cl. A4, 5.903%, 2/1/511		5,790,000		4,202,974
Wachovia Bank Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-C34, Cl. AJ, 5.952%, 5/1/461		2,610,000		693,763
Wachovia Mortgage Loan Trust LLC, Mtg. Pass-Through Certificates, Series 2007-A, Cl. 1A1, 5.981%, 3/1/371		4,295,579		2,317,376
WaMu Mortgage Pass-Through Certificates 2006-AR14 Trust, Mtg. Pass-Through Certificates, Series 2006-AR14, Cl. 1A7, 5.631%, 11/1/361		1,704,637		553,593

	Principal
	Amount		Value
Commercial Continued
WaMu Mortgage Pass-Through Certificates 2006-AR15 Trust, Mtg. Pass-Through Certificates, Series 2006-AR15, Cl. 1A, 3.096%, 11/1/461,2	$	1,563,095	$	578,345
WaMu Mortgage Pass-Through Certificates 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 1A4, 5.871%, 8/1/461		7,588,474		4,224,206
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates:
Series 2007-HY1, Cl. 1A2, 5.706%, 2/25/371,2		2,669,186		613,913
Series 2007-HY1, Cl. 2A4, 5.863%, 2/1/371		665,623		286,161
WaMu Mortgage Pass-Through Certificates 2007-HY3 Trust, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 2A2, 5.668%, 3/1/371		3,865,607		999,094
WaMu Mortgage Pass-Through Certificates 2007-HY4 Trust, Mtg. Pass-Through Certificates, Series 2007-HY4, Cl. 5A1, 5.548%, 11/1/361		734,477		482,663
WaMu Mortgage Pass-Through Certificates 2007-HY5 Trust, Mtg. Pass-Through Certificates, Series 2007-HY5, Cl. 2A3, 5.647%, 5/1/371		772,564		494,025
WaMu Mortgage Pass-Through Certificates 2007-OA3 Trust, Mtg. Pass-Through Certificates, Series 2007-OA3, Cl. 5A, 4.019%, 4/1/471,2		1,080,095		356,431
Wells Fargo Mortgage-Backed Securities 2004-EE Trust, Mtg. Pass-Through Certificates, Series 2004-EE, Cl. 3A2, 4.388%, 12/1/341		6,051,866		4,575,895
Wells Fargo Mortgage-Backed Securities 2004-U Trust, Mtg. Pass-Through Certificates, Series 2004-U, Cl. A1, 5.245%, 10/1/341		1,157,231		988,099
Wells Fargo Mortgage-Backed Securities 2004-V Trust, Mtg. Pass-Through Certificates, Series 2004-V, Cl. 1A1, 3.986%, 10/1/341		3,699,864		3,396,692
Wells Fargo Mortgage-Backed Securities 2004-W Trust, Mtg. Pass-Through Certificates, Series 2004-W, Cl. B2, 4.543%, 11/1/341		1,284,021		782,787
Wells Fargo Mortgage-Backed Securities 2005-AR1 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2005-AR1, Cl. 1A1, 4.542%, 2/1/351		6,439,032		4,069,086
Wells Fargo Mortgage-Backed Securities 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 1A3, 5.205%, 4/25/361		3,895,387		2,560,537
				157,979,464
Manufactured Housing—0.1%
Wells Fargo Mortgage-Backed Securities 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 6.099%, 9/25/361		6,541,337		4,205,075
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through Certificates, Series 2006-AR2, Cl. 2A5, 5.093%, 3/25/361		1,891,134		1,177,194
				5,382,269
Multifamily—0.6%
Banc of America Mortgage Securities, Inc., Mtg. Pass-Through Certificates, Series 2003-E, Cl. 2A2, 4.71%, 6/25/331		2,572,909		2,033,592
Bear Stearns ARM Trust 2006-4, Mtg. Pass-Through Certificates, Series 2006-4, Cl. 2A1, 5.779%, 10/25/361		2,627,276		1,270,650
CHL Mortgage Pass-Through Trust 2003-46, Mtg. Pass-Through Certificates, Series 2003-46, Cl. 1A2, 5.15%, 1/19/341		4,046,645		3,413,059
CHL Mortgage Pass-Through Trust 2007-HY1, Mtg. Pass-Through Certificates, Series 2007-HY1, Cl. 1A1, 5.68%, 4/25/371		6,412,236		3,498,748
Merrill Lynch Mortgage Investors Trust 2005-A2, Mtg. Pass-Through Certificates, Series 2005-A2, Cl. A2, 4.487%, 2/1/351		1,465,115		893,824

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Multifamily Continued
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 2A1, 5.628%, 7/25/361	$	1,510,283	$	809,030
Wells Fargo Mortgage-Backed Securities 2006-AR5 Trust, Mtg. Pass-Through Certificates, Series 2006-AR5, Cl. 2A1, 5.545%, 4/1/361		10,267,993		5,746,905
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.093%, 3/25/361		2,746,287		1,972,396
				19,638,204
Other—0.0%
JPMorgan Mortgage Trust 2005-S2, Mtg. Pass-Through Certificates, Series 2005-S2, Cl. 3A1, 6.719%, 2/25/321		1,542,685		1,151,707
Residential—7.1%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2007-4, Cl. AM, 5.812%, 8/1/171		6,560,000		3,040,754
Bear Stearns ARM Trust 2004-2, Mtg. Pass-Through Certificates, Series 2004-2, Cl. 12A2, 4.404%, 5/1/341,2		5,564,397		3,755,968
Bear Stearns ARM Trust 2004-9, Mtg. Pass-Through Certificates, Series 2004-9, Cl. 23A1, 5.028%, 11/1/341		3,683,947		2,845,586
Chase Mortgage Finance Trust 2006-S3, Multiclass Mtg. Pass-Through Certificates, Series 2006-S3, Cl. 1A2, 6%, 11/1/36		4,210,000		1,971,551
Chase Mortgage Finance Trust 2007-A1, Multiclass Mtg. Pass-Through Certificates, Series 2007-A1, Cl. 9A1, 4.567%, 2/1/371		3,956,944		3,221,943
CHL Mortgage Pass-Through Trust 2005-26, Mtg. Pass-Through Certificates, Series 2005-26, Cl. 1A8, 5.50%, 11/1/35		3,698,833		3,432,466
CHL Mortgage Pass-Through Trust 2005-27, Mtg. Pass-Through Certificates, Series 2005-27, Cl. 2A1, 5.50%, 12/1/35		3,312,369		2,078,949
CHL Mortgage Pass-Through Trust 2005-31, Mtg. Pass-Through Certificates, Series 2005-31, Cl. 2A4, 5.471%, 1/1/361,2		1,434,223		372,898
CHL Mortgage Pass-Through Trust 2005-J4, Mtg. Pass-Through Certificates, Series 2005-J4, Cl. A7, 5.50%, 11/1/35		2,110,000		1,489,689
CHL Mortgage Pass-Through Trust 2007-HY3, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 1A1, 5.617%, 6/1/471,2		3,220,515		1,674,668
CHL Mortgage Pass-Through Trust 2007-HY4, Mtg. Pass-Through Certificates:
Series 2007-HY4, Cl. 1A1, 6.086%, 9/1/471		18,149,299		9,327,059
Series 2007-HY4, Cl. 1A2, 6.086%, 9/1/471,2		3,914,900		782,980
Series 2007-HY4, Cl. 2A2, 6.232%, 11/1/371,2		866,388		173,278
Series 2007-HY4, Cl. 3A2, 6.388%, 11/1/371,2		917,681		183,536
CHL Mortgage Pass-Through Trust 2007-HY5, Mtg. Pass-Through Certificates:
Series 2007-HY5, Cl. 1A2, 5.93%, 9/1/371,2		4,311,384		1,336,529
Series 2007-HY5, Cl. 2A2, 6.001%, 9/1/371,2		1,103,806		342,180
Series 2007-HY5, Cl. 3A2, 6.201%, 9/1/371,2		2,760,486		855,751
Citigroup Commercial Mortgage Trust 2007-C6, Commercial Mtg. Pass-Through Certificates:
Series 2007-C6, Cl. A2, 5.70%, 8/1/121		1,110,000		864,813
Series 2007-C6, Cl. A4, 5.70%, 12/1/491		6,170,000		4,670,085
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates, Series 2008-C7, Cl. A4, 6.096%, 12/1/491		3,800,000		2,946,019
Citigroup Mortgage Loan Trust, Inc. 2005-2, Mtg. Pass-Through Certificates, Series 2005-2, Cl. 1A3, 4.951%, 5/1/351,2		4,180,613		2,704,007
Citigroup Mortgage Loan Trust, Inc. 2005-3, Mtg. Pass-Through Certificates, Series 2005-3, Cl. 2A4, 5.199%, 8/1/351		8,250,741		4,686,525

	Principal
	Amount		Value
Residential Continued
Citigroup Mortgage Loan Trust, Inc. 2006-AR1, Asset-Backed Pass-Through Certificates, Series 2006-AR1, Cl. 3A2, 5.50%, 3/1/361,2	$	4,368,582	$	1,092,146
Citigroup Mortgage Loan Trust, Inc. 2006-AR2, Asset-Backed Pass-Through Certificates:
Series 2006-AR2, Cl. 1A2, 5.523%, 3/1/361		9,148,567		4,937,452
Series 2006-AR2, Cl. 1AB, 5.591%, 3/1/362		3,946,659		986,665
Citigroup/Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-CD4, Cl. AMFX, 5.366%, 12/1/49		5,680,000		2,565,222
CitiMortgage Alternative Loan Trust 2006-A5, Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2006-A5, Cl. 2A1, 5.50%, 10/1/21		3,148,890		2,304,221
CitiMortgage Alternative Loan Trust 2007-A2, Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2007-A2, Cl. 1A5, 6%, 2/25/37		5,438,071		3,228,340
COMM 2007-C9 Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-C9, Cl. A4, 5.816%, 7/1/171		5,160,000		3,928,849
CWALT Alternative Loan Trust 2005-J1, Mtg. Pass-Through Certificates, Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32		4,940,616		3,164,347
CWALT Alternative Loan Trust 2006-43CB, Mtg. Pass-Through Certificates, Series 2006-43CB, Cl. 1A10, 6%, 2/1/372		15,350,647		7,577,080
GSR Mortgage Loan Trust 2004-5, Mtg. Pass-Through Certificates, Series 2004-5, Cl. 2A1, 4.506%, 5/1/341		3,943,742		2,720,198
GSR Mortgage Loan Trust 2005-AR6, Mtg. Pass-Through Certificates:
Series 2005-AR6, Cl. 1A4, 4.586%, 9/1/351		10,350,399		7,960,402
Series 2005-AR6, Cl. 3A1, 4.56%, 9/25/351		4,877,866		3,121,048
GSR Mortgage Loan Trust 2005-AR7, Mtg. Pass-Through Certificates, Series 2005-AR7, Cl. 4A1, 5.346%, 11/25/351		5,195,288		3,224,831
GSR Mortgage Loan Trust 2007-AR1, Mtg. Pass-Through Certificates:
Series 2007-AR1, Cl. 2A1, 5.999%, 3/1/371		20,242,291		10,760,136
Series 2007-AR1, Cl. 4A1, 5.826%, 3/1/371,2		3,784,523		1,892,261
JPMorgan Mortgage Trust 2007-A1, Mtg. Pass-Through Certificates, Series 2007-A1, Cl. 7A1, 5.298%, 7/1/351,2		6,365,009		4,264,556
JPMorgan Mortgage Trust 2007-A3, Mtg. Pass-Through Certificates, Series 2007-A3, Cl. 3A3, 6.009%, 5/1/371,2		1,849,813		347,210
LB-UBS Commercial Mortgage Trust 2007-C7, Commercial Mtg. Pass-Through Certificates, Series 2007-C7, Cl. AM, 6.166%, 9/11/451		10,430,000		4,933,973
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-10, Cl. 2A3B, 5.55%, 1/25/36		261,515		241,019
Mastr Adjustable Rate Mortgages Trust 2006-2, Mtg. Pass-Through Certificates, Series 2006-2, Cl. 1A1, 5.036%, 4/1/361		3,416,847		2,441,709
Merrill Lynch Mortgage Investors Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 6.076%, 10/25/361		6,258,839		4,661,527
Merrill Lynch Mortgage Investors Trust 2007-3, Mtg. Pass-Through Certificates, Series 2007-3, Cl. 1A1, 5.801%, 9/1/371		2,650,364		2,257,624
RALI Series 2006-QS13 Trust:
Mtg. Asset-Backed Pass-Through
Certificates, Series 2006-QS13, Cl. 1A5, 6%, 9/25/36		3,585,512		2,424,855
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		598,223		575,781
RALI Series 2006-QS5 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS5, Cl. 2A2, 6%, 5/1/36		242,833		237,441
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A28, 5.75%, 4/25/37		1,492,027		702,935
Residential Asset Securitization Trust 2005-A14, Mtg. Pass-Through Certificates, Series 2005-A14, Cl. A1, 5.50%, 12/1/35		3,720,000		1,461,315

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Residential Continued
Residential Asset Securitization Trust 2005-A6CB, Mtg. Pass-Through Certificates, Series 2005-A6CB, Cl. A7, 6%, 6/1/35	$	6,096,850	$	4,153,555
Residential Funding Mortgage Securities I, Inc., Mtg. Pass-Through Certificates, 5.764%, 7/1/371,2		3,191,978		414,319
WaMu Asset-Backed Certificates 2005-AR12 Trust, Mtg. Asset-Backed Certificates, Series 2007-AR12, Cl. 1A8, 4.834%, 10/1/351		3,837,785		2,808,274
WaMu Mortgage Pass-Through Certificates 2003-AR9 Trust, Mtg. Pass-Through Certificates, Series 2003-AR9, Cl. 2A, 4.491%, 9/25/331		1,615,691		1,393,290
WaMu Mortgage Pass-Through Certificates 2005-AR14 Trust, Mtg. Pass-Through Certificates, Series 2005-AR14, Cl. 1A1, 5.048%, 12/1/351		4,112,750		3,316,314
WaMu Mortgage Pass-Through Certificates 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 1A2, 5.929%, 9/1/361		4,631,471		3,933,647
WaMu Mortgage Pass-Through Certificates 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 5.75%, 10/25/361		4,787,396		2,714,085
WaMu Mortgage Pass-Through Certificates 2006-AR14 Trust, Mtg. Pass-Through Certificates, Series 2006-AR14, Cl. 2A4, 5.752%, 11/1/361,2		521,923		130,481
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates:
Series 2007-HY1, Cl. 4A1, 5.449%, 2/1/371		19,311,771		11,536,240
Series 2007-HY1, Cl. 5A1, 5.762%, 2/1/371		11,197,735		6,998,897
WaMu Mortgage Pass-Through Certificates 2007-HY2 Trust, Mtg. Pass-Through Certificates:
Series 2007-HY2, Cl. 1A1, 5.606%, 12/1/361		12,984,526		6,462,853
Series 2007-HY2, Cl. 1A2, 5.606%, 12/1/361,2		1,550,884		248,141
WaMu Mortgage Pass-Through Certificates 2007-HY3 Trust, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 4A1, 5.347%, 3/1/371		12,491,694		7,161,692
WaMu Mortgage Pass-Through Certificates 2007-HY4 Trust, Mtg. Pass-Through Certificates, Series 2007-HY4, Cl. 4A1, 5.506%, 9/25/361		11,231,639		7,877,913
WaMu Mortgage Pass-Through Certificates 2007-HY6 Trust, Mtg. Pass-Through Certificates, Series 2007-HY6, Cl. 2A1, 5.688%, 6/25/371		5,796,955		2,847,176
WaMu Mortgage Pass-Through Certificates 2007-HY7 Trust, Mtg. Pass-Through Certificates, Series 2007-HY7, Cl. 2A1, 5.859%, 7/1/371		3,144,264		1,673,951
Washington Mutual Mortgage Pass-Through Certificates, Mtg. Pass-Through Certificates, Series 2007-1, Cl. 1A8, 6%, 2/25/37		4,958,706		4,338,196
Wells Fargo Mortgage-Backed Securities 2004-EE Trust, Mtg. Pass-Through Certificates, Series 2004-EE, Cl. 3A1, 4.388%, 12/1/341		2,523,704		1,967,235
Wells Fargo Mortgage-Backed Securities 2004-R Trust, Mtg. Pass-Through Certificates, Series 2004-R, Cl. 2A1, 4.368%, 9/1/341		402,603		288,219
Wells Fargo Mortgage-Backed Securities 2005-AR12 Trust, Mtg. Pass-Through Certificates, Series 2005-AR12, Cl. 2A6, 4.359%, 7/1/351		2,190,422		1,499,291
Wells Fargo Mortgage-Backed Securities 2005-AR16 Trust, Mtg. Pass-Through Certificates, Series 2005-AR16, Cl. 2A1, 4.876%, 10/1/351		2,483,796		1,668,342
Wells Fargo Mortgage-Backed Securities 2006-12 Trust, Mtg. Pass-Through Certificates, Series 2006-12, Cl. A1, 6%, 10/25/36		1,753,273		1,605,292
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates:
Series 2006-AR10, Cl. 2A2, 5.628%, 7/1/361,2		2,368,921		592,230

	Principal
	Amount			Value
Residential Continued
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates: Continued
Series 2006-AR10, Cl. 3A2, 4.818%, 7/1/361,2	$	968,614		$	242,154
Series 2006-AR10, Cl. 4A2, 5.557%, 7/1/361,2		3,468,106			867,026
Series 2006-AR10, Cl. 5A3, 5.594%, 7/1/361		1,733,849			988,251
Series 2006-AR10, Cl. 5A6, 5.594%, 7/1/361		17,318,280			9,551,293
Wells Fargo Mortgage-Backed Securities 2006-AR13 Trust, Mtg. Pass-Through Certificates:
Series 2006-AR13, Cl. A2, 5.75%, 9/1/361		20,083,874			13,537,395
Series 2006-AR13, Cl. A4, 5.75%, 9/1/361		11,440,000			6,149,967
Wells Fargo Mortgage-Backed Securities 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 2A1, 5.24%, 4/1/361		2,666,235			1,359,871
					245,095,967
Total Mortgage-Backed Obligations (Cost $1,137,444,785)					950,433,420
U.S. Government Obligations—11.1%
Federal Home Loan Bank Unsec. Bonds, 3.625%, 10/18/138		10,695,000			11,263,407
Federal Home Loan Mortgage Corp. Unsec. Nts.:
3.75%, 6/28/138		4,400,000			4,690,418
4.125%, 9/27/138		18,280,000			19,718,471
5.25%, 5/21/098		6,940,000			7,068,064
Federal National Mortgage Assn. Sr. Unsec. Nts.:
4.375%, 9/13/108		37,160,000			39,243,487
4.875%, 5/18/128		28,970,000			31,572,201
Federal National Mortgage Assn. Unsec. Nts.:
3.25%, 4/9/138		19,165,000			19,989,842
3.875%, 7/12/138		11,457,000			12,170,783
4.625%, 10/15/148,9		9,070,000			10,083,600
Resolution Funding Corp. Bonds, Residual Funding STRIPS, 5.155%, 1/15/2110		5,667,000			3,572,397
U.S. Treasury Bonds:
STRIPS, 4.201%, 2/15/1110		900,000			885,758
STRIPS, 4.808%, 2/15/1610		4,491,000			3,726,313
U.S. Treasury Inflationary Index Nts., 0.64%, 4/15/1311,12		222,620,000			218,159,431
Total U.S. Government Obligations (Cost $364,603,908)					382,144,172
Foreign Government Obligations—22.7%
Argentina—0.1%
Argentina (Republic of) Bonds:
3.127%, 8/3/121		571,500			307,969
Series GDP, 1.626%, 12/15/351		8,600,000			258,000
Series V, 7%, 3/28/11		2,320,000			898,968
Series VII, 7%, 9/12/13		3,035,000			975,499
					2,440,436
Australia—0.1%
New South Wales Treasury Corp. Sr. Bonds,
Series 12RG, 6%, 5/1/12	1,115,000		AUD		825,707
New South Wales Treasury Corp. Sr. Unsec. Bonds, Series 14RG, 5.50%, 8/1/14	1,625,000		AUD		1,191,305
					2,017,012
Belgium—0.1%
Belgium (Kingdom of) Bonds, Series 44, 5%, 3/28/35	2,235,000		EUR		3,549,640
Brazil—2.7%
Banco Nacional de Desenvolvimento Economico e Social Nts., 6.369%, 6/16/1813		5,340,000			5,099,700
Brazil (Federal Republic of) Bonds:
6%, 1/17/17		11,870,000			12,315,125
8%, 1/15/18		11,545,000			12,988,125
8.75%, 2/4/25		2,950,000			3,643,250
8.875%, 10/14/19		4,610,000			5,647,250
10.50%, 7/14/14		6,288,000			7,922,880
Brazil (Federal Republic of) Nota Do Tesouro Nacional Nts.:
10%, 1/10/10	18,216,000		BRR		7,978,599
10%, 1/1/12	36,251,000		BRR		15,405,096
10%, 1/1/17	54,018,000		BRR		20,703,486
Brazil (Federal Republic of) Nts., 7.875%, 3/7/15		130,000			148,200
					91,851,711
Bulgaria—0.0%
Bulgaria (Republic of) Bonds:
8.25%, 1/15/15		740,000			725,200
8.25%, 1/15/1513		710,000			695,800
					1,421,000
Canada—0.2%
Canada (Government of) Bonds:
3.50%, 6/1/13	2,380,000		CAD		2,105,264
5%, 6/1/37	2,500,000		CAD		2,627,599
Canada (Government of) Nts.:
3.75%, 6/1/10	1,785,000		CAD		1,524,094
4.25%, 6/1/18	1,090,000		CAD		1,011,209
					7,268,166

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Colombia—0.6%
Bogota Distrio Capital Sr. Bonds, 9.75%, 7/26/2813	3,058,000,000		COP	$	1,126,925
Colombia (Republic of) Bonds:
7.375%, 9/18/37		3,805,000			3,747,925
10.75%, 1/15/13		750,000			877,500
12%, 10/22/15	17,234,000,000		COP		8,437,500
Colombia (Republic of) Nts., 8.25%, 12/22/14		2,394,000			2,591,505
Colombia (Republic of) Unsec. Nts., 7.375%, 1/27/17		960,000			1,003,200
EEB International Ltd. Sr. Unsec. Bonds, 8.75%, 10/31/1413		3,330,000			3,105,225
					20,889,780
Denmark—0.1%
Denmark (Kingdom of) Bonds, 5%, 11/15/13	15,195,000		DKK		3,109,446
Egypt—0.2%
Egypt (The Arab Republic of) Treasury Bills:
Series 182, 11.021%, 1/6/0910	11,600,000		EGP		2,106,464
Series 364, 8.371%, 1/6/0910	9,800,000		EGP		1,778,173
Egypt (The Arab Republic of) Unsec. Unsub. Bonds, 8.75%, 7/15/1213	22,870,000		EGP		3,441,083
					7,325,720
France—1.2%
France (Government of) Obligations Assimilables du Tresor Bonds, 4%, 10/25/38	13,150,000		EUR		19,215,877
France (Government of) Treasury Nts.:
3.75%, 1/12/13	11,770,000		EUR		17,116,288
4.50%, 7/12/12	4,660,000		EUR		6,934,123
					43,266,288
Germany—2.3%
Germany (Federal Republic of) Bonds:
5.50%, 1/4/31	7,260,000		EUR		12,631,450
Series 03, 3.75%, 7/4/13	26,250,000		EUR		38,843,012
Series 05, 4%, 1/4/37	18,125,000		EUR		27,190,410
					78,664,872
Greece—0.2%
Greece (Republic of) Bonds, 4.60%, 5/20/13	5,200,000		EUR		7,197,365
Hungary—0.3%
Hungary (Republic of) Bonds:
Series 12/C, 6%, 10/24/12	1,609,000,000		HUF		7,650,463
Series 14/C, 5.50%, 2/12/14	503,700,000		HUF		2,288,413
					9,938,876
Indonesia—0.6%
Indonesia (Republic of) Nts.:
6.75%, 3/10/1413		7,620,000			6,819,900
6.875%, 1/17/1813		4,490,000			3,872,670
7.25%, 4/20/1513		4,870,000			4,358,650
Indonesia (Republic of) Sr. Unsec. Nts., 7.75%, 1/17/3813		605,000			505,175
Indonesia (Republic of) Unsec. Nts., 8.50%, 10/12/3513		6,700,000			5,728,500
					21,284,895
Israel—0.4%
Israel (State of) Bonds:
5.50%, 2/28/17	24,370,000		ILS		7,072,458
Series 2682, 7.50%, 3/31/14	25,080,000		ILS		7,780,692
					14,853,150
Italy—0.3%
Italy (Republic of) Nts., Certificati di Credito del Tesoro, 4.70%, 7/1/091	6,945,000		EUR		9,702,991
Japan—4.6%
Japan (Government of) Bonds:
2 yr., Series 269, 0.90%, 6/15/10	4,006,000,000		JPY		44,507,027
5 yr., Series 72, 1.50%, 6/20/13	4,596,000,000		JPY		52,556,111
10 yr., Series 279, 2%, 3/20/16	748,000,000		JPY		8,970,091
10 yr., Series 282, 1.70%, 9/20/16	2,095,000,000		JPY		24,431,814
20 yr., Series 61, 1%, 3/20/23	1,245,000,000		JPY		12,771,039
20 yr., Series 73, 2%, 12/20/24	933,000,000		JPY		10,827,750
20 yr., Series 75, 2.10%, 3/20/25	520,000,000		JPY		6,112,312
					160,176,144
Malaysia—0.1%
Johor Corp. Malaysia (Government of) Bonds, Series P3, 1%, 7/31/122	7,980,000		MYR		2,350,787
Mexico—1.6%
United Mexican States Bonds:
8.375%, 1/14/11		11,650,000			12,640,250
Series A, 6.375%, 1/16/13		3,800,000			4,009,000
Series MI10, 8%, 12/19/13	126,490,000		MXN		9,307,110
Series M20, 10%, 12/5/241	125,300,000		MXN		10,540,263
United Mexican States Treasury Bills, Series BI, 8.15%, 4/2/0910	255,600,000		MXN		18,264,107
					54,760,730
Nigeria—0.6%
Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10		61,631			57,601
Nigeria (Federal Republic of) Treasury Bills:
Series 364, 9.186%, 1/8/0910	773,700,000		NGN		5,538,296

	Principal
	Amount			Value
Nigeria Continued
Nigeria (Federal Republic of) Treasury Bills: Continued
Series 364, 9.17%, 2/5/0910	$605,400,000		NGN	$	4,331,405
Series 364, 9.30%, 4/9/0910	175,100,000		NGN		1,240,866
Nigeria (Federal Republic of) Treasury Bonds:
Series 3 yr., 9.23%, 5/25/12	278,300,000		NGN		1,885,547
Series 3Y2S, 12.50%, 2/24/09	60,500,000		NGN		437,402
Series 3Y1S, 15%, 1/27/09	116,700,000		NGN		839,538
Series 5 yr., 9.50%, 2/23/12	278,300,000		NGN		1,892,520
Series 10 yr., 9.35%, 8/31/17	600,000,000		NGN		3,697,924
					19,921,099
Norway—0.0%
Norway (Kingdom of) Bonds, 6.50%, 5/15/13	8,165,000		NOK		1,331,058
Panama—0.5%
Panama (Republic of) Bonds:
6.70%, 1/26/36		7,190,000			6,506,950
7.25%, 3/15/15		6,230,000			6,385,750
8.875%, 9/30/27		1,375,000			1,409,375
9.375%, 4/1/29		655,000			723,775
Panama (Republic of) Unsec. Bonds, 7.125%, 1/29/26		2,760,000			2,615,100
					17,640,950
Peru—1.5%
Peru (Republic of) Bonds:
7.84%, 8/12/20	28,080,000		PEN		9,108,598
9.91%, 5/5/15	10,351,000		PEN		3,711,566
Series 7, 8.60%, 8/12/17	27,250,000		PEN		9,280,214
Series 8-1, 12.25%, 8/10/11	52,015,000		PEN		18,627,991
Peru (Republic of) Certificates of Deposit:
4.066%, 4/13/0910	604,000		PEN		188,061
5.713%, 1/5/0910	28,800,000		PEN		9,174,562
Peru (Republic of) Sr. Nts., 4.533%, 2/28/1610		363,871			245,358
					50,336,350
Philippines—0.2%
Philippines (Republic of the) Unsec. Bonds:
7.75%, 1/14/31		510,000			517,650
9%, 2/15/13		7,625,000			8,120,625
					8,638,275
Poland—0.1%
Poland (Republic of) Bonds:
Series WS0922, 5.75%, 9/23/22	1,000,000		PLZ		346,169
Series 0413, 5.25%, 4/25/13	11,430,000		PLZ		3,847,593
					4,193,762
Sweden—0.1%
Sweden (Kingdom of) Bonds,
Series 1049, 4.50%, 8/12/15	24,395,000		SEK		3,554,911
Turkey—2.8%
Turkey (Republic of) Bonds:
6.75%, 4/3/18		10,035,000			9,583,425
7%, 9/26/16		6,560,000			6,428,800
7%, 3/11/19		1,285,000			1,249,444
14%, 1/19/111	15,250,000		TRY		9,406,889
15.861%, 10/7/0910	18,240,000		TRY		10,518,459
15.935%, 6/23/1010	6,200,000		TRY		3,206,251
16%, 3/7/121	50,110,000		TRY		31,959,153
18.141%, 1/13/1010	28,520,000		TRY		15,797,692
Series CPI, 10%, 2/15/121	6,810,000		TRY		4,830,691
Series CPI, 12%, 8/14/131	1,455,000		TRY		872,165
Turkey (Republic of) Nts., 7.25%, 3/15/15		4,115,000			4,115,000
					97,967,969
United Kingdom—0.6%
United Kingdom Gilt Bonds:
4.75%, 6/7/10	2,675,000		GBP		4,106,745
5%, 3/7/12	2,440,000		GBP		3,859,454
United Kingdom Treasury Bonds:
4.75%, 12/7/38	5,215,000		GBP		9,046,592
5%, 3/7/18	2,605,000		GBP		4,399,393
					21,412,184
Uruguay—0.4%
Uruguay (Oriental Republic of) Bonds:
4.25%, 4/5/27	48,300,000		UYU		1,118,340
7.625%, 3/21/36		3,525,000			2,978,625
Uruguay (Oriental Republic of) Unsec. Bonds:
5%, 9/14/18	54,110,000		UYU		1,771,167
8%, 11/18/22		7,030,000			6,537,900
					12,406,032
Venezuela—0.2%
Venezuela (Republic of) Bonds, 9%, 5/7/23		3,495,000			1,502,850
Venezuela (Republic of) Nts., 10.75%, 9/19/13		2,385,000			1,574,100
Venezuela (Republic of) Unsec. Bonds, 7.65%, 4/21/25		7,445,000			3,043,144
					6,120,094
Total Foreign Government Obligations (Cost $815,484,092)					785,591,693
Loan Participations—1.3%
Bayerische Hypo-und Vereinsbank AG for the City of Kiev, Ukraine, 8.625% Nts., 7/15/1113		8,210,000			3,284,000

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Loan Participations Continued
Credit Suisse First Boston International, Export-Import Bank of Ukraine, 8.40% Sec. Nts., 2/9/162	$	4,340,000		$	781,200
Dali Capital plc/Bank of Moscow, 7.25% Sec. Nts., Series 28, Tranche 1, 11/25/09	37,000,000		RUR		817,819
Dali Capital SA (ROSBANK), 8% Sec. Nts., Series 23, Tranche 1, 9/30/09	36,400,000		RUR		866,446
Gaz Capital SA:
7.288% Sr. Sec. Nts., 8/16/3713		13,510,000			7,970,900
7.51% Sr. Sec. Nts., 7/31/1313		5,970,000			4,537,200
8.625% Sr. Sec. Nts., 4/28/3413		3,590,000			2,692,500
RSHB Capital SA/OJSC Russian Agricultural Bank, 7.75% Nts., 5/29/1813		2,010,000			1,306,500
Steel Capital SA for OAO Severstal, 9.75% Sec. Nts., 7/29/1313		5,310,000			2,840,850
TransCapitalInvest Ltd. for OJSC AK Transneft, 5.67% Sec. Bonds, 3/5/142,7		1,070,000			693,681
VIP Finance Ireland Ltd., 9.125% Bonds, 4/30/1813		6,680,000			3,640,600
VTB Capital SA:
6.315% Sub. Unsec. Nts., 2/4/15		16,280,000			10,300,421
6.875% Sr. Sec. Nts., 5/29/1813		6,940,000			4,580,400
Total Loan Participations (Cost $75,307,101)					44,312,517
Corporate Bonds and Notes—15.0%
AAC Group Holding Corp., 0%/10.25% Sr. Unsec. Nts., 10/1/1214		100,000			66,500
AES Dominicana Energia Finance SA, 11% Sr. Nts., 12/13/1513		1,245,000			491,775
AES Panama SA, 6.35% Sr. Nts., 12/21/1613		615,000			493,936
Albertson’s, Inc., 8% Sr. Unsec. Debs., 5/1/31		4,210,000			2,547,050
Alcoa, Inc., 6.75% Sr. Unsec. Unsub. Nts., 7/15/18		2,060,000			1,688,131
Allbritton Communications Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/12		890,000			441,663
Allied Waste North America, Inc., 7.375% Sr. Sec. Nts., Series B, 4/15/14		3,070,000			2,904,251
Allstate Life Global Funding Trust, 5.375% Nts., 4/30/13		206,000			202,979
Alrosa Finance SA, 8.875% Nts., 11/17/1413		13,025,000			7,880,125
AmBev International Finance Co. Ltd., 9.50% Bonds, 7/24/1713	4,470,000		BRR		1,390,538
AMC Entertainment, Inc., 8% Sr. Unsec. Sub. Nts., 3/1/14		895,000			554,900
America Movil SAB de CV, 8.46% Sr. Unsec. Unsub. Bonds, 12/18/36	52,700,000		MXN		2,891,301
American Express Credit Corp., 5.875% Sr. Unsec. Nts., 5/2/13		661,000			635,136
American International Group, Inc., 8.25% Sr. Nts., 8/15/1813		500,000			366,500
American Media Operations, Inc.:
8.875% Sr. Unsec. Sub. Nts., 1/15/112		5,454			1,309
8.875% Sr. Unsec. Sub. Nts., 1/15/11		145,000			29,906
American Tower Corp., 7.50% Sr. Nts., 5/1/12		1,715,000			1,697,850
Anheuser-Busch Cos., Inc., 5.50% Nts., 1/15/18		1,321,000			1,202,802
AT&T Wireless Services, Inc., 8.125% Sr. Unsec. Nts., 5/1/12		1,747,000			1,874,791
Atlas Energy Resources LLC, 10.75% Sr. Nts., 2/1/1813		3,870,000			2,380,050
Atlas Pipeline Partners LP, 8.125% Sr. Unsec. Nts., 12/15/15		2,530,000			1,720,400
Autopistas del Nordeste Cayman Ltd., 9.39% Nts., 1/15/2613		4,551,750			1,957,253
Avis Budget Car Rental LLC, 7.625% Sr. Unsec. Unsub. Nts., 5/15/14		7,055,000			2,081,225
BA Covered Bond Issuer, 4.25% Sec. Nts., 4/5/17	2,520,000		EUR		3,345,512
Banco Bilbao Vizcaya Argentaria SA, 4.25% Sec. Bonds, 7/15/14	1,895,000		EUR		2,663,964
Banco BMG SA, 9.15% Nts., 1/15/1613		3,520,000			2,129,600
Banco de Credito del Peru, 6.95% Sub. Nts., 11/7/211,13		1,345,000			1,143,250
Banco Hipotecario SA, 9.75% Sr. Unsec. Nts., 4/27/1613		1,585,000			499,275
Banco Invex SA, 26.951% Mtg.-Backed Certificates, Series 062U, 3/13/341,12	4,830,734		MXN		1,281,755
Bank of America Corp.:
4.90% Sr. Unsec. Nts., 5/1/13		2,750,000			2,726,504

	Principal
	Amount			Value
Corporate Bonds and Notes Continued
8% Unsec. Perpetual Bonds, Series K15	$	3,875,000		$	2,791,240
8.125% Perpetual Bonds, Series M15		2,470,000			1,850,648
Bank of Scotland plc:
4.375% Sr. Sec. Nts., 7/13/16	8,545,000		EUR		11,250,937
4.50% Sr. Sec. Nts., 7/13/21	4,784,000		EUR		5,975,545
Barclays Bank plc, 6.278% Perpetual Bonds15		12,320,000			7,131,678
Bausch & Lomb, Inc., 9.875% Sr. Unsec. Nts., 11/1/1513		1,095,000			823,988
BE Aerospace, Inc., 8.50% Sr. Unsec. Nts., 7/1/18		950,000			857,375
BellSouth Corp., 5.20% Sr. Unsec. Nts., 12/15/16		1,488,000			1,429,480
Berry Petroleum Co., 8.25% Sr. Sub. Nts., 11/1/16		905,000			493,225
Berry Plastics Holding Corp., 8.875% Sr. Sec. Nts., 9/15/14		4,905,000			2,158,200
Biomet, Inc., 10% Sr. Unsec. Bonds, 10/15/17		895,000			863,675
Braskem Finance Ltd., 7.25% Sr. Unsec. Nts., 6/5/1813		5,350,000			3,825,250
C10 Capital SPV Ltd., 6.722% Unsec. Perpetual Debs.13,15		3,070,000			1,463,414
Case New Holland, Inc., 7.125% Sr. Unsec. Nts., 3/1/14		5,910,000			4,225,650
Catalent Pharma Solutions, Inc., 9.50% Sr. Unsec. Nts., 4/15/1516		4,045,000			1,557,325
Caterpillar Financial Services Corp., 5.45% Sr. Unsec. Nts., 4/15/18		2,750,000			2,579,363
CBS Corp., 5.625% Sr. Unsec. Nts., 8/15/12		1,486,000			1,223,942
CCH I LLC/CCH I Capital Corp., 11% Sr. Sec. Nts., 10/1/15		3,955,000			711,900
CCM Merger, Inc., 8% Unsec. Nts., 8/1/1313		1,335,000			694,200
Centex Corp., 5.80% Sr. Unsec. Nts., 9/15/09		2,410,000			2,301,550
Cinemark, Inc., 0%/9.75% Sr. Unsec. Nts., 3/15/1414		2,110,000			1,717,013
CIT Group, Inc., 7.625% Sr. Unsec. Nts., Series A, 11/30/12		967,000			816,964
Citigroup, Inc.:
5.50% Sr. Unsec. Nts., 4/11/13		6,884,000			6,709,105
6.50% Sr. Nts., 8/19/13		2,753,000			2,780,756
8.40% Perpetual Bonds, Series E15		6,895,000			4,561,318
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		5,040,000			4,309,200
Claire’s Stores, Inc., 10.50% Sr. Unsec. Sub. Nts., 6/1/17		10,715,000			1,875,125
Cloverie plc, 5.775% Sec. Nts., Series 2005-93, 12/20/101,2		1,100,000			703,230
Comcast Corp., 5.70% Unsec. Unsub. Nts., 5/15/18		3,302,000			3,102,123
Community Health Systems, Inc., 8.875% Sr. Unsec. Nts., 7/15/15		2,025,000			1,873,125
Copano Energy LLC/Copano Energy Finance Corp., 7.75% Sr. Nts., 6/1/1813		2,705,000			1,839,400
Coriolanus Ltd.:
3.359% Pass-Through Sec. Nts., 12/31/172,10	23,130,000		BRR		6,865,548
10.62% Sec. Nts., 8/10/102		3,300,000			216,150
Cox Communications, Inc., 4.625% Unsec. Nts., 1/15/10		593,000			573,936
Credit Suisse New York, 5% Sr. Unsec. Nts., 5/15/13		2,754,000			2,653,085
Crown Americas, Inc., 7.75% Sr. Nts., 11/15/15		2,740,000			2,740,000
CSC Holdings, Inc., 7.625% Sr. Unsec. Unsub. Nts., Series B, 4/1/11		1,265,000			1,198,588
CSX Corp., 6.25% Sr. Unsec. Unsub. Nts., 4/1/15		1,376,000			1,352,414
DaVita, Inc., 6.625% Sr. Unsec. Nts., 3/15/13		2,160,000			2,062,800
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31		3,395,000			3,441,705
Denbury Resources, Inc., 7.50% Sr. Sub. Nts., 12/15/15		3,560,000			2,545,400
Depfa ACS Bank, 3.875% Sec. Nts., 11/14/16	485,000		EUR		583,078
DJO Finance LLC/DJO Finance Corp., 10.875% Sr. Unsec. Nts., 11/15/14		2,415,000			1,750,875
Dole Food Co., Inc.:
7.25% Sr. Unsec. Nts., 6/15/10		100,000			70,250
8.625% Sr. Nts., 5/1/09		306,000			278,460
8.875% Sr. Unsec. Nts., 3/15/11		71,000			44,730
E.I. du Pont de Nemours & Co., 6% Sr. Unsec. Unsub. Nts., 7/15/18		897,000			943,818
EchoStar DBS Corp., 6.375% Sr. Unsec. Nts., 10/1/11		2,795,000			2,606,338

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Corporate Bonds and Notes Continued
Eirles Two Ltd.:
5.13% Sec. Nts., Series 335, 4/30/121,2	$	6,300,000		$	2,197,440
7.379% Sec. Nts., Series 324, 4/30/121,2		4,100,000			1,593,260
Eletropaulo Metropolitana SA, 19.125% Nts., 6/28/1013	1,115,000		BRR		487,767
Elizabeth Arden, Inc., 7.75% Sr. Unsec. Sub. Nts., 1/15/14		2,370,000			1,552,350
Enterprise Products Operating LP, 8.375% Jr. Sub. Nts., 8/1/661		7,465,000			4,110,438
Exodus Communications, Inc., 10.75% Sr. Nts., 12/15/092,3,4	337,947		EUR		—
FairPoint Communications, Inc., 13.125% Sr. Nts., 4/1/18		5,015,000			2,432,275
Ferrellgas Partners LP, 6.75% Sr. Nts., 5/1/1413		600,000			417,000
Forest Oil Corp., 7.75% Sr. Nts., 5/1/14		605,000			511,225
Freeport-McMoRan Copper & Gold, Inc., 8.375% Sr. Nts., 4/1/17		6,274,000			5,151,807
Fresenius Medical Care Capital Trust IV, 7.875% Sr. Sub. Nts., 6/15/11		885,000			845,175
GameStop Corp., 8% Sr. Unsec. Nts., 10/1/12		1,870,000			1,748,450
Gaz Capital SA, 8.146% Sr. Sec. Nts., 4/11/1813		3,220,000			2,125,200
Gazprom International SA, 7.201% Unsec. Unsub. Bonds, 2/1/2013		1,851,520			1,360,867
General Electric Capital Corp., 5.40% Sr. Unsec. Nts., Series A, 9/20/13		2,755,000			2,761,810
General Mills, Inc., 5.25% Sr. Unsec. Nts., 8/15/13		550,000			553,876
General Motors Acceptance Corp., 8% Bonds, 11/1/31		8,220,000			4,818,243
GlaxosmithKline Capital, Inc., 6.375% Sr. Unsec. Nts., 5/15/38		413,000			468,271
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34		5,345,000			3,888,739
Goldman Sachs Group, Inc. (The), 6.15% Sr. Unsec. Nts., 4/1/18		5,492,000			5,286,720
Goodyear Tire & Rubber Co. (The):
7.857% Nts., 8/15/11		1,290,000			1,077,150
9% Sr. Unsec. Nts., 7/1/15		845,000			684,450
Graham Packaging Co., Inc., 9.875% Sr. Unsec. Sub. Nts., 10/15/14		3,045,000			1,887,900
Graphic Packaging International Corp., 8.50% Sr. Nts., 8/15/11		3,045,000			2,557,800
Greektown Holdings, Inc., 10.75% Sr. Nts., 12/1/133,4,13		2,510,000			602,400
GTL Trade Finance, Inc., 7.25% Sr. Unsec. Nts., 10/20/1713		5,620,000			4,721,609
Harrah’s Operating Co., Inc., 10.75% Sr. Unsec. Nts., 2/1/1613		5,845,000			1,695,050
HBOS plc, 6.413% Sub. Perpetual Bonds, Series A13,15		14,615,000			5,677,431
HCA, Inc.:
6.375% Nts., 1/15/15		4,670,000			2,872,050
9.25% Sr. Sec. Nts., 11/15/16		1,230,000			1,131,600
HealthSouth Corp., 10.75% Sr. Unsec. Nts., 6/15/16		1,785,000			1,646,663
Helix Energy Solutions Group, Inc., 9.50% Sr. Unsec. Nts., 1/15/1613		3,380,000			1,808,300
Hertz Corp.:
8.875% Sr. Unsec. Nts., 1/1/14		610,000			378,200
10.50% Sr. Unsec. Sub. Nts., 1/1/16		1,135,000			523,519
Home Depot, Inc. (The), 5.875% Sr. Unsec. Unsub. Nts., 12/16/36		2,203,000			1,732,532
HSBC Bank plc:
11.601% Sr. Unsec. Nts., 1/12/1010		2,510,000			1,959,306
12.278% Sr. Unsec. Nts., 3/9/0910		1,960,000			1,786,736
9.751% Sr. Unsec. Nts., 7/8/0910		1,960,000			1,777,720
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/351		12,600,000			5,277,787
HSBK Europe BV:
7.25% Unsec. Unsub. Nts., 5/3/1713		1,360,000			741,200
9.25% Sr. Nts., 10/16/1313		15,930,000			11,708,550
ICICI Bank Ltd., 6.375% Bonds, 4/30/221,13		6,960,000			3,664,530
Idearc, Inc., 8% Sr. Unsec. Nts., 11/15/16		2,770,000			221,600
IIRSA Norte Finance Ltd., 8.75% Sr. Nts., 5/30/2413		8,340,652			6,046,973
Inter-American Development Bank:
6.26% Nts., 12/8/091	920,000		BRR		371,657
11.108% Nts., 1/25/121	618,500,012		COP		268,140
International Business Machines Corp. (IBM), 8% Sr. Unsec. Unsub. Nts., 10/15/38		4,136,000			5,524,559
International Paper Co., 7.40% Sr. Unsec. Nts., 6/15/14		1,485,000			1,218,552
Iron Mountain, Inc., 8.625% Sr. Unsec. Sub. Nts., 4/1/13		1,765,000			1,667,925
ISA Capital do Brasil SA:
7.875% Sr. Nts., 1/30/1213		510,000			484,500
8.80% Sr. Nts., 1/30/1713		1,410,000			1,247,850

	Principal
	Amount			Value
Corporate Bonds and Notes Continued
Isle of Capri Casinos, Inc., 7% Sr. Unsec. Sub. Nts., 3/1/14	$	7,270,000		$	3,126,100
Ispat Inland ULC, 9.75% Sr. Sec. Nts., 4/1/14		2,570,000			2,199,827
Israel Electric Corp. Ltd., 7.25% Nts., 1/15/1913		8,015,000			7,488,102
iStar Financial, Inc., 2.471% Sr. Unsec. Nts., 3/16/091		1,595,000			1,150,394
Jarden Corp., 7.50% Sr. Unsec. Sub. Nts., 5/1/17		2,300,000			1,581,250
Johnson & Johnson, 5.85% Sr. Unsec. Nts., 7/15/38		1,495,000			1,813,130
JPMorgan Chase & Co.:
6.40% Sr. Unsec. Nts., 5/15/38		5,500,000			6,529,771
7.90% Perpetual Bonds, Series 115		6,780,000			5,654,696
JPMorgan Hipotecaria su Casita:
6.47% Sec. Nts., 8/26/352	5,923,219		MXN		362,431
24.791% Mtg.-Backed Certificates, Series 06U, 9/25/351	2,661,229		MXN		557,259
JSC Astana Finance, 9.16% Nts., 3/14/122		7,200,000			3,333,547
K. Hovnanian Enterprises, Inc.:
7.75% Sr. Unsec. Sub. Nts., 5/15/13		410,000			92,250
8.875% Sr. Sub. Nts., 4/1/12		975,000			287,625
Kazmunaigaz Finance Sub BV, 9.125% Nts., 7/2/1813		14,880,000			9,746,400
Key Energy Services, Inc., 8.375% Sr. Unsec. Nts., 12/1/14		2,060,000			1,369,900
Kinder Morgan Energy Partners LP, 7.30% Sr. Unsec. Nts., 8/15/33		1,166,000			970,338
Kraft Foods, Inc., 6.125% Sr. Unsec. Nts., 8/23/18		256,000			252,837
L-3 Communications Corp.:
5.875% Sr. Sub. Nts., 1/15/15		2,905,000			2,629,025
6.375% Sr. Unsec. Sub. Nts., Series B, 10/15/15		1,185,000			1,113,900
Lamar Media Corp., 7.25% Sr. Unsec. Sub. Nts., 1/1/13		3,030,000			2,431,575
Lear Corp., 8.75% Sr. Unsec. Nts., Series B, 12/1/16		10,135,000			2,989,825
Lehman Brothers Holdings, Inc., 7.50% Sub. Nts., 5/11/384		4,656,000			466
Leslie’s Poolmart, Inc., 7.75% Sr. Unsec. Nts., 2/1/13		1,430,000			1,151,150
Levi Strauss & Co., 9.75% Sr. Unsec. Unsub. Nts., 1/15/15		3,655,000			2,722,975
Lin Television Corp., 6.50% Sr. Sub. Nts., 5/15/13		3,885,000			1,874,513
Majapahit Holding BV:
7.25% Nts., 10/17/1113		1,990,000			1,522,350
7.75% Nts., 10/17/1613		4,230,000			2,432,250
Marquee Holdings, Inc., 9.505% Sr. Nts., 8/15/141		2,010,000			1,035,150
Mashantucket Pequot Tribe, 8.50% Bonds, Series A, 11/15/1513		6,615,000			2,629,463
MediaNews Group, Inc.:
6.375% Sr. Sub. Nts., 4/1/14		1,330,000			91,438
6.875% Sr. Unsec. Sub. Nts., 10/1/13		2,870,000			197,313
MGM Mirage, Inc., 8.375% Sr. Unsec. Sub. Nts., 2/1/11		2,965,000			1,779,000
MHP SA, 10.25% Sr. Sec. Sub. Bonds, 11/30/1113		1,360,000			605,200
Mohegan Tribal Gaming Authority:
6.125% Sr. Unsec. Sub. Nts., 2/15/13		1,770,000			1,123,950
8% Sr. Sub. Nts., 4/1/12		3,770,000			2,318,550
Momentive Performance Materials, Inc., 11.50% Sr. Unsec. Sub. Nts., 12/1/16		4,245,000			1,273,500
Morgan Stanley, 6% Sr. Unsec. Unsub. Nts., Series F, 4/28/15		8,262,000			7,136,856
National Power Corp., 5.875% Unsec. Unsub. Bonds, 12/19/16	109,600,000		PHP		1,961,263
NewPage Corp., 10% Sr. Sec. Nts., 5/1/12		3,730,000			1,659,850
News America, Inc., 6.15% Sr. Unsec. Unsub. Nts., 3/1/37		1,749,000			1,637,108
Nextel Communications, Inc., 7.375% Sr. Nts., Series D, 8/1/15		4,590,000			1,928,677
Nortek, Inc., 8.50% Sr. Unsec. Unsub. Nts., 9/1/14		2,620,000			615,700
NorthPoint Communications Group, Inc., 12.875% Nts., 2/15/102,3,4		200,173			—
Novelis, Inc., 7.25% Sr. Unsec. Nts., 2/15/151		2,780,000			1,626,300
NTK Holdings, Inc., 0%/10.75% Sr. Unsec. Nts., 3/1/1414		6,170,000			1,357,400
NTL Cable plc, 9.125% Sr. Nts., 8/15/16		2,735,000			2,037,575
Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/102,3,4		90,000			—
Oracle Corp., 5.75% Sr. Unsec. Unsub. Nts., 4/15/18		2,001,000			2,096,746
Orion Network Systems, Inc., 12.50% Sr. Unsub. Nts., 1/15/072,3,4		675,000			7
Panama Canal Railway Co., 7% Sr. Sec. Nts., 11/1/2613		3,665,000			2,034,075
Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 3/15/10		5,275,000			3,507,875

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Corporate Bonds and Notes Continued
PECO Energy Co., 5.35% Sec. Nts., 3/1/18	$	892,000		$	853,055
Pemex Project Funding Master Trust, 6.625% Nts., 6/15/3813		6,680,000			5,594,500
Petrobras International Finance Co., 5.785% Sr. Unsec. Nts., 3/1/18		10,040,000			9,076,160
Petroleum Export Ltd. Cayman SPV, 5.265% Sr. Nts., Cl. A3, 6/15/1113		2,394,239			2,223,649
Philip Morris International, Inc., 5.65% Sr. Unsec. Unsub. Nts., 5/16/18		917,000			910,686
Pinnacle Entertainment, Inc., 8.25% Sr. Unsec. Sub. Nts., 3/15/12		3,230,000			2,470,950
Pinnacle Foods Finance LLC/ Pinnacle Foods Finance Corp., 10.625% Sr. Sub. Nts., 4/1/17		2,985,000			1,626,825
Pokagon Gaming Authority, 10.375% Sr. Nts., 6/15/1413		1,345,000			1,163,425
Premier Cruise Ltd., 11% Sr. Nts., 3/15/082,3,4		250,000			—
Quicksilver Resources, Inc.:
7.125% Sr. Sub. Nts., 4/1/16		2,740,000			1,479,600
8.25% Sr. Unsec. Nts., 8/1/15		1,330,000			851,200
Qwest Corp., 8.875% Unsec. Unsub. Nts., 3/15/12		4,925,000			4,580,250
R.H. Donnelley Corp.:
6.875% Sr. Nts., 1/15/13		860,000			120,400
6.875% Sr. Nts., Series A-2, 1/15/13		1,865,000			261,100
Radio One, Inc., 8.875% Sr. Unsec. Sub. Nts., Series B, 7/1/11		1,630,000			810,925
Rainbow National Services LLC, 8.75% Sr. Nts., 9/1/1213		2,020,000			1,828,100
Real Time Data Co., 11% Nts., 5/31/092,3,4,16		142,981			—
Sabine Pass LNG LP:
7.25% Sr. Sec. Nts., 11/30/13		710,000			521,850
7.50% Sr. Sec. Nts., 11/30/16		1,470,000			1,065,750
Salisbury International Investments Ltd., 8.653% Sec. Nts., Series 2006-003, Tranche E, 7/20/111,2		1,100,000			468,490
Sally Holdings LLC:
9.25% Sr. Unsec. Nts., 11/15/14		1,725,000			1,492,125
10.50% Sr. Unsec. Sub. Nts., 11/15/16		1,315,000			900,775
Select Medical Corp., 7.625% Sr. Unsec. Sub. Nts., 2/1/15		2,265,000			1,211,775
Service Corp. International, 6.75% Sr. Unsec. Nts., 4/1/15		1,080,000			858,600
Sinclair Broadcast Group, Inc., 8% Sr. Unsec. Sub. Nts., 3/15/12		3,095,000			2,336,725
SLM Corp., 4.50% Nts., Series A, 7/26/10		4,245,000			3,685,381
Smithfield Foods, Inc., 7% Sr. Nts., 8/1/11		1,350,000			965,250
Sprint Capital Corp., 8.75% Nts., 3/15/32		9,555,000			6,461,769
Station Casinos, Inc., 6.50% Sr. Unsec. Sub. Nts., 2/1/14		7,485,000			467,813
Steel Dynamics, Inc., 7.375% Sr. Unsec. Unsub. Nts., 11/1/12		2,295,000			1,686,825
Telefonica del Peru SA, 8% Sr. Unsec. Bonds, 4/11/1613	3,290,100		PEN		956,223
Teligent, Inc., 11.50% Sr. Nts., 12/1/082,3,4		500,000			—
Tengizchevroil LLP, 6.124% Nts., 11/15/1413		1,819,990			1,392,292
Tesoro Corp., 6.625% Sr. Unsec. Nts., 11/1/15		2,375,000			1,389,375
TGI International Ltd., 9.50% Nts., 10/3/1713		6,100,000			5,581,500
Tiers-BSP, 0%/8.60% Collateralized Trust, Cl. A, 6/15/9714		2,695,000			889,350
Time Warner Cable, Inc., 6.20% Sr. Unsec. Nts., 7/1/13		1,926,000			1,823,535
Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11		1,000,000			915,000
Travelport LLC, 11.875% Sr. Unsec. Sub. Nts., 9/1/16		545,000			155,325
Trump Entertainment Resorts, Inc., 8.50% Sec. Nts., 6/1/15		1,240,000			170,500
Union Pacific Corp., 7.875% Sr. Unsec. Nts., 1/15/19		1,376,000			1,574,778
United Parcel Service, Inc., 5.50% Sr. Unsec. Nts., 1/15/18		1,183,000			1,265,862
United Rentals, Inc., 7% Sr. Sub. Nts., 2/15/14		3,905,000			2,401,575
United Technologies Corp., 6.125% Sr. Unsec. Nts., 7/15/38		825,000			899,785
Universal Hospital Services, Inc., 8.50% Sr. Sec. Nts., 6/1/1516		1,965,000			1,404,975
US Oncology Holdings, Inc., 8.334% Sr. Unsec. Nts., 3/15/121,16		1,319,000			837,565
US Oncology, Inc., 9% Sr. Unsec. Nts., 8/15/12		1,945,000			1,779,675
Vanguard Health Holding Co. I LLC, 0%/11.25% Sr. Nts., 10/1/1514		2,770,000			2,188,300

	Principal
	Amount			Value
Corporate Bonds and Notes Continued
Vedanta Resources plc, 9.50% Sr. Unsec. Nts., 7/18/1813	$	11,010,000		$	5,780,250
Verizon Communications, Inc., 6.90% Sr. Unsec. Unsub. Bonds, 4/15/38		1,377,000			1,554,672
Videotron Ltd., 9.125% Sr. Nts., 4/15/1813		1,765,000			1,650,275
Virgin Media Finance plc, 8.75% Sr. Unsec. Nts., 4/15/14		1,820,000			1,374,100
Wal-Mart Stores, Inc., 5.80% Sr. Unsec. Unsub. Nts., 2/15/18		2,477,000			2,745,834
Walt Disney Co. (The), 4.50% Sr. Unsec. Unsub. Nts., Series D, 12/15/13		689,000			694,307
Warner Music Group Corp., 7.375% Sr. Sub. Bonds, 4/15/14		500,000			295,000
Wells Fargo & Co., 5.25% Sr. Unsec. Unsub. Nts., 10/23/12		5,608,000			5,716,823
William Lyon Homes, Inc.:
7.50% Sr. Unsec. Nts., 2/15/14		160,000			39,200
10.75% Sr. Nts., 4/1/13		1,390,000			354,450
Windstream Corp.:
8.125% Sr. Unsec. Unsub. Nts., 8/1/13		2,900,000			2,682,500
8.625% Sr. Unsec. Unsub. Nts., 8/1/16		1,970,000			1,753,300
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/102,3,4		250,000			—
WM Covered Bond Program:
3.875% Sec. Nts., Series 1, 9/27/11	8,725,000		EUR		11,222,278
4% Sec. Mtg. Nts., Series 2, 9/27/16	10,485,000		EUR		12,654,226
WMG Holdings Corp., 0%/9.50% Sr. Nts., 12/15/1414		2,030,000			761,250
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14		4,615,000			3,507,400
XTO Energy, Inc., 6.50% Sr. Unsec. Unsub. Nts., 12/15/18		1,954,000			1,894,917
Total Corporate Bonds and Notes (Cost $694,267,395)					519,305,734
	Shares			Value
Preferred Stocks—0.0%
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.2,3,16		4,253			—
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.2,3		5,000			—
Fannie Mae, 8.25% Non-Cum. Sub., Series S, Non-Vtg.		148,310			123,097
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.2,3,16		151			—
Sovereign Real Estate Investment Trust, 12% Non-Cum., Series A2		250			208,125
Total Preferred Stocks (Cost $4,486,155)					331,222
Common Stocks—0.0%
Arco Capital Corp. Ltd.2,3		690,638			690,638
Global Aero Logistics, Inc.2,3		2,168			2,168
National Maintenance Group, Inc.3		9,420			47
Revlon, Inc., Cl. A3		134,166			894,887
Total Common Stocks (Cost $12,158,364)					1,587,740
	Units
Rights, Warrants and Certificates—0.0%
Global Aero Logistics, Inc. Wts., Strike Price $10, Exp. 2/28/112,3		266			3
MHP SA, GDR Wts., Strike Price 0.01UAH, Exp. 5/8/093		56,610			183,982
Total Rights, Warrants and Certificates (Cost $2,025)					183,985
	Principal
	Amount
Structured Securities—5.0%
Barclays Bank plc:
Custom Basket of African Currencies Cv. Unsec. Unsub. Nts., 10.25%, 5/15/092	$	3,030,000			2,650,038
Custom Basket of African Currencies Cv. Unsec. Unsub. Nts., 10.25%, 5/7/092		3,030,000			2,639,130
Citibank NA, New York:
Dominican Republic Credit Linked Nts., 12%, 2/22/112	22,200,000		DOP		509,623
Dominican Republic Credit Linked Nts., 14.218%, 5/11/0910	61,180,000		DOP		1,596,580
Citigroup Funding, Inc., Custom Basket of African Currencies Credit Linked Nts., (0.055)%, 4/29/0910		6,070,000			5,358,900
Citigroup Global Markets Holdings, Inc.:
Brazil (Federal Republic of) Credit Linked Nts., 9.762%, 1/3/172	8,850,000		BRR		3,216,765
Brazil (Federal Republic of) Unsec. Credit Linked Nts., 14.809%, 1/5/1010	2,480,096		BRR		954,499
Colombia (Republic of) Credit Linked Bonds, 11.25%, 10/25/18	3,255,000,000		COP		1,497,713

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Structured Securities Continued
Citigroup Global Markets Holdings, Inc.: Continued
Colombia (Republic of) Credit Linked Nts., 12.710%, 2/26/152,12	2,199,000,000		COP	$	1,908,265
Colombia (Republic of) Credit Linked Nts., Series 01, 12.710%, 2/26/152,12	811,000,000		COP		703,776
Colombia (Republic of) Credit Linked Nts., Series 02, 12.710% 12/26/152,12	1,345,000,000		COP		1,167,174
Colombia (Republic of) Credit Linked Nts., Series II, 15%, 4/27/12	552,359,546		COP		280,057
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12	1,034,000,000		COP		524,257
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/122	1,200,000,000		COP		608,422
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12	927,000,000		COP		470,006
Dominican Republic Unsec. Credit Linked Nts., 13.182%, 2/23/0910	90,800,000		DOP		2,481,906
Dominican Republic Unsec. Credit Linked Nts., 15%, 3/12/12	49,300,000		DOP		1,104,595
Egypt (The Arab Republic of) Credit Linked Nts., 5.765%, 2/5/0910	18,110,000		EGP		3,256,520
Egypt (The Arab Republic of) Credit Linked Nts., 6.089%, 3/5/0910	12,920,000		EGP		2,302,282
Egypt (The Arab Republic of) Credit Linked Nts., 6.267%, 3/26/0910	17,610,000		EGP		3,116,948
Egypt (The Arab Republic of) Credit Linked Nts., 6.641%, 2/19/0910	17,850,000		EGP		3,195,194
Egypt (The Arab Republic of) Credit Linked Nts., 7.812%, 4/16/0910	7,100,000		EGP		1,248,300
Egypt (The Arab Republic of) Unsec. Credit Linked Nts., 6.529%, 3/26/0910	17,690,000		EGP		3,131,108
Ghana (Republic of) Credit Linked Nts., 13.50%, 4/2/10	2,990,000		GHS		2,057,695
Nigeria (Federal Republic of) Credit Linked Nts., 14.50%, 3/1/111,2	347,000,000		NGN		2,527,660
Ukraine Hryvnia Unsec. Credit Linked Nts., 11.94%, 1/2/10	880,000		UAH		94,532
Zambia (Republic of) Credit Linked Nts., 10.717%, 3/4/0910	3,850,000,000		ZMK		764,722
Zambia (Republic of) Credit Linked Nts., 10.793%, 2/25/0910	3,850,000,000		ZMK		761,985
Zambia (Republic of) Credit Linked Nts., 11.399%, 6/11/0910	2,165,000,000		ZMK	$	404,530
Credit Suisse First Boston International:
Boryspil Airport Total Return Linked Nts., 10%, 4/19/101	4,840,000		UAH		257,777
Indonesia (Republic of) Total Return Linked Nts., 12%, 9/16/11	14,800,000,000		IDR		1,362,046
Moitk Total Return Linked Nts., 8.966%, 3/26/111,2	59,900,000		RUR		659,954
NAK Naftogaz of Ukraine Credit Linked Nts., 5%, 1/20/09		3,890,000			3,720,007
Oreniz Total Return Linked Nts., 9.24%, 2/21/121,2	116,835,000		RUR		1,609,051
RuRail Total Return Linked Nts., 6.67%, 1/22/091,2	49,210,000		RUR		1,206,342
Ukraine (Republic of) Credit Linked Nts., Series EMG 13, 11.94%, 12/30/092	2,195,000		UAH		192,132
Vietnam Shipping Industry Group Total Return Linked Nts., 10.50%, 1/19/172	14,609,000,000		VND		510,687
Credit Suisse First Boston, Inc. (Nassau Branch):
Russian Specialized Construction and Installation Administration Credit Linked Nts., 5/20/101,2	97,250,000		RUR		267,865
Ukraine (Republic of) Credit Linked Nts., 11.94%, 12/30/092	5,650,000		UAH		494,554
Ukraine (Republic of) Credit Linked Nts., Series EMG 11, 11.94%, 12/30/09	661,000		UAH		57,858
Ukraine (Republic of) Credit Linked Nts., Series NPC 12, 11.94%, 12/30/092	4,170,000		UAH		365,007
Credit Suisse Group, Russian Moscoblgaz Finance Total Return Linked Nts., 9.25%, 6/24/122	106,500,000		RUR		1,466,718
Deutsche Bank AG:
Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.09%, 1/5/112	9,127,796		MXN		618,495
Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.65%, 1/5/112	6,053,427		MXN		410,178
Brazil Real Credit Linked Nts., 13.882%, 3/3/1010	4,580,760		BRR		1,746,067
Brazil Real Total Return Linked Nts., 6%, 8/18/10	2,065,000		BRR		1,588,966

	Principal
	Amount			Value
Structured Securities Continued
Deutsche Bank AG: Continued
Colombia (Republic of) Credit Linked Nts., 13.50%, 9/16/14	$2,002,000,000		COP	$	995,524
Coriolanus Ltd. Sec. Credit Linked Nts., Series 109, (0.196)%, 3/25/092		2,190,000			2,168,100
Coriolanus Ltd. Sec. Credit Linked Nts., Series 110, (2.256)%, 12/22/112		900,000			900,000
Coriolanus Ltd. Sec. Credit Linked Nts., Series 112, 0.004%, 12/7/092		650,000			638,950
Coriolanus Ltd. Sec. Credit Linked Nts., Series 113, (2.186)%, 4/26/112		655,000			586,225
European Investment Bank, Russian Federation Credit Linked Nts., 5.502%, 1/19/102,10		705,000			563,859
Grupo TMM SA Credit Linked Nts., 6%, 9/7/122		2,069,512			1,138,232
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/22/15		820,000			617,343
Indonesia (Republic of) Credit Linked Nts., Series 02, 12.80%, 6/22/21	29,700,000,000		IDR		2,869,237
Indonesia (Republic of) Credit Linked Nts., Series III, 14.25%, 6/22/13		873,600			814,931
Nigeria (Federal Republic of) Credit Linked Nts., 12.50%, 2/24/09	67,900,000		NGN		508,788
Nigeria (Federal Republic of) Credit Linked Nts., 15%, 1/27/09	91,000,000		NGN		695,039
Opic Reforma I Credit Linked Nts., Cl. 1A, 10.75%, 9/24/141,2	14,850,000		MXN		1,081,967
Opic Reforma I Credit Linked Nts., Cl. 1B, 10.75%, 9/24/141,2	2,970,000		MXN		216,393
Opic Reforma I Credit Linked Nts., Cl. 1C, 10.75%, 9/24/141,2	4,950,000		MXN		360,656
Opic Reforma I Credit Linked Nts., Cl. 2A, 12.25%, 5/22/151,2	1,417,014		MXN		103,243
Opic Reforma I Credit Linked Nts., Cl. 2B, 12.25%, 5/22/151,2	2,479,100		MXN		180,627
Opic Reforma I Credit Linked Nts., Cl. 2C, 12.25%, 5/22/151,2	37,378,810		MXN		2,723,411
Opic Reforma I Credit Linked Nts., Cl. 2D, 12.25%, 5/22/151,2	2,724,116		MXN		198,478
Opic Reforma I Credit Linked Nts., Cl. 2E, 12.25%, 5/22/151,2	1,979,122		MXN		144,198
Opic Reforma I Credit Linked Nts., Cl. 2F, 12.25%, 5/22/151,2	1,263,966		MXN		92,092
Opic Reforma I Credit Linked Nts., Cl. 2G, 12.25%, 5/22/151,2	232,771		MXN		16,960
Ukraine (Republic of) 5 yr. Credit Linked Nts., 4.05%, 8/27/10		885,000			500,078
Ukraine (Republic of) 5.5 yr. Credit Linked Nts., 4.05%, 3/1/11		885,000			448,031
Ukraine (Republic of) 6 yr. Credit Linked Nts., 4.05%, 8/29/11		885,000			406,392
Ukraine (Republic of) 6.5 yr. Credit Linked Nts., 4.05%, 2/29/12		885,000			377,709
Ukraine (Republic of) 7 yr. Credit Linked Nts., 4.05%, 8/30/12		885,000			359,089
United Mexican States Credit Linked Nts., 9.52%, 1/5/112	6,045,360		MXN		409,631
Videocon International Ltd. Credit Linked Nts., 6.26%, 12/29/09		1,630,000			1,785,421
Deutsche Bank AG, Singapore, Vietnam Shipping Industry Group Total Return Linked Nts., 9%, 4/20/17	36,800,000,000		VND		893,323
Dresdner Bank AG, Lukoil Credit Linked Nts., Series 3, 7.04%, 12/12/111,2	34,190,000		RUR		964,600
Goldman Sachs & Co., Turkey (Republic of) Credit Linked Nts., 14.802%, 3/29/172,10	21,980,000		TRY		3,099,030
Goldman Sachs Capital Markets LP, Colombia (Republic of) Credit Linked Nts., 10.476%, 2/8/372,10	63,720,800,000		COP		416,572
Goldman Sachs International, Rosselkhozbank Total Return Linked Nts., 8%, 5/13/091	84,500,000		RUR		2,592,669
Hallertau SPC, Philippines (Republic of) Credit Linked Nts., Series 2007-01, 3.914%, 12/20/171,2		14,290,000			10,410,265
Hallertau SPC Credit Linked Nts., Series 2008-2A, 8.636%, 9/17/131,2		19,430,000			19,676,761
Hallertau SPC Segregated Portfolio, Brazil (Federal Republic of) Credit Linked Nts., Series 2008-01, 9.888%, 8/2/102,4,10	14,337,604		BRR		1,256,283
ING Bank NV, Ukraine (Republic of) Credit Linked Nts., Series 725, 11.89%, 12/30/092	4,689,000		UAH		378,615
JPMorgan Chase Bank NA:
Brazil (Federal Republic of) Credit Linked Nts., 10.564%, 5/16/452	1,445,000		BRR		934,552
Brazil (Federal Republic of) Credit Linked Nts., 15.326%, 1/2/1510	10,948,600		BRR		2,237,855
Brazil (Federal Republic of) Credit Linked Nts., Series III, 12.184%, 1/2/152,10	5,245,000		BRR		1,072,059
Colombia (Republic of) Credit Linked Bonds, 10.19%, 1/5/162,10	20,100,000,000		COP		4,329,146
Colombia (Republic of) Credit Linked Bonds, 10.218%, 10/31/162,10	12,177,000,000		COP		2,406,070

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Structured Securities Continued
JPMorgan Chase Bank NA: Continued
Colombia (Republic of) Credit Linked Bonds, Series A, 10.218%, 10/31/162,10	12,125,000,000		COP	$	2,395,795
Peru (Republic of) Credit Linked Nts., 8.115%, 9/2/152,10	3,470,000		PEN		592,485
Swaziland (Kingdom of) Credit Linked Nts., 7.25%, 6/20/102		1,120,000			1,185,408
JPMorgan Chase Bank NA London Branch, Indonesia (Republic of) Credit Linked Nts., 12.80%, 6/17/212	25,490,000,000		IDR		2,438,706
Lehman Brothers Treasury Co. BV:
Brazil (Federal Republic of) Credit Linked Nts., 6.357%, 4/20/114,10,13	13,157,420		BRR		1,249,955
Microvest Capital Management LLC Credit Linked Nts., 7.55%, 5/24/122		7,541,026			6,811,054
Merrill Lynch, Colombia (Republic of) Credit Linked Nts., 10%, 11/17/162	1,784,000,000		COP		743,168
Morgan Stanley:
Peru (Republic of) Credit Linked Nts., 6.25%, 3/23/172	4,885,000		PEN		947,545
Russian Federation Total Return Linked Bonds, Series 007, Cl. VR, 5%, 8/22/34	93,152,901		RUR		1,621,714
Morgan Stanley & Co. International Ltd./Red Arrow International Leasing plc Total Return Linked Nts., Series A, 8.375%, 7/9/122	20,420,042		RUR		562,450
Morgan Stanley Capital Services, Inc.:
Brazil (Federal Republic of) Credit Linked Nts., 12.551%, 1/5/222,10	28,914,000		BRR		287,329
Brazil (Federal Republic of) Credit Linked Nts., 14.40%, 8/4/162	5,793,682		BRR		1,900,938
Ukraine (Republic of) Credit Linked Nts., 6.176%, 10/15/171,2		8,300,000			2,075,000
Ukraine (Republic of) Credit Linked Nts., Series 2, 7.046%, 10/15/171,2		6,800,000			1,700,000
United Mexican States Credit Linked Nts., 5.64%, 11/20/152		2,000,000			1,800,000
WTI Trading Ltd. Total Return Linked Nts., Series A, 15%, 3/8/122		4,440,493			2,729,127
WTI Trading Ltd. Total Return Linked Nts., Series C, 15%, 3/8/122		5,934,498			3,669,300
UBS AG, Ghana (Republic of) Credit Linked Nts., 14.47%, 12/28/112	1,222,052		GHS		621,505
Total Structured Securities (Cost $243,160,515)					172,966,769
Event-Linked Bonds—1.4%
Aiolos Ltd. Catastrophe Linked Nts., 10.095%, 4/8/091,13	2,050,000		EUR		2,823,579
Akibare Ltd. Catastrophe Linked Nts., Cl. A, 5.103%, 5/22/121,13		1,888,000			1,831,077
Calabash Re Ltd. Catastrophe Linked Nts., Cl. A-1, 10.653%, 6/1/091,13		2,750,000			2,756,463
Cascadia Ltd. Catastrophe Linked Nts., 6.203%, 8/31/091,13		1,130,000			1,123,559
Cat-Mex Ltd. Catastrophe Linked Nts., Cl. A, 4.585%, 5/19/091,13		3,200,000			3,130,880
Champlain Ltd. Catastrophe Linked Nts., Series A, 17.084%, 1/7/091,13		2,190,000			2,184,416
Eurus Ltd. Catastrophe Linked Nts., 9.758%, 4/8/091,13		1,400,000			1,379,210
Fhu-Jin Ltd. Catastrophe Linked Nts., Cl. B, 7.093%, 8/10/111,13		2,880,000			2,781,216
Foundation Re II Ltd. Catastrophe Linked Nts., 11.841%, 1/8/091,13		926,000			923,569
Fusion 2007 Ltd. Catastrophe Linked Nts., 8.239%, 5/19/091,13		3,350,000			3,318,678
Lakeside Re Ltd. Catastrophe Linked Nts., 7.959%, 12/31/091,13		4,100,000			4,073,350
Medquake Ltd. Catastrophe Linked Nts., 7.249%, 5/31/101,13		1,500,000			1,467,450
Midori Ltd. Catastrophe Linked Nts., 7.503%, 10/24/121,13		1,850,000			1,791,910
Muteki Ltd. Catastrophe Linked Nts., 6.549%, 5/24/111,13		2,100,000			1,993,950
Nelson Re Ltd. Catastrophe Linked Nts., Series 2007-I, Cl. A, 14.049%, 6/21/101,13		3,340,000			3,222,432
Osiris Capital plc Catastrophe Linked Combined Mortality Index Nts., Series D, 9.753%, 1/15/101,13		890,000			870,865
Residential Reinsurance 2007 Ltd. Catastrophe Linked Nts.:
Series CL2, 13.703%, 6/6/111,13		2,590,000			2,499,674
Series CL3, 14.453%, 6/7/101,13		1,000,000			966,400
VASCO Re 2006 Ltd. Catastrophe Linked Nts., 10.701%, 6/5/091,13		3,550,000			3,563,668
Vega Capital Ltd. Catastrophe Linked Nts., Series D, 0%, 6/24/112,10		4,205,000			4,310,125
Willow Re Ltd. Catastrophe Linked Nts., 8.545%, 6/16/101,13		2,480,000			1,494,820
Total Event-Linked Bonds (Cost $49,914,507)					48,507,291

	Expiration		Notional
	Date		Amount			Value
Swaptions Purchased—0.0%
J Aron & Co., Swap Counterparty, Interest Rate Swap call option; Swap Terms-Receive fixed rate of 9.32% and pay floating rate based on 28 day MXN TIIE BANXICO; terminating 5/31/213,17 (Cost $333,398)		6/11/09	117,625,000		MXN	$	632,280
			Principal
			Amount
Short-Term Notes—5.3%
Federal Home Loan Mortgage Corp.:
2.74%, 2/26/098,18			$	60,000,000			59,748,000
Federal National Mortgage Assn.:
2.67%, 2/23/098,19				63,830,000			63,579,095
2.76%, 2/25/098,20				60,000,000			59,750,667
Total Short-Term Notes (Cost $183,077,762)							183,077,762
			Shares
Investment Companies—12.4%
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%21,22				314,416,821			314,416,821
Oppenheimer Master Event-Linked Bond Fund, LLC 21				1,404,749		$	13,761,909
Oppenheimer Master Loan Fund, LLC21				14,194,313			102,098,787
Total Investment Companies (Cost $477,509,586)							430,277,517
Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $4,124,049,916)							3,566,317,162
Investments Purchased with Cash Collateral from Securities Loaned—9.4%23
OFI Liquid Assets Fund, LLC, 1.71%21,22 (Cost $325,265,870)				325,265,870			325,265,870
Total Investments, at Value (Cost $4,449,315,786)				112.5	%		3,891,583,032
Liabilities in Excess of Other Assets				(12.5	)		(432,698,291	)
Net Assets				100.0	%	$	3,458,884,741

Industry classifications are unaudited.

Footnotes to Statement of Investments

Principal/notional amount and strike price are reported in U.S. Dollars, except for those denoted in the following currencies:

AUD	Australian Dollar
BRR	Brazilian Real
CAD	Canadian Dollar
COP	Colombian Peso
DKK	Danish Krone
DOP	Dominican Republic Peso
EGP	Egyptian Pounds
EUR	Euro
GBP	British Pound Sterling
GHS	Ghana Cedi
HUF	Hungarian Forint
IDR	Indonesia Rupiah
ILS	Israeli Shekel
JPY	Japanese Yen
MXN	Mexican Nuevo Peso
MYR	Malaysian Ringgit
NGN	Nigeria Naira
NOK	Norwegian Krone
PEN	Peruvian New Sol
PHP	Philippines Peso
PLZ	Polish Zloty
RUR	Russian Ruble
SEK	Swedish Krona
TRY	New Turkish Lira
UAH	Ukraine Hryvnia
UYU	Uruguay Peso
VND	Vietnam Dong
ZMK	Zambian Kwacha

Swaption Purchased abbreviation is as follows:

MXN-TIIE-BANXICO     Mexican Nuevo Peso-Interbank Equilibrium Interest Rate-Banco de Mexico

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

1.	Represents the current interest rate for a variable or increasing rate security.
2.	Illiquid or restricted security. The aggregate value of illiquid or restricted securities as of December 31, 2008 was $178,278,234, which represents 5.15% of the Fund’s net assets, of which $5,118,025 is considered restricted. See Note 9 of accompanying Notes. Information concerning restricted securities is as follows:

	Acquisition						Unrealized
Security	Date		Cost		Value		Depreciation
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1A, 10.75%, 9/24/14		12/27/07	$	1,364,764	$	1,081,967	$	282,797
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1B, 10.75%, 9/24/14		6/12/08		286,334		216,393		69,941
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1C, 10.75%, 9/24/14		8/12/08		487,085		360,656		126,429
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2A, 12.25%, 5/22/15		5/21/08		136,622		103,243		33,379
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2B, 12.25%, 5/22/15		6/12/08		239,007		180,627		58,380
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2C, 12.25%, 5/22/15		6/18/08		3,626,317		2,723,411		902,906
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2D, 12.25%, 5/22/15		7/8/08		264,086		198,478		65,608
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2E, 12.25%, 5/22/15		7/15/08		192,185		144,198		47,987
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2F, 12.25%, 5/22/15		8/8/08		124,426		92,092		32,334
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2G, 12.25%, 5/22/15		8/22/08		22,959		16,960		5,999
			$	6,743,785	$	5,118,025	$	1,625,760

3.	Non-income producing security.
4.	Issue is in default. See Note 1 of accompanying Notes.
5.	Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. These securities amount to $22,444,545 or 0.65% of the Fund’s net assets as of December 31, 2008.
6.	Principal-Only Strips represent the right to receive the monthly principal payments on an underlying pool of mortgage loans. The value of these securities generally increases as interest rates decline and prepayment rates rise. The price of these securities is typically more volatile than that of coupon-bearing bonds of the same maturity. Interest rates disclosed represent current yields based upon the current cost basis and estimated timing of future cash flows. These securities amount to $5,330,153 or 0.15% of the Fund’s net assets as of December 31, 2008.
7.	When-issued security or delayed delivery to be delivered and settled after December 31, 2008. See Note 1 of accompanying Notes.
8.	Partial or fully-loaned security. See Note 10 of accompanying Notes.
9.	A sufficient amount of liquid assets has been designated to cover outstanding written put options. See Note 7 of accompanying Notes.
10.	Zero coupon bond reflects effective yield on the date of purchase.
11.	All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures contracts. The aggregate market value of such securities is $45,907,536. See Note 6 of accompanying Notes.
12.	Denotes an inflation-indexed security: coupon and principal are indexed to the consumer price index.
13.	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 $233,849,534 or 6.76% of the Fund’s net assets as of December 31, 2008.
14.	Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date.
15.	This bond has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest. Rate reported represents the current interest rate for this variable rate security.
16.	Interest or dividend is paid-in-kind, when applicable.
17.	Swap contract terms if the option was exercised on exercise date.
18.	All or a portion of the security was segregated by the Fund in the amount of $3,562,000, which represented 97.43% of the market value of securities sold short. See Note 1 of accompanying Notes.
19.	A sufficient amount of securities has been designated to cover outstanding foreign currency exchange contracts. See Note 5 of accompanying Notes.
20.	A sufficient amount of liquid assets has been designated to cover outstanding written call options. See Note 7 of accompanying Notes.

21. Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
OFI Liquid Assets Fund, LLC		—		429,325,708		104,059,838		325,265,870
Oppenheimer Institutional Money Market Fund, Cl. E		587,306,313		4,222,709,843		4,495,599,335		314,416,821
Oppenheimer Master Event-Linked Bond Fund, LLC		—		1,404,749		—		1,404,749
Oppenheimer Master Loan Fund, LLC		14,194,313		—		—		14,194,313

						Realized
	Value		Income			Gain/(Loss)
OFI Liquid Assets Fund, LLC	$	325,265,870	$	1,405,615	a	$	—
Oppenheimer Institutional Money Market Fund, Cl. E		314,416,821		16,462,436			—
Oppenheimer Master Event-Linked Bond Fund, LLC		13,761,909		503,808	b		178,059	b
Oppenheimer Master Loan Fund, LLC		102,098,787		11,532,172	c		(4,315,961	)c
	$	755,543,387	$	29,904,031		$	(4,137,902	)

a.	Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.
b.	Represents the amount allocated to the Fund from Oppenheimer Master Event-Linked Bond Fund, LLC.
c.	Represents the amount allocated to the Fund from Oppenheimer Master Loan Fund, LLC.

22.	Rate shown is the 7-day yield as of December 31, 2008.
23.	The security/securities have been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 10 of accompanying Notes.

	Principal
	Amount
	Sold Short			Value
Mortgage-Backed Obligations Sold Short—(0.1)%
Federal National Mortgage Assn., 5%, 1/1/247	$	(3,562,000	)	$	(3,656,058	)
(Proceeds $3,628,788)

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities activelytraded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices forsimilar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments in		Other Financial
Valuation Description	Securities		Instruments*
Level 1—Quoted Prices	$	756,438,321	$	(4,080,437	)
Level 2—Other Significant Observable Inputs		3,134,767,144		(53,323,121	)
Level 3—Significant Unobservable Inputs		377,567		—
Total	$	3,891,583,032	$	(57,403,558	)

* Other financial instruments include options written, currency contracts, futures, forwards, swap contracts, short contracts and unfunded loan commitments. Currency contracts, forwards and unfunded loan commitments are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written, swaps and short contracts are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Foreign Currency Exchange Contracts as of December 31, 2008 are as follows:

		Contracts
		Amount		Expiration				Unrealized		Unrealized
Contract Description	Buy/Sell	(000s)		Date		Value		Appreciation		Depreciation
Argentine Peso (ARP)	Buy	22,800	ARP		2/3/09	$	6,267,404	$	679,168	$	—
Australian Dollar (AUD)	Sell	17,965	AUD		1/9/09-1/27/09		12,752,407		—		798,928
Australian Dollar (AUD)	Buy	28,035	AUD		1/16/09-2/3/09		19,855,125		1,131,925		—
Brazilian Real (BRR)	Sell	15,740	BRR		2/3/09		6,731,205		—		276,417
Brazilian Real (BRR)	Buy	112,958	BRR		2/3/09-1/5/10		48,066,940		3,556,527		280,132
British Pound Sterling (GBP)	Sell	16,875	GBP		1/9/09-2/5/09		24,595,247		6,827,231		—
British Pound Sterling (GBP)	Buy	16,810	GBP		1/16/09-2/3/09		24,495,688		36,364		908,278
Canadian Dollar (CAD)	Sell	52,585	CAD		1/9/09-2/9/09		43,206,232		1,078,951		1,357,828
Canadian Dollar (CAD)	Buy	4,420	CAD		1/16/09		3,631,695		154,118		—
Chinese Renminbi (Yuan) (CNY)	Buy	167,350	CNY		5/13/09-12/17/09		23,996,852		66,865		858,090
Colombian Peso (COP)	Sell	21,229,000	COP		1/21/09-4/2/09		9,361,003		12,628		367,710
Czech Koruna (CZK)	Sell	274,303	CZK		2/9/09-12/31/09		14,244,197		26,026		632,351
Euro (EUR)	Sell	94,305	EUR		1/9/09-3/3/09		131,530,414		2,783,968		7,130,922
Euro (EUR)	Buy	40,710	EUR		1/9/09-1/16/09		56,821,566		2,092,409		2,506,521
Hong Kong Dollar (HKD)	Sell	51,100	HKD		2/4/09		6,595,067		151		—
Hungarian Forint (HUF)	Sell	1,337,906	HUF		2/2/09-12/31/09		7,042,153		6,364		487,866
Hungarian Forint (HUF)	Buy	4,495,000	HUF		2/2/09		23,664,489		19,190		466,627
Indian Rupee (INR)	Sell	802,000	INR		2/3/09-3/9/09		16,288,830		—		666,361
Indian Rupee (INR)	Buy	324,000	INR		1/30/09		6,612,245		295,224		—
Indonesia Rupiah (IDR)	Buy	43,750,000	IDR		2/17/09-2/19/09		3,852,595		2,147		28,857
Israeli Shekel (ILS)	Sell	51,660	ILS		1/30/09-2/9/09		13,642,344		13,307		401,415
Japanese Yen (JPY)	Sell	7,740,000	JPY		1/16/09-2/5/09		85,368,279		160,555		3,890,591
Japanese Yen (JPY)	Buy	11,963,000	JPY		1/9/09-3/3/09		131,928,005		4,196,667		26,797
Malaysian Ringgit (MYR)	Sell	36,255	MYR		1/9/09-2/18/09		10,435,435		—		113,812
Malaysian Ringgit (MYR)	Buy	18,030	MYR		1/9/09-2/17/09		5,181,918		8,864		—
Mexican Nuevo Peso (MXN)	Sell	37,410	MXN		2/18/09		2,683,640		17,443		—
Mexican Nuevo Peso (MXN)	Buy	223,025	MXN		1/21/09-2/18/09		16,071,076		—		260,518
New Taiwan Dollar (TWD)	Sell	413,000	TWD		3/2/09		12,611,137		—		196,805
New Turkish Lira (TRY)	Sell	51,835	TRY		1/20/09-2/13/09		33,220,797		—		1,005,366
New Turkish Lira (TRY)	Buy	10,775	TRY		1/26/09		6,920,666		209,194		—
New Zealand Dollar (NZD)	Sell	4,305	NZD		1/27/09		2,519,979		—		36,747
New Zealand Dollar (NZD)	Buy	25,675	NZD		1/16/09		15,054,656		—		3,753,397
Norwegian Krone (NOK)	Sell	208,800	NOK		1/9/09		30,035,420		—		191,927
Norwegian Krone (NOK)	Buy	103,805	NOK		1/9/09-1/16/09		14,926,519		53,196		3,338,659
Peruvian New Sol (PEN)	Sell	70,534	PEN		1/7/09-2/26/09		22,390,003		410,732		—
Philippines Peso (PHP)	Sell	92,900	PHP		2/17/09		1,932,214		—		125,138
Philippines Peso (PHP)	Buy	325,000	PHP		1/26/09		6,792,587		413,784		—
Polish Zloty (PLZ)	Sell	90,218	PLZ		1/9/09-12/31/09		30,286,191		2,626,488		144,496
Polish Zloty (PLZ)	Buy	50,390	PLZ		1/9/09-2/3/09		16,895,884		12,699		218,463
Russian Ruble (RUR)	Sell	603,290	RUR		9/18/09-11/18/09		17,277,621		3,318,461		—
Russian Ruble (RUR)	Buy	222,470	RUR		2/11/09		7,207,394		—		318,655
Singapore Dollar (SGD)	Sell	9,900	SGD		1/30/09		6,904,488		—		337,324
Singapore Dollar (SGD)	Buy	2,060	SGD		1/9/09		1,437,639		28,610		—
South African Rand (ZAR)	Sell	176,355	ZAR		1/20/09		18,644,512		—		2,225,002
South African Rand (ZAR)	Buy	3,872	ZAR		12/31/09		384,503		—		90,284
South Korean Won (KRW)	Sell	9,610,000	KRW		1/30/09		7,294,118		—		810,293
Swedish Krona (SEK)	Sell	85,080	SEK		1/16/09		10,865,402		2,178,743		110,588
Swiss Franc (CHF)	Sell	91,405	CHF		1/9/09-2/4/09		85,757,178		—		7,629,825
Swiss Franc (CHF)	Buy	34,713	CHF		1/9/09-2/3/09		32,561,136		2,959,676		—
Ukraine Hryvnia (UAH)	Sell	12,850	UAH		1/28/09		1,417,165		343,107		—
Ukraine Hryvnia (UAH)	Buy	12,850	UAH		1/28/09		1,417,165		—		1,048,769
Total unrealized appreciation and depreciation								$	35,720,782	$	43,041,759

Futures Contracts as of December 31, 2008 are as follows:

								Unrealized
		Number of		Expiration				Appreciation
Contract Description	Buy/Sell	Contracts		Date		Value		(Depreciation)
Amsterdam Exchange Index	Buy		51		1/16/09	$	3,509,586	$	(49,843	)
CAC 40 10 Euro Index	Sell		143		1/16/09		6,433,242		(52,155	)
Canadian Bond, 10 yr.	Buy		241		3/20/09		25,108,211		1,507,181
DAX Index	Sell		99		3/20/09		16,712,057		(535,972	)
DAX Index	Buy		36		3/20/09		6,077,112		194,868
Euro-Bundesobligation, 5 yr.	Buy		2,065		3/6/09		335,171,195		3,138,810
Euro-Bundesobligation, 10 yr.	Buy		2,276		3/6/09		396,852,525		2,268,948
Euro-Bundesobligation, 10 yr.	Sell		68		3/6/09		11,856,754		(26,969	)
Euro-Schatz	Buy		591		3/6/09		88,711,079		372,065
FTSE 100 Index	Sell		181		3/20/09		11,589,095		(388,718	)
FTSE 100 Index	Buy		17		3/20/09		1,088,479		36,495
H Shares Index	Sell		70		1/29/09		3,566,295		(149,944	)
Japan (Government of) Bonds, 10 yr.	Sell		49		3/11/09		75,682,099		(590,489	)
Japan (Government of) Mini Bonds, 10 yr.	Buy		38		3/10/09		5,853,726		30,151
Mexican Bolsa Index	Sell		215		3/20/09		3,581,140		(363,682	)
MSCI Taiwan Stock Index	Buy		182		1/20/09		3,174,080		214,458
NASDAQ 100 E-Mini Index	Sell		468		3/20/09		11,349,000		98,445
Nikkei 225 Index	Sell		99		3/12/09		9,635,913		(497,018	)
Nikkei 225 Index	Buy		38		3/12/09		3,698,633		190,713
OMXS30 Index	Sell		711		1/23/09		5,985,705		37,763
SGX CNX Nifty Index	Sell		568		1/29/09		3,368,240		156,869
Standard & Poor’s 500 E-Mini	Sell		965		3/20/09		43,425,000		(712,762	)
Standard & Poor’s 500 E-Mini	Buy		154		3/20/09		6,930,000		113,190
Standard & Poor’s/MIB Index, 10 yr.	Buy		27		3/20/09		3,662,105		19,974
Standard & Poor’s/Toronto Stock Exchange 60 Index	Buy		67		3/19/09		5,946,133		282,172
U.S. Treasury Bonds, 10 yr.	Sell		767		3/20/09		96,450,250		(4,342,008	)
U.S. Treasury Bonds, 10 yr.	Buy		1,327		3/20/09		166,870,250		896,638
U.S. Treasury Bonds, 20 yr.	Buy		1,293		3/20/09		178,494,609		13,693,696
U.S. Treasury Bonds, 20 yr.	Sell		121		3/20/09		16,703,672		(555,617	)
U.S. Treasury Bonds, 20 yr.	Sell		3,109		3/31/09		370,141,025		(8,911,488	)
U.S. Treasury Bonds, 20 yr.	Buy		583		3/31/09		69,408,883		1,280,613
U.S. Treasury Nts., 2 yr.	Sell		1,335		3/31/09		291,113,438		(1,447,421	)
United Kingdom Long Gilt	Sell		8		3/27/09		1,440,648		(47,064	)
								$	5,861,899

Written Options as of December 31, 2008 are as follows:

		Number of		Exercise		Expiration		Premiums
Description	Type	Contracts		Price		Date		Received		Value
Euro (EUR)	Call		2,485,000	$	1.411		1/6/09	$	40,673	$	(17,093	)
Euro (EUR)	Call		2,460,000		1.392		1/7/09		37,847		(43,652	)
Euro (EUR)	Put		2,485,000		1.411		1/6/09		40,673		(53,647	)
Euro (EUR)	Put		2,460,000		1.392		1/7/09		37,847		(29,925	)
								$	157,040	$	(144,317	)

Credit Default Swap Contracts as of December 31, 2008 are as follows:

					Pay/					Upfront
		Buy/Sell	Notional		Receive					Payment
		Credit	Amount		Fixed			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Rate			Date		(Paid)		Value
ABX.HE.AA.06-2 Index:
	Barclays Bank plc	Sell	$	1,630		0.170	%		5/25/46	$	1,260,997	$	(1,431,546	)
	Deutsche Bank AG	Sell		720		0.170			5/25/46		86,393		(632,339	)
	Goldman Sachs International	Sell		240		0.170			5/25/46		19,774		(210,780	)
	Goldman Sachs International	Sell		970		0.170			5/25/46		383,127		(851,902	)
	Morgan Stanley Capital Services, Inc.	Sell		240		0.170			5/25/46		19,174		(210,780	)
	Morgan Stanley Capital Services, Inc.	Sell		480		0.170			5/25/46		47,998		(421,560	)
		Total		4,280							1,817,463		(3,758,907	)
ABX-HE-AAA 06-2 Index:
	Deutsche Bank AG	Sell		1,720		0.110			5/25/46		85,989		(875,955	)
	Deutsche Bank AG	Sell		1,720		0.110			5/25/46		85,974		(875,955	)
	Goldman Sachs International	Sell		1,000		0.110			5/25/46		110,607		(509,276	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap: Continued

					Pay/					Upfront
		Buy/Sell	Notional		Receive					Payment
		Credit	Amount		Fixed			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Rate			Date		(Paid)			Value
ABX-HE-AAA 06-2 Index: Continued
	Morgan Stanley Capital Services, Inc.	Sell	$	1,535		0.110	%		5/25/46	$	475,770		$	(781,739	)
	UBS AG	Sell		1,035		0.110			5/25/46		323,384			(527,101	)
		Total		7,010							1,081,724			(3,570,026	)
ARAMARK Corp.:
	Credit Suisse International	Sell		690		6.000			3/20/13		—			(12,360	)
	Credit Suisse International	Sell		550		4.750			12/20/13		—			(37,108	)
	Morgan Stanley Capital Services, Inc.	Sell		750		5.920			3/20/13		—			(15,430	)
		Total		1,990							—			(64,898	)
Bolivarian Republic of Venezuela	Goldman Sachs International	Sell		645		6.350			5/20/13		—			(318,048	)
		Total		645							—			(318,048	)
Cablevision Systems Corp.	Citibank NA, New York	Sell		100		3.100			12/20/10		—			(9,517	)
		Total		100							—			(9,517	)
Capmark Financial Group, Inc.:
	Citibank NA, New York	Sell		2,480		7.125			12/20/12		—			(1,132,110	)
	Citibank NA, New York	Sell		1,620		9.700			12/20/12		—			(682,095	)
	Citibank NA, New York	Sell		1,350		9.750			12/20/12		—			(567,483	)
	Credit Suisse International	Sell		790		5.200			12/20/12		—			(381,568	)
	Credit Suisse International	Sell		415		6.250			12/20/12		—			(194,445	)
	Morgan Stanley Capital Services, Inc.	Sell		460		7.400			12/20/12		—			(208,247	)
	Morgan Stanley Capital Services, Inc.	Sell		415		7.150			12/20/12		—			(189,303	)
		Total		7,530							—			(3,355,251	)
CDX North America High Yield Index, Series 7:
	Credit Suisse International	Sell		1,254		3.250			12/20/11		(47,467	)		(125,935	)
	Deutsche Bank AG	Sell		3,543		3.250			12/20/11		(134,056	)		(355,667	)
		Total		4,797							(181,523	)		(481,602	)
CDX North America High Yield Index, Series 8:
	Credit Suisse International	Sell		2,847		2.750			6/20/12		144,826			(418,106	)
	JPMorgan Chase Bank NA, NY Branch	Sell		3,425		2.750			6/20/12		174,240			(503,023	)
		Total		6,272							319,066			(921,129	)
CDX North America High Yield Index, Series 9:
	Deutsche Bank AG	Sell		7,512		3.750			12/20/12		(15,170	)		(1,399,706	)
	JPMorgan Chase Bank NA, NY Branch	Sell		6,326		3.750			12/20/12		6,724			(1,178,748	)
	Morgan Stanley Capital Services, Inc.	Sell		5,767		3.750			12/20/12		31,264			(1,074,660	)
		Total		19,605							22,818			(3,653,114	)
CDX North America High Yield Index, Series 10:
	Credit Suisse International	Sell		11,050		5.000			6/20/13		593,170			(1,732,118	)
	Deutsche Bank AG	Sell		15,840		5.000			6/20/13		508,200			(2,482,963	)
	Deutsche Bank AG	Sell		12,740		5.000			6/20/13		744,051			(1,997,030	)
	Deutsche Bank AG	Sell		11,110		5.000			6/20/13		738,352			(1,741,523	)
	Deutsche Bank AG	Sell		5,495		5.000			6/20/13		491,497			(855,994	)
	Deutsche Bank AG	Sell		8,235		5.000			6/20/13		766,312			(1,282,823	)
	Goldman Sachs International	Sell		15,800		5.000			6/20/13		459,736			(2,476,693	)
	JPMorgan Chase Bank NA, NY Branch	Sell		15,840		5.000			6/20/13		528,000			(2,482,963	)
	JPMorgan Chase Bank NA, NY Branch	Sell		3,385		5.000			6/20/13		302,769			(527,305	)
	JPMorgan Chase Bank NA, NY Branch	Sell		4,125		5.000			6/20/13		383,854			(642,580	)
	Morgan Stanley Capital Services, Inc.	Sell		15,780		5.000			6/20/13		543,533			(2,473,558	)
	UBS AG	Sell		15,850		5.000			6/20/13		516,226			(2,484,531	)
	UBS AG	Sell		3,385		5.000			6/20/13		302,769			(527,305	)
	UBS AG	Sell		2,750		5.000			6/20/13		255,903			(428,386	)
		Total		141,385							7,134,372			(22,135,772	)

Credit Default Swap: Continued

					Pay/					Upfront
		Buy/Sell	Notional		Receive					Payment
		Credit	Amount		Fixed			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Rate			Date		(Paid)			Value
CDX North America High Yield Index, Series 11:
	Barclays Bank plc	Sell	$	8,275		5.000	%		12/20/13	$	1,553,861		$	(1,640,580	)
	Barclays Bank plc	Sell		9,460		5.000			12/20/13		1,776,378			(1,875,515	)
	Barclays Bank plc	Sell		555		5.000			12/20/13		99,823			(110,033	)
	Barclays Bank plc	Sell		2,745		5.000			12/20/13		493,719			(544,217	)
	Barclays Bank plc	Sell		2,380		5.000			12/20/13		409,889			(471,853	)
	Barclays Bank plc	Sell		975		5.000			12/20/13		171,437			(193,301	)
	Barclays Bank plc	Sell		4,645		5.000			12/20/13		905,130			(920,906	)
	Barclays Bank plc	Sell		3,690		5.000			12/20/13		750,813			(731,570	)
	Barclays Bank plc	Sell		6,390		5.000			12/20/13		1,267,350			(1,266,865	)
	Barclays Bank plc	Sell		6,390		5.000			12/20/13		1,299,300			(1,266,865	)
	Credit Suisse International	Sell		8,275		5.000			12/20/13		1,522,830			(1,640,580	)
	Credit Suisse International	Sell		8,075		5.000			12/20/13		1,529,764			(1,600,929	)
	Credit Suisse International	Sell		2,815		5.000			12/20/13		568,865			(558,095	)
	Deutsche Bank AG	Sell		13,420		5.000			12/20/13		2,566,575			(2,660,615	)
	Merrill Lynch International	Sell		1,605		5.000			12/20/13		276,194			(318,203	)
	Morgan Stanley Capital Services, Inc.	Sell		8,050		5.000			12/20/13		1,549,625			(1,595,972	)
	Morgan Stanley Capital Services, Inc.	Sell		8,055		5.000			12/20/13		1,690,431			(1,596,964	)
	Morgan Stanley Capital Services, Inc.	Sell		8,275		5.000			12/20/13		1,595,236			(1,640,580	)
	UBS AG	Sell		8,060		5.000			12/20/13		1,561,625			(1,597,955	)
		Total		112,135							21,588,845			(22,231,598	)
CDX North America Investment Grade Index, Series 10:
	Barclays Bank plc	Sell		12,986		1.550			6/20/13		(268,597	)		(215,244	)
	Barclays Bank plc	Sell		5,192		1.550			6/20/13		(118,435	)		(86,065	)
	Barclays Bank plc	Sell		3,894		1.550			6/20/13		(22,848	)		(64,549	)
	Morgan Stanley Capital Services, Inc.	Sell		12,986		1.550			6/20/13		(278,443	)		(215,244	)
	Morgan Stanley Capital Services, Inc.	Sell		7,793		1.550			6/20/13		(146,662	)		(129,179	)
	Morgan Stanley Capital Services, Inc.	Sell		3,894		1.550			6/20/13		(57,383	)		(64,549	)
		Total		46,745							(892,368	)		(774,830	)
Cemex SAB de CV:
	UBS AG	Buy		1,535		5.300			10/20/13		—			101,681
	UBS AG	Buy		1,535		5.300			10/20/13		—			101,681
		Total		3,070							—			203,362
Charter Communications Holdings LLC/Charter Communications Holdings Capital:
	Credit Suisse International	Sell		235		5.000			9/20/17		47,000			(128,552	)
	Credit Suisse International	Sell		285		5.000			9/20/17		57,000			(155,903	)
		Total		520							104,000			(284,455	)
CMBX.3.AJ Index:
	Goldman Sachs Bank USA	Sell		1,500		1.470			12/13/49		184,417			(863,784	)
	JPMorgan Chase Bank NA, NY Branch	Sell		700		1.470			12/13/49		83,920			(403,099	)
	JPMorgan Chase Bank NA, NY Branch	Sell		5,800		1.470			12/13/49		1,282,806			(3,339,966	)
	Morgan Stanley Capital Services, Inc.	Sell		2,050		1.470			12/13/49		269,298			(1,180,505	)
		Total		10,050							1,820,441			(5,787,354	)
CMBX.4.AJ Index:
	JPMorgan Chase Bank NA, NY Branch	Sell		700		0.960			2/17/51		118,552			(435,414	)
	Morgan Stanley Capital Services, Inc.	Sell		3,260		0.960			2/17/51		670,524			(2,027,787	)
	Morgan Stanley Capital Services, Inc.	Sell		2,050		0.960			2/17/51		348,319			(1,280,858	)
		Total		6,010							1,137,395			(3,744,059	)
CMBX.AAA.4 Index:
	Credit Suisse International	Buy		6,250		0.350			2/17/51		(2,037,952	)		1,904,199
	JPMorgan Chase Bank NA, NY Branch	Buy		12,500		0.350			2/17/51		(4,075,903	)		3,808,398
	Morgan Stanley Capital Services, Inc.	Buy		14,100		0.350			2/17/51		(4,496,814	)		4,295,873
	Morgan Stanley Capital Services, Inc.	Buy		12,500		0.350			2/17/51		(3,866,610	)		3,808,398
		Total		45,350							(14,477,279	)		13,816,868

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap: Continued

					Pay/					Upfront
		Buy/Sell	Notional		Receive					Payment
		Credit	Amount		Fixed			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Rate			Date		(Paid)		Value
Constellation Brands, Inc. JPMorgan Chase Bank NA, NY Branch		Sell	$	525		3.970	%		9/20/13	$	—	$	(21,244	)
		Total		525							—		(21,244	)
Dean Foods Co.:
	JPMorgan Chase Bank NA, NY Branch	Sell		915		1.030			6/20/11		—		(72,325	)
	JPMorgan Chase Bank NA, NY Branch	Sell		915		1.060			6/20/11		—		(71,704	)
	JPMorgan Chase Bank NA, NY Branch	Sell		500		1.050			6/20/11		—		(39,296	)
	JPMorgan Chase Bank NA, NY Branch	Sell		975		1.080			6/20/11		—		(75,965	)
		Total		3,305							—		(259,290	)
Development Bank of Kazakhstan JSC            Credit Suisse International		Sell		8,170		3.750			2/20/13		—		(1,608,114	)
		Total		8,170							—		(1,608,114	)
Eastman Kodak Co.:
	Credit Suisse International	Buy		625		4.050			12/20/18		—		105,619
	Credit Suisse International	Buy		665		4.010			12/20/18		—		113,821
	Credit Suisse International	Buy		1,110		3.700			12/20/18		—		208,640
		Total		2,400							—		428,080
	Barclays Bank plc	Sell		625		4.000			12/20/13		—		(81,833	)
	Barclays Bank plc	Sell		665		3.960			12/20/13		—		(88,027	)
	Credit Suisse International	Sell		1,110		3.650			12/20/13		—		(159,302	)
		Total		2,400							—		(329,162	)
El Paso Corp.:
	Credit Suisse International	Sell		435		2.800			3/20/18		—		(114,622	)
	Merrill Lynch International	Sell		460		2.900			3/20/18		—		(118,946	)
	Merrill Lynch International	Sell		1,175		2.890			3/20/18		—		(304,407	)
		Total		2,070							—		(537,975	)
Energy Future Holdings Corp.:
	Credit Suisse International	Sell		940		1.530			6/20/11		—		(281,156	)
	Credit Suisse International	Sell		490		1.610			6/20/11		—		(145,886	)
	Merrill Lynch International	Sell		935		1.530			6/20/11		—		(279,661	)
	Merrill Lynch International	Sell		960		1.580			6/20/11		—		(286,313	)
	Merrill Lynch International	Sell		960		1.590			6/20/11		—		(286,148	)
	Merrill Lynch International	Sell		1,210		1.620			6/20/11		—		(360,041	)
	Merrill Lynch International	Sell		1,405		2.060			6/20/11		—		(407,433	)
		Total		6,900							—		(2,046,638	)
Federative Republic of Brazil
	Citibank NA, New York	Sell		3,250		4.250			12/20/13		—		183,797
		Total		3,250							—		183,797
Ford Motor Co.:
	Deutsche Bank AG	Sell		720		5.000			12/20/18		388,800		(508,518	)
	Deutsche Bank AG	Sell		2,065		6.000			12/20/16		—		(1,376,816	)
	Deutsche Bank AG	Sell		3,180		5.850			12/20/16		—		(2,124,056	)
	Deutsche Bank AG	Sell		2,540		5.800			12/20/16		—		(1,697,591	)
	JPMorgan Chase Bank NA, NY Branch	Sell		2,065		6.000			12/20/16		—		(1,376,816	)
	Merrill Lynch International	Sell		2,450		5.300			12/20/12		—		(1,552,270	)
	Morgan Stanley Capital Services, Inc.	Sell		2,065		6.150			12/20/16		—		(1,374,332	)
	Morgan Stanley Capital Services, Inc.	Sell		1,690		5.000			12/20/13		929,500		(1,145,006	)
	Morgan Stanley Capital Services, Inc.	Sell		520		5.900			12/20/16		—		(347,121	)
		Total		17,295							1,318,300		(11,502,526	)

Credit Default Swap: Continued

					Pay/					Upfront
		Buy/Sell	Notional		Receive					Payment
		Credit	Amount		Fixed			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Rate			Date		(Paid)		Value
Ford Motor Credit Co. LLC:
	Citibank NA, New York	Sell	$	1,800		2.320	%		3/20/12	$	—	$	(287,548	)
	Credit Suisse International	Sell		3,425		2.385			3/20/12		—		(546,655	)
	Credit Suisse International	Sell		1,150		2.550			3/20/12		—		(183,135	)
	Deutsche Bank AG	Sell		2,760		2.390			3/20/12		—		(440,486	)
		Total		9,135							—		(1,457,824	)
General Electric Capital Corp.:
	Barclays Bank plc	Sell		1,064		8.000			12/20/09		—		31,349
	Barclays Bank plc	Sell		1,745		5.750			12/20/09		—		13,658
	Credit Suisse International	Sell		936		8.000			12/20/09		—		27,577
		Total		3,745							—		72,584
General Motors Corp.:
	Deutsche Bank AG	Sell		3,465		5.000			12/20/13		2,217,600		(2,742,500	)
	Deutsche Bank AG	Sell		3,220		5.000			12/20/18		2,157,400		(2,549,307	)
	Deutsche Bank AG	Sell		1,650		4.750			12/20/16		—		(1,320,188	)
	Deutsche Bank AG	Sell		2,035		4.680			12/20/16		—		(1,629,468	)
	Goldman Sachs Bank USA	Sell		1,650		4.950			12/20/16		—		(1,317,326	)
	JPMorgan Chase Bank NA, NY Branch	Sell		2,545		4.750			12/20/16		—		(2,036,291	)
	Merrill Lynch International	Sell		1,635		4.050			12/20/12		—		(1,307,365	)
	Morgan Stanley Capital Services, Inc.	Sell		1,650		4.900			12/20/16		—		(1,318,041	)
	Morgan Stanley Capital Services, Inc.	Sell		420		4.620			12/20/16		—		(336,522	)
		Total		18,270							4,375,000		(14,557,008	)
Gisad Dis Ticaret AS	Morgan Stanley Capital Services, Inc.	Sell	6,386 EUR			3.000			3/23/13		—		(847,671	)
		Total	6,386 EUR								—		(847,671	)
GMAC LLC:
	Credit Suisse International	Sell		1,690		1.390			3/20/17		—		(496,187	)
	Credit Suisse International	Sell		3,205		5.000			3/20/09		464,725		(376,357	)
	Goldman Sachs International	Sell		1,040		1.390			3/20/17		—		(305,346	)
	Goldman Sachs International	Sell		1,200		1.370			3/20/17		—		(352,634	)
		Total		7,135							464,725		(1,530,524	)
Harrah’s Operating Co., Inc. Credit Suisse International		Sell		1,275		5.000			3/20/10		81,281		(291,481	)
		Total		1,275							81,281		(291,481	)
HSBK Europe BV:
	Credit Suisse International	Sell		1,600		4.950			3/20/13		—		(258,177	)
	Morgan Stanley Capital Services, Inc.	Sell		3,200		4.780			3/20/13		—		(532,357	)
	Morgan Stanley Capital Services, Inc.	Sell		3,200		4.880			3/20/13		—		(522,943	)
		Total		8,000							—		(1,313,477	)
Idearc, Inc.:
	Credit Suisse International	Sell		35		5.000			12/20/09		7,175		(25,319	)
	Goldman Sachs International	Sell		1,560		5.000			9/20/09		213,150		(1,138,498	)
	JPMorgan Chase Bank NA, NY Branch	Sell		315		5.000			9/20/09		40,950		(229,889	)
		Total		1,910							261,275		(1,393,706	)
Intelsat Ltd.:
	Citibank NA, New York	Sell		430		5.000			3/20/09		—		774
	Credit Suisse International	Sell		425		4.400			3/20/09		—		664
	Credit Suisse International	Sell		50		5.750			3/20/09		—		105
	Deutsche Bank AG	Sell		175		4.400			3/20/09		—		274
	Deutsche Bank AG	Sell		430		4.750			3/20/09		—		731
	Deutsche Bank AG	Sell		260		5.000			3/20/09		—		468
		Total		1,770							—		3,016

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap: Continued

					Pay/					Upfront
		Buy/Sell	Notional		Receive					Payment
		Credit	Amount		Fixed			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Rate			Date		(Paid)		Value
Islamic Republic of Pakistan            Citibank NA, New York		Sell	$	1,570		5.100	%		3/20/13	$	—	$	(680,019	)
		Total		1,570							—		(680,019	)
Istanbul Bond Company SA	Morgan Stanley Capital Services, Inc.	Sell		5,180		1.300			3/24/13		—		(950,334	)
		Total		5,180							—		(950,334	)
iStar Financial, Inc.:
	Credit Suisse International	Sell		100		4.000			12/20/12		—		(54,469	)
	Credit Suisse International	Sell		765		4.150			12/20/12		—		(415,969	)
	Credit Suisse International	Sell		410		12.000			3/20/09		—		(44,835	)
	Deutsche Bank AG	Sell		560		4.320			12/20/12		—		(303,901	)
	Deutsche Bank AG	Sell		770		4.500			12/20/12		—		(416,992	)
	Deutsche Bank AG	Sell		935		4.000			12/20/12		—		(509,289	)
	Deutsche Bank AG	Sell		1,015		12.000			3/20/09		—		(110,994	)
	Goldman Sachs International	Sell		2,060		3.950			12/20/12		—		(1,122,719	)
	Morgan Stanley Capital Services, Inc.	Sell		450		4.860			12/20/12		—		(242,677	)
	UBS AG	Sell		410		4.560			12/20/12		—		(221,880	)
		Total		7,475							—		(3,443,725	)
Jefferson Smurfit Corp. US:
	Citibank NA, New York	Sell		275		8.000			12/20/13		—		(198,315	)
	Merrill Lynch International	Sell		515		6.700			6/20/13		—		(377,023	)
	Merrill Lynch International	Sell		640		6.800			6/20/13		—		(467,986	)
	Merrill Lynch International	Sell		685		7.950			12/20/13		—		(494,281	)
		Total		2,115							—		(1,537,605	)
Massey Energy Co.:
	Credit Suisse International	Sell		605		5.000			3/20/13		—		(42,079	)
	Credit Suisse International	Sell		215		5.000			3/20/13		—		(14,954	)
	UBS AG	Sell		360		5.050			9/20/12		—		(25,187	)
	UBS AG	Sell		600		5.100			9/20/12		—		(41,093	)
		Total		1,780							—		(123,313	)
MGM Mirage:
	Citibank NA, New York	Sell		1,465		5.000			12/20/13		483,450		(537,504	)
	Credit Suisse International	Sell		1,565		5.000			12/20/13		391,250		(574,193	)
	Credit Suisse International	Sell		545		8.400			12/20/13		—		(156,837	)
	Goldman Sachs International	Sell		905		8.400			12/20/13		—		(260,435	)
		Total		4,480							874,700		(1,528,969	)
Morgan Stanley:
	Citibank NA, New York	Sell		1,910		7.800			12/20/13		—		285,683
	JPMorgan Chase Bank NA, NY Branch	Sell		2,250		7.800			12/20/13		—		336,537
		Total		4,160							—		622,220
Nalco Co.:
	Barclays Bank plc	Sell		575		4.500			9/20/13		—		(57,247	)
	Citibank NA, New York	Sell		595		3.600			9/20/12		—		(59,269	)
	Citibank NA, New York	Sell		555		4.170			9/20/13		—		(61,684	)
	Goldman Sachs Bank USA	Sell		555		4.250			9/20/13		—		(60,126	)
	Goldman Sachs International	Sell		660		3.700			9/20/12		—		(63,767	)
	Goldman Sachs International	Sell		590		4.700			9/20/13		—		(54,598	)
	Goldman Sachs International	Sell		1,070		4.700			9/20/13		—		(99,017	)
	JPMorgan Chase Bank NA, NY Branch	Sell		590		4.650			9/20/13		—		(55,634	)
		Total		5,190							—		(511,342	)

Credit Default Swap: Continued

					Pay/					Upfront
		Buy/Sell	Notional		Receive					Payment
		Credit	Amount		Fixed			Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Rate			Date		(Paid)		Value
Owens-Illinois, Inc.:
	Citibank NA, New York	Sell	$	520		2.500	%		6/20/13	$	—	$	(25,236	)
	Credit Suisse International	Sell		305		2.500			6/20/13		—		(14,802	)
	Deutsche Bank AG	Sell		145		2.500			6/20/13		—		(7,037	)
		Total		970							—		(47,075	)
PEMEX Project Funding Master	Goldman Sachs International	Buy		1,005		3.450			11/20/13		—		(16,121	)
		Total		1,005							—		(16,121	)
Reliant Energy, Inc.:
	Citibank NA, New York	Sell		500		2.450			9/20/11		—		(72,858	)
	Citibank NA, New York	Sell		1,200		2.600			9/20/11		—		(170,831	)
	Credit Suisse International	Sell		970		5.750			12/20/13		—		(147,183	)
	Merrill Lynch International	Sell		595		2.050			9/20/11		—		(92,027	)
		Total		3,265							—		(482,899	)
Republic of Peru	Deutsche Bank AG	Buy		1,900		1.710			12/20/16		—		224,755
		Total		1,900							—		224,755
Republic of the Philippines:
	UBS AG	Sell		3,095		1.450			6/20/17		—		(479,516	)
	UBS AG	Sell		1,870		2.500			6/20/17		—		(170,893	)
		Total		4,965							—		(650,409	)
Republic of Turkey:
	Citibank NA, New York	Buy		3,250		5.250			12/20/13		—		(122,621	)
	Goldman Sachs International	Buy		6,500		5.290			12/20/13		—		(255,809	)
	Morgan Stanley Capital Services, Inc.	Buy		3,230		2.670			9/20/13		—		186,067
		Total		12,980							—		(192,363	)
	JPMorgan Chase Bank NA, NY Branch	Sell		940		2.640			8/20/13		—		(52,118	)
	JPMorgan Chase Bank NA, NY Branch	Sell		1,285		2.680			9/20/13		—		(73,489	)
		Total		2,225							—		(125,607	)
R.H. Donnelley Corp.:
	Barclays Bank plc	Sell		535		5.000			9/20/10		96,300		(241,281	)
	Goldman Sachs International	Sell		745		5.000			9/20/10		163,900		(335,989	)
	Morgan Stanley Capital Services, Inc.	Sell		325		5.000			9/20/10		58,500		(146,572	)
		Total		1,605							318,700		(723,842	)
Rite Aid Corp.:
	Credit Suisse International	Sell		10		7.500			3/20/09		—		(512	)
	Goldman Sachs International	Sell		55		8.060			3/20/09		—		(2,743	)
	Goldman Sachs International	Sell		2,600		5.000			12/20/09		185,250		(592,454	)
		Total		2,665							185,250		(595,709	)
Russian Federation	Citibank NA, New York	Sell		10,000		0.360			1/20/11		—		(1,325,541	)
		Total		10,000							—		(1,325,541	)
Standard Bank London Holdings
PLC for NAK Naftogaz Ukrainy	Credit Suisse International	Sell		2,570		3.250			4/20/11		—		(1,043,967	)
		Total		2,570							—		(1,043,967	)
Station Casinos, Inc.:
	Barclays Bank plc	Sell		500		5.000			6/20/13		90,000		(395,983	)
	Goldman Sachs International	Sell		295		5.000			6/20/13		51,994		(232,000	)
		Total		795							141,994		(627,983	)
Tribune Co.:
	Citibank NA, New York	Sell		435		5.000			1/16/09		139,200		(407,866	)
	Citibank NA, New York	Sell		460		5.000			1/16/09		150,650		(431,306	)
	Citibank NA, New York	Sell		520		5.000	%		1/16/09		171,600		(487,563	)
	Citibank NA, New York	Sell		475		5.000			1/16/09		166,250		(445,370	)
	Credit Suisse International	Sell		370		6.350			1/16/09		—		(346,920	)
	Credit Suisse International	Sell		70		5.000			1/16/09		15,400		(65,634	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap: Continued

					Pay/				Upfront
		Buy/Sell	Notional		Receive				Payment
		Credit	Amount		Fixed		Termination		Received/
Swap Reference Entity	Counterparty	Protection	(000s)		Rate		Date		(Paid)			Value
Tribune Co.: Continued Credit Suisse International		Sell	$	315		5.000		1/16/09	$	72,450		$	(295,351	)
	JPMorgan Chase Bank NA, NY Branch	Sell		520		5.000		1/16/09		124,800			(487,563	)
		Total		3,165						840,350			(2,967,573	)
Troy Capital SA for Yasar Holdings SA:
	Morgan Stanley Capital Services, Inc.	Sell		1,340		8.750		6/20/10		—			(227,909	)
	Morgan Stanley Capital Services, Inc.	Sell		1,340		8.500		10/20/09		—			(149,551	)
		Total		2,680						—			(377,460	)
Ukraine:
	Citibank NA, New York	Buy		1,660		4.180		8/20/13		—			908,306
	Citibank NA, New York	Buy		2,340		6.650		10/20/13		—			1,248,168
	Goldman Sachs International	Buy		7,580		4.220		8/20/13		—			4,144,509
	Merrill Lynch International	Buy		7,580		4.300		8/20/13		—			4,138,415
	UBS AG	Buy		3,350		4.180		8/20/13		—			1,833,026
		Total		22,510						—			12,272,424
Univision Communications, Inc.:
	Citibank NA, New York	Sell		670		5.000		12/20/09		46,900			(230,086	)
	Credit Suisse International	Sell		535		14.600		3/20/09		—			(38,667	)
	Goldman Sachs International	Sell		510		5.000		6/20/09		51,000			(168,603	)
	Goldman Sachs International	Sell		125		5.000		6/20/09		13,750			(41,324	)
	Goldman Sachs International	Sell		105		5.000		6/20/09		6,300			(34,712	)
	JPMorgan Chase Bank NA, NY Branch	Sell		340		5.000		6/20/09		44,200			(112,402	)
	UBS AG	Sell		235		5.000		6/20/09		21,150			(77,690	)
		Total		2,520						183,300			(703,484	)
Vale Overseas:
	Deutsche Bank AG	Buy		995		0.630		3/20/17		—			163,135
		Total		995						—			163,135
	Deutsche Bank AG	Sell		995		1.050		3/20/17		—			(134,152	)
		Total		995						—			(134,152	)
VTB Capital SA	Goldman Sachs International	Buy		3,300		7.400		5/28/13		—			407,923
		Total		3,300						—			407,923
Grand Total Buys										(14,477,279	)		27,308,063
Grand Total Sells										42,997,108			(126,486,591	)
Total Credit Default Swaps									$	28,519,829		$	(99,178,528	)

The table that follows shows the undiscounted maximum potential payment by the Fund related to selling credit protection in credit default swaps.

Type of Reference	Total Maximum Potential
Asset on which the	Payments for Selling Credit				Reference Asset
Fund Sold Protection	Protection (Undiscounted)		Amount Recoverable*		Rating Range**
Asset-Backed Indexes	$	11,290,000	$	—	AAA to AA
CMBS Indexes		16,060,000		—	AAA
Investment Grade Corporate Debt Indexes		53,131,520		—	A to A-
Non-Investment Grade Corporate Debt Indexes		284,194,000		—		B-
Single Name Corporate Debt		32,075,000		—	AAA to BBB-
Single Name Corporate Debt		104,750,000		2,400,000	BB+ to D
Sovereign Debt		10,000,000		—	BBB
Sovereign Debt		29,485,000		—	BB+ to CCC+
Total	$	540,985,520	$	2,400,000

*	Amounts recoverable includes potential payments from related purchased protection for instances where the Fund is the seller of protection. In addition, the Fund has no recourse provisions under the credit derivatives and holds no collateral which can offset or reduce potential payments under a triggering event.
**	The reference asset security rating, as rated by any rating organization, are included in the equivalent Standard & Poor’s rating category. The reference asset rating represents the likelihood of a potential payment by the Fund if the reference asset experiences a credit event as of period end.

Interest Rate Swap Contracts as of December 31, 2008 are as follows:

Notional

Reference Entity/

Amount

Paid by

Received by

Termination

Swap Counterparty

(000’s)

the Fund

the Fund

Date

Value

AUD BBR BBSW

Six-Month

Westpac Banking Corp.

25,500 AUD

AUD BBR BBSW

4.880

%

12/3/18

$

696,838

BZDI:

Banco Santander Central Hispano SA

56,000 BRR

BZDI

12.290

1/4/10

866,506

Banco Santander Central Hispano SA

4,420 BRR

BZDI

14.000

1/3/12

101,628

Banco Santander SA, Inc.

32,480 BRR

BZDI

14.900

1/2/12

567,828

Banco Santander SA, Inc.

8,490 BRR

BZDI

13.550

1/2/17

159,393

Goldman Sachs Capital Markets LP

21,000 BRR

BZDI

14.550

1/4/10

410,455

Goldman Sachs International

2,640 BRR

BZDI

14.100

1/2/17

45,150

Goldman Sachs International

17,000 BRR

BZDI

13.900

1/2/17

224,897

J Aron & Co.

43,800 BRR

BZDI

10.670

1/2/12

(1,178,550

)

J Aron & Co.

8,745 BRR

BZDI

14.160

1/2/17

226,932

J Aron & Co.

8,790 BRR

BZDI

12.920

1/2/14

12,028

J Aron & Co.

4,390 BRR

BZDI

12.870

1/2/14

3,003

J Aron & Co.

8,750 BRR

BZDI

12.710

1/4/10

63,448

J Aron & Co.

15,140 BRR

BZDI

12.610

1/4/10

103,570

J Aron & Co.

19,400 BRR

BZDI

12.390

1/2/12

(39,416

)

J Aron & Co.

25,560 BRR

BZDI

14.890

1/4/10

772,929

J Aron & Co.

6,910 BRR

BZDI

12.260

1/2/15

(90,244

)

J Aron & Co.

3,160 BRR

BZDI

12.290

1/2/15

(40,361

)

J Aron & Co.

4,420 BRR

BZDI

14.050

1/2/12

102,656

J Aron & Co.

13,000 BRR

BZDI

14.300

1/2/17

394,263

J Aron & Co.

8,550 BRR

BZDI

13.670

1/2/17

160,527

J Aron & Co.

10,360 BRR

BZDI

13.100

1/2/17

(5,559

)

JPMorgan Chase Bank NA

19,400 BRR

BZDI

12.380

1/2/12

(39,814

)

JPMorgan Chase Bank NA

17,080 BRR

BZDI

13.900

1/2/17

226,073

JPMorgan Chase Bank NA

8,750 BRR

BZDI

13.910

1/2/12

201,970

JPMorgan Chase Bank NA

15,800 BRR

BZDI

13.900

1/2/17

325,710

Morgan Stanley

12,860 BRR

BZDI

14.950

1/2/17

493,892

Morgan Stanley

12,860 BRR

BZDI

15.000

1/2/17

496,976

Morgan Stanley

8,540 BRR

BZDI

14.800

1/2/17

259,052

Morgan Stanley

32,000 BRR

BZDI

13.900

1/2/17

659,665

Morgan Stanley

8,540 BRR

BZDI

14.860

1/2/17

259,049

Morgan Stanley Capital Services, Inc.

5,590 BRR

BZDI

13.930

1/2/17

104,917

UBS AG

9,100 BRR

BZDI

14.340

1/2/17

276,039

Reference Entity Total

473,525 BRR

6,124,612

CNY CFXSREPOFIX01

CNY

CFXSREPOFIX

Goldman Sachs International

18,300 cny

4.00

%

01

2/16/17

(199,593

)

CZK PRIBOR PRBO:

Six-Month CZK

Citibank NA, New York

297,000 CZK

PRIBOR PRBO

3.560

9/27/10

327,625

Six-Month CZK

2.76% times

Goldman Sachs Group, Inc. (The)

338,000 CZK

PRIBOR PRBO

UDI

12/5/10

102,350

Six-Month CZK

Goldman Sachs Group, Inc. (The)

142,000 CZK

PRIBOR PRBO

3.760

10/6/18

354,415

Six-Month CZK

JPMorgan Chase Bank NA

338,000 CZK

PRIBOR PRBO

2.750

12/5/10

100,135

Six-Month CZK

JPMorgan Chase Bank NA

294,700 CZK

PRIBOR PRBO

3.470

9/18/10

298,233

Six-Month CZK

JPMorgan Chase Bank NA

240,000 CZK

PRIBOR PRBO

3.560

9/12/10

267,393

Six-Month CZK

JPMorgan Chase Bank NA

326,000 CZK

PRIBOR PRBO

3.300

10/17/10

298,591

Six-Month CZK

Morgan Stanley

140,800 CZK

PRIBOR PRBO

3.830

10/3/18

396,999

Reference Entity Total

2,116,500 CZK

2,145,741

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Interest Rate Swap Contracts: Continued

	Notional
Reference Entity/	Amount	Paid by		Received by			Termination
Swap Counterparty	(000’s)	the Fund		the Fund			Date		Value
HUF BUBOR Reuters:
		Six-Month HUF
Barclays Bank plc	1,433,000 HUF	BUBOR Reuters			7.820	%		9/19/13	$	(36,212	)
		Six-Month HUF
Barclays Bank plc	866,000 HUF	BUBOR Reuters			7.180			10/8/18		(133,134	)
		Six-Month HUF
Citibank NA	852,000 HUF	BUBOR Reuters			7.200			10/8/18		(79,424	)
		Six-Month HUF
Citibank NA	853,000 HUF	BUBOR Reuters			7.180			10/3/18		(132,447	)
		Six-Month HUF
JPMorgan Chase Bank NA	866,000 HUF	BUBOR Reuters			7.200			10/6/18		(80,729	)
		Six-Month HUF
JPMorgan Chase Bank NA	1,905,000 HUF	BUBOR Reuters			8.600			12/17/10		53,169
		Six-Month HUF
JPMorgan Chase Bank NA	666,000 HUF	BUBOR Reuters			7.890			9/12/13		(8,590	)
		Six-Month HUF
JPMorgan Chase Bank NA	1,142,000 HUF	BUBOR Reuters			8.480			6/6/13		365,682
		Six-Month HUF
JPMorgan Chase Bank NA	753,000 HUF	BUBOR Reuters			7.880			8/12/13		(14,794	)
Reference Entity Total	9,336,000 HUF									(66,479	)
ILS TELBOR01 Reuters:
		Three-Month ILS
Credit Suisse International	6,220 ILS	TELBOR01 Reuters			4.650			12/22/18		24,296
		Three-Month ILS
Credit Suisse International	6,640 ILS	TELBOR01 Reuters			4.940			12/15/18		57,670
		Three-Month ILS
UBS AG	15,300 ILS		TELBOR01		5.880			8/28/10		485,654
		Three-Month ILS
UBS AG	15,550 ILS		TELBOR01		5.850			9/4/18		482,001
		Three-Month ILS
UBS AG	16,930 ILS	TELBOR01 Reuters			5.036			12/12/18		149,638
Reference Entity Total	60,640 ILS									1,199,259
MXN TIIE BANXICO:
Banco Santander SA, Inc.	90,600 MXN	MXN TIIE BANXICO			8.540			9/27/13		128,840
Banco Santander SA, Inc.	28,100 MXN	MXN TIIE BANXICO			8.645			5/17/18		41,078
Banco Santander SA, Inc.	31,310 MXN	MXN TIIE BANXICO			8.570			5/3/18		34,214
Citibank NA	175,200 MXN	MXN TIIE BANXICO			8.920			11/24/11		348,498
Credit Suisse International	35,800 MXN	MXN TIIE BANXICO			8.560			9/27/13		52,115
Credit Suisse International	22,480 MXN	MXN TIIE			8.300			12/17/26		(39,725	)
Goldman Sachs Capital Markets LP	62,900 MXN	MXN TIIE			8.140			1/10/18		(62,148	)
Goldman Sachs Group, Inc. (The)	54,800 MXN	MXN TIIE BANXICO			8.540			9/27/13		77,930
Goldman Sachs Group, Inc. (The)	174,000 MXN	MXN TIIE BANXICO			9.350			11/18/11		473,800
Goldman Sachs Group, Inc. (The)	563,000 MXN	MXN TIIE BANXICO			10.000			11/11/11		626,909
Goldman Sachs Group, Inc. (The)	212,800 MXN	MXN TIIE BANXICO			9.270			11/21/11		551,637
Goldman Sachs Group, Inc. (The)	211,300 MXN	MXN TIIE BANXICO			9.080			11/22/11		469,571
J Aron & Co.	22,300 MXN	MXN TIIE			9.150			8/27/26		100,170
		One-Month MXN
J Aron & Co.	9,700 MXN	TIIE BANXICO			9.330			9/16/26		56,119
		One-Month MXN
JPMorgan Chase Bank NA	224,300 MXN	TIIE BANXICO			9.580			10/23/18		1,447,385
JPMorgan Chase Bank NA	560,000 MXN	MXN TIIE BANXICO			10.000			11/11/11		623,569
JPMorgan Chase Bank NA	171,100 MXN	MXN TIIE BANXICO			8.920			11/24/11		340,343
JPMorgan Chase Bank NA	27,055 MXN	MXN TIIE BANXICO			9.320			6/1/18		121,672
Merrill Lynch Capital Services, Inc.	36,370 MXN	MXN TIIE BANXICO			8.570			5/11/18		40,143
		One-Month MXN
Morgan Stanley	67,300 MXN	TIIE BANXICO			9.070			11/26/18		240,451
Reference Entity Total	2,780,415 MXN									5,672,571

Interest Rate Swap Contracts: Continued

Notional

Reference Entity/

Amount

Paid by

Received by

Termination

Swap Counterparty

(000’s)

the Fund

the Fund

Date

Value

PLZ WIBOR WIBO:

Six-Month PLZ

Goldman Sachs Group, Inc. (The)

21,640 PLZ

WIBOR WIBO

5.330

%

10/6/18

$

508,035

Six-Month PLZ

Goldman Sachs Group, Inc. (The)

21,700 PLZ

WIBOR WIBO

5.320

10/3/18

507,851

Six-Month PLZ

Goldman Sachs International

23,970 PLZ

WIBOR WIBO

6.140

8/26/10

212,618

Six-Month PLZ

JPMorgan Chase Bank NA

15,840 PLZ

WIBOR WIBO

6.040

8/8/13

393,362

Reference Entity Total

83,150 PLZ

1,621,866

SEK STIBOR SIDE:

Three-Month SEK

Barclays Bank plc

40,595 SEK

3.14

%

STIBOR SIDE

12/9/18

14,718

Three-Month SEK

Barclays Bank plc

30,400 SEK

3.22

STIBOR SIDE

12/22/18

(3,785

)

Three-Month SEK

Barclays Bank plc

50,700 SEK

3.52

STIBOR SIDE

12/15/18

(195,662

)

Three-Month SEK

Deutsche Bank AG, London

10,150 SEK

3.13

STIBOR SIDE

12/09/18

24,436

Total where Fund pays a fixed rate

131,845 SEK

(160,293

)

Three-Month SEK

Deutsche Bank AG

59,900 SEK

STIBOR SIDE

5.110

7/16/18

1,357,549

Three-Month SEK

Goldman Sachs International

59,900 SEK

STIBOR SIDE

5.080

7/17/18

1,337,339

Three-Month SEK

Goldman Sachs International

44,200 SEK

STIBOR SIDE

4.840

8/21/18

851,459

Total where Fund pays a variable rate

164,000 SEK

3,546,347

Reference Entity Total

295,845 SEK

3,386,054

ZAR JIBAR SAFEX:

Three-Month ZAR

JPMorgan Chase Bank NA

85,400 ZAR

8.93

JIBAR SAFEX

11/3/18

(680,757

)

Three-Month ZAR

UBS AG

85,400 ZAR

8.92

JIBAR SAFEX

11/3/18

(681,438

)

Reference Entity Total

170,800 ZAR

(1,362,195

)

Total Interest Rate Swaps

$

19,218,674

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:

AUD	Australian Dollar
BRR	Brazilian Real
CNY	Chinese Renminbi (Yuan)
CZK	Czech Koruna
HUF	Hungarian Forint
ILS	Israeli Shekel
MXN	Mexican Nuevo Peso
PLZ	Polish Zloty
SEK	Swedish Krona
ZAR	South African Rand
Abbreviations/Definitions are as follows:
BANXICO	Banco de Mexico
BBR BBSW	Bank Bill Swap Reference Rate (Australian financial market)
BUBOR Reuters	Budapest Interbank Offered Rate
BZDI	Brazil Interbank Deposit Rate
CFXSREPOFIX01	Chinese Renminbi 7 Days Repurchase Fixing Rates
JIBAR	South African Rand-Johannesburg Interbank Agreed Rate

PRIBOR PRBO	Prague Interbank Offering Rate
SAFEX	South African Futures Exchange
STIBOR-SIDE	Stockholm Interbank Offered Rate
TELBOR01	Tel Aviv Interbank Offered Rate 1 Month
TIIE	Interbank Equilibrium Interest Rate
UDI	Unidad de Inversion (Unit of Investment)
WIBOR-WIBO	Poland Warsaw Interbank Offer Bid Rate

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Total Return Swap Contracts as of December 31, 2008 are as follows:

Notional

Upfront

Reference Entity/

Amount

Paid by

Received by

Termination

Payment

Swap Counterparty

(000’s)

the Fund

the Fund

Date

Received/(Paid)

Value

Banc of America Securities LLC

AAA 10 yr. CMBS Daily Index*:

Goldman Sachs Group, Inc. (The)

$

49,660

A

D

3/31/09

$

—

$

10,697,178

Morgan Stanley

15,320

B

C

3/31/09

—

3,767,316

Reference Entity Total

—

14,464,494

Barclays Capital U.S.

CMBS AAA Index*:

Citibank NA

15,700

A

D

2/1/09

—

1,715,434

Citibank NA

7,800

A

D

2/1/09

—

857,347

Morgan Stanley

28,300

A

D

3/1/09

—

3,101,147

Reference Entity Total

—

5,673,928

Barclays Capital U.S.

CMBS AAA 8.5+ Index*:

Goldman Sachs Group, Inc. (The)

11,540

A

D

3/1/09

—

1,957,376

Goldman Sachs Group, Inc. (The)

6,830

A

D

1/1/09

—

1,166,789

Goldman Sachs Group, Inc. (The)

24,720

A

D

2/1/09

—

4,220,835

JPMorgan Chase

6,520

A

D

2/1/09

—

1,103,750

Morgan Stanley

5,110

A

D

3/1/09

—

871,329

Morgan Stanley

5,280

A

D

2/1/09

—

888,941

Morgan Stanley

5,280

A

D

2/1/09

—

898,522

Morgan Stanley

12,530

A

D

1/1/09

—

2,134,377

Morgan Stanley

9,120

A

D

2/1/09

—

1,559,164

Morgan Stanley

11,490

A

D

2/1/09

—

1,948,895

Reference Entity Total

—

16,749,978

BOVESPA Index

If negative, the absolute

If positive, the

value of the Total

Total Return of the

Return of the

Citibank NA

8,844 BRR

BOVESPA Index

BOVESPA Index

2/20/09

—

213,901

Constant Maturity Option Price:

The Constant Maturity

Option Price divided

Merrill Lynch

54,700

4.66

%

by 10,000

6/11/17

(1,823,698

)

(3,066,091

)

The Constant Maturity

Option Price divided

Merrill Lynch

15,380

5.33

by 10,000

8/13/17

91,511

(2,032,151

)

Reference Entity Total

(1,732,187

)

(5,098,242

)

Custom basket of securities:

One-Month USD BBA

LIBOR plus 20 basis

points and if negative,

the absolute value of the

If positive, the Total

Total Return of a custom

Return of a custom

Deutsche Bank AG, London

8,408

equity basket

equity basket

10/5/09

—

317,946

One-Month EUR BBA

LIBOR plus 25 basis

points and if negative,

the absolute value of the

If positive, the Total

Total Return of a custom

Return of a custom

Morgan Stanley

5,365 EUR

basket of securities

basket of securities

3/6/09

—

522,105

One-Month EUR BBA

LIBOR plus 30 basis

points and if negative,

the absolute value of the

If positive, the Total

Total Return of a custom

Return of a custom

Morgan Stanley International

5,208 EUR

basket of securities

basket of securities

10/7/08

—

298,665

Reference Entity Total

—

1,138,716

Total Return Swap Contracts: Continued

Notional

Upfront

Reference Entity/

Amount

Paid by

Received by

Termination

Payment

Swap Counterparty

(000’s)

the Fund

the Fund

Date

Received/(Paid)

Value

Custom basket of securities traded on the London Stock Exchange

One-Month GBP BBA

LIBOR plus 35 basis

points and if negative,

the absolute value of the

If positive, the Total

Total Return of a custom

Return of a custom

Citibank NA, New York

6,530

GBP

basket of securities

basket of securities

5/8/09

$

—

$

(94,244

)

Custom basket of securities traded on the New York Stock Exchange

One-Month USD BBA

LIBOR plus 30 basis

points and if negative,

the absolute value of the

If positive, the Total

Total Return of a custom

Return of a custom

Goldman Sachs International

34,457

equity basket

equity basket

6/8/09

—

5,191,739

Custom basket of securities traded on the Tokyo Stock Exchange, Inc.

One-Month JPY BBA

LIBOR plus 40 basis

points and if negative,

the absolute value of the

If positive, the Total

Total Return of a custom

Return of a custom

Citibank NA, New York

902,674

JPY

basket of securities

basket of securities

4/14/09

—

1,383,993

Each of JSC “Rushydro” (Open Joint Stock Company, Federal Hydrogeneration Company) and OJSC Saratovskaya HPP and any Successor(s) to these Reference Entities

7.75% from debt

obligations of JSC

Morgan Stanley

Three-Month USD

Rushydro and OJSC

Capital Services, Inc.

271,430

RUR

BBA LIBOR

Saratovskaya HPP

12/26/13

—

(4,693,128

)

EURX/EURX SMI INDEX

If negative, the absolute

value of the Total

If positive, the Total

Goldman Sachs Group,

Return of the

Return of the

Inc. (The)

3,812

CHF

EURX SMI Index

EURX SMI Index

3/24/09

—

(19,934

)

MSCI DAILY TR NET BELGIUM

One-Month USD BBA

LIBOR and if negative,

If positive, the Total

the absolute value MSCI

Return of the MSCI

Daily of the Net Belgium

Daily Net Belgium

Citibank NA

989

USD Market Index

USD Market Index

10/7/09

—

102,593

MSCI DAILY TR NET BELGIUM

One-Month USD BBA

LIBOR and if negative,

If positive, the Total

the absolute value MSCI

Return of the MSCI

Daily of the Net Belgium

Daily Net Belgium

Citibank NA

4,234

USD Market Index

USD Market Index

10/7/09

—

291,811

MXN TIIE BANXICO:

Deutsche Bank AG

1,620

Six-Month USD BBA LIBOR

5.46% times UDI

5/13/15

—

62,682

Deutsche Bank AG

930

Six-Month USD LIBOR

5.25% times UDI

6/23/15

—

10,549

Goldman Sachs Group, Inc. (The)

920

Six-Month USD BBA LIBOR

5.10% times UDI

1/14/15

—

43,550

Goldman Sachs Group, Inc. (The)

920

Six-Month BBA LIBOR

5.08% times UDI

1/20/15

—

51,815

Reference Entity Total

—

168,596

Total of Total Return Swaps

$

(1,732,187

)

$

35,474,201

* The CMBS Indexes are representative indexes of segments of the commercial mortgage backed securities market. These indexes are measured by movements in the credit spreads of the underlying holdings. As the credit market perceives an improvement in the credit quality of an Index’s underlying holdings and reduced probability of default, the spread of an index narrows. As the credit market perceives a decrease in credit quality and an increased probability of default on an Index’s underlying holdings, the spread widens.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:

BRR	Brazilian Real
CHF	Swiss Franc
EUR	Euro
GBP	British Pound Sterling
JPY	Japanese Yen
RUR	Russian Ruble
Abbreviations/Definitions are as follows:
BANXICO	Banco de Mexico
BBA LIBOR	British Bankers’ Association London-Interbank Offered Rate
BOVESPA	Bovespa Index that trades on the Sao Paulo Stock Exchange
CMBS	Commercial Mortgage Backed Securities
EURX	Euro Index
LIBOR	London Interbank Offered Rate
MSCI	Morgan Stanley Capital International
MXN-TIIE	Mexican Nuevo Peso-Interbank Equilibrium Interest Rate
SMI	Swiss Market Index
UDI	Unidad de Inversion (Unit of Investment)

A — The Fund makes periodic payments when credit spreads, as represented by the Reference Entity, widen.
B — The Fund makes periodic payments when credit spreads, as represented by the Reference Entity, narrow.
C — The Fund receives periodic payments when credit spreads, as represented by the Reference Entity, widen.
D — The Fund receives periodic payments when credit spreads, as represented by the Reference Entity, narrow.

Currency Swaps as of December 31, 2008 are as follows:

		Notional
	Swap	Amount	Paid by	Received by			Termination
Reference Entity	Counterparty	(000’s)	the Fund	the Fund			Date		Value
USD BBA LIBOR:
			Three Month USD
	Credit Suisse International	3,170 TRY	BBA LIBOR		16.75	%		2/26/12	$	158,012
			Three Month USD
	Credit Suisse International	1,255 TRY	BBA LIBOR		17.25			2/7/12		84,253
			Three Month USD
	Credit Suisse International	1,890 TRY	BBA LIBOR		17.30			2/9/12		125,319
			Three Month BBA
	Merrill Lynch International	1,960 TRY	LIBOR		17.10			2/6/12		197,343
							Reference Entity Total			564,927
							Total Currency Swaps		$	564,927

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currency: TRY New Turkish Lira

Abbreviation is as follows:
BBA LIBOR     British Bankers’ Association London-Interbank Offered Rate

Swap Summary as of December 31, 2008 is as follows:

The following table aggregates, as of period end, the amount receivable from/(payable to) each counterparty with whom the Fund has entered into a swap agreement. Swaps are individually disclosed in the preceding tables.

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)			Value
Banco Santander Central Hispano SA	Interest Rate		60,420	BRR	$	968,134
Banco Santander SA, Inc.:
	Interest Rate		40,970	BRR		727,221
	Interest Rate		150,010	MXN		204,132
						931,353
Barclays Bank plc:
	Credit Default Sell Protection		74,916			(11,638,473	)
	Interest Rate		2,299,000	HUF		(169,346	)
	Interest Rate		121,695	SEK		(184,729	)
						(11,992,548	)

Swap Summary: Continued

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)			Value
Citibank NA:
	Interest Rate		1,705,000	HUF	$	(211,871	)
	Interest Rate		175,200	MXN		348,498
	Total Return		28,723			2,967,185
	Total Return		8,844	BRR		213,901
						3,317,713
Citibank NA, New York:
	Credit Default Buy Protection		7,250			2,033,853
	Credit Default Sell Protection		32,180			(7,341,947	)
	Interest Rate		297,000	CZK		327,625
	Total Return		6,530	GBP		(94,244	)
	Total Return		902,674	JPY		1,383,993
						(3,690,720	)
Credit Suisse International:
	Credit Default Buy Protection		8,650			2,332,279
	Credit Default Sell Protection		71,567			(14,700,116	)
	Currency		6,315	TRY		367,584
	Interest Rate		12,860	ILS		81,966
	Interest Rate		58,280	MXN		12,390
						(11,905,897	)
Deutsche Bank AG:
	Credit Default Buy Protection		2,895			387,890
	Credit Default Sell Protection		108,974			(31,030,392	)
	Interest Rate		59,900	SEK		1,357,549
	Total Return		2,550			73,231
						(29,211,722	)
Deutsche Bank AG, London:
	Interest Rate		10,150	SEK		24,436
	Total Return		8,408			317,946
						342,382
Goldman Sachs Bank USA	Credit Default Sell Protection		3,705			(2,241,236	)
Goldman Sachs Capital Markets LP:
	Interest Rate		21,000	BRR		410,455
	Interest Rate		62,900	MXN		(62,148	)
						348,307
Goldman Sachs Group, Inc. (The):
	Interest Rate		480,000	CZK		456,765
	Interest Rate		1,215,900	MXN		2,199,847
	Interest Rate		43,340	PLZ		1,015,886
	Total Return		94,590			18,137,543
	Total Return		3,812	CHF		(19,934	)
						21,790,107
Goldman Sachs International:
	Credit Default Buy Protection		18,385			4,280,502
	Credit Default Sell Protection		32,175			(9,171,538	)
	Interest Rate		19,640	BRR		270,047
	Interest Rate		18,300	CNY		(199,593	)
	Interest Rate		23,970	PLZ		212,618
	Interest Rate		104,100	SEK		2,188,798
	Total Return		34,457			5,191,739
						2,772,573
J Aron & Co.:
	Interest Rate		180,975	BRR		485,226
	Interest Rate		32,000	MXN		156,289
						641,515
JPMorgan Chase	Total Return		6,520			1,103,750

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Swap Summary: Continued

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)			Value
JPMorgan Chase Bank NA:
	Interest Rate		61,030	BRR	$	713,939
	Interest Rate		1,198,700	CZK		964,352
	Interest Rate		5,332,000	HUF		314,738
	Interest Rate		982,455	MXN		2,532,969
	Interest Rate		15,840	PLZ		393,362
	Interest Rate		85,400	ZAR		(680,757	)
						4,238,603
JPMorgan Chase Bank NA, NY Branch:
	Credit Default Buy Protection		12,500			3,808,398
	Credit Default Sell Protection		54,981			(13,881,297	)
						(10,072,899	)
Merrill Lynch	Total Return		70,080			(5,098,242	)
Merrill Lynch Capital Services, Inc.	Interest Rate		36,370	MXN		40,143
Merrill Lynch International:
	Credit Default Buy Protection		7,580			4,138,415
	Credit Default Sell Protection		15,230			(6,652,104	)
	Currency		1,960	TRY		197,343
						(2,316,346	)
Morgan Stanley:
	Interest Rate		74,800	BRR		2,168,634
	Interest Rate		140,800	CZK		396,999
	Interest Rate		67,300	MXN		240,451
	Total Return		92,430			15,169,691
	Total Return		5,365	EUR		522,105
						18,497,880
Morgan Stanley Capital Services, Inc.:
	Credit Default Buy Protection		29,830			8,290,338
	Credit Default Sell Protection		103,221			(22,400,280	)
	Credit Default Sell Protection		6,386	EUR		(847,671	)
	Interest Rate		5,590	BRR		104,917
	Total Return		271,430	RUR		(4,693,128	)
						(19,545,824	)
Morgan Stanley International	Total Return		5,208	EUR		298,665
UBS AG:
	Credit Default Buy Protection		6,420			2,036,388
	Credit Default Sell Protection		37,650			(6,581,537	)
	Interest Rate		9,100	BRR		276,039
	Interest Rate		47,780	ILS		1,117,293
	Interest Rate		85,400	ZAR		(681,438	)
						(3,833,255	)
Westpac Banking Corp.	Interest Rate		25,500	AUD		696,838
		Total Swaps			$	(43,920,726	)

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:

AUD	Australian Dollar
BRR	Brazilian Real
CHF	Swiss Franc
CNY	Chinese Renminbi (Yuan)
CZK	Czech Koruna
EUR	Euro
GBP	British Pound Sterling
HUF	Hungarian Forint
ILS	Israeli Shekel
JPY	Japanese Yen
MXN	Mexican Nuevo Peso
PLZ	Polish Zloty
RUR	Russian Ruble
SEK	Swedish Krona
TRY	New Turkish Lira
ZAR	South African Rand

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $3,646,540,330)	$	3,136,039,645
Affiliated companies (cost $802,775,456)		755,543,387
		3,891,583,032
Cash		21,028,099
Cash—foreign currencies (cost $716,523)		711,182
Unrealized appreciation on foreign currency exchange contracts		35,720,782
Swaps, at value (upfront payments received $6,041,484)		77,876,379
Unrealized appreciation on unfunded loan commitments		1,718,957
Receivables and other assets:
Interest, dividends and principal paydowns		45,560,981
Closed foreign currency contracts		35,028,779
Investments sold (including $26,790,819 sold on a when-issued or delayed delivery basis)		27,223,240
Shares of beneficial interest sold		392,382
Due from Manager		861
Other		424,643
Total assets		4,137,269,317
Liabilities
Short positions, at value (proceeds of $3,628,788)—see accompanying statement of investments		3,656,058
Options written, at value (premiums received $157,040)—see accompanying statement of investments		144,317
Return of collateral for securities loaned		325,265,870
Unrealized depreciation on foreign currency exchange contracts		43,041,759
Swaps, at value (net upfront payments received $20,746,158)		121,797,105
Payables and other liabilities:
Investments purchased (including $72,960,143 purchased on a when-issued or delayed delivery basis)		110,038,691
Closed foreign currency contracts		35,220,680
Shares of beneficial interest redeemed		17,920,869
Futures margins		4,080,437
Distribution and service plan fees		1,767,335
Shareholder communications		223,613
Trustees’ compensation		11,710
Transfer and shareholder servicing agent fees		1,720
Terminated investment contracts		14,926,192
Other		288,220
Total liabilities		678,384,576
Net Assets	$	3,458,884,741
Composition of Net Assets
Par value of shares of beneficial interest	$	760,749
Additional paid-in capital		4,016,806,288
Accumulated net investment income		54,184,535
Accumulated net realized loss on investments and foreign currency transactions		(37,509,630	)
Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies		(575,357,201	)
Net Assets	$	3,458,884,741
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $648,570,029 and 144,352,029 shares of beneficial interest outstanding)	$	4.49
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $2,810,314,712 and 616,397,008 shares of beneficial interest outstanding)	$	4.56

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Allocation of Income and Expenses from Master Funds1
Net investment income allocated from Oppenheimer Master Event-Linked Bond Fund:
Interest	$	499,946
Dividends		3,862
Expenses2		(34,605	)
Net investment income from Oppenheimer Master Event-Linked Bond Fund, LLC		469,203
Net investment income allocated from Oppenheimer Master Loan Fund, LLC:
Interest		11,145,892
Dividends		386,280
Expenses3		(513,160	)
Net investment income from Oppenheimer Master Loan Fund, LLC		11,019,012
Investment Income
Interest (net of foreign withholding taxes of $66,874)		216,600,047
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $8,406)		608,546
Affiliated companies		16,462,436
Fee income		1,045,297
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		156,398
Affiliated companies		1,405,615
Total investment income		236,278,339
Expenses
Management fees		21,372,387
Distribution and service plan fees—Service shares		7,876,236
Transfer and shareholder servicing agent fees:
Non-Service shares		9,994
Service shares		9,994
Shareholder communications:
Non-Service shares		135,876
Service shares		582,180
Custodian fees and expenses		270,995
Trustees’ compensation		57,498
Other		234,583
Total expenses		30,549,743
Less reduction to custodian expenses		(2,127	)
Less waivers and reimbursements of expenses		(936,254	)
Net expenses		29,611,362
Net Investment Income		218,155,192

STATEMENT OF OPERATIONS Continued

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:
Investments from unaffiliated companies (including premiums on options exercised)	$	(42,357,137	)
Closing and expiration of option contracts written		10,315,924
Closing and expiration of futures contracts		79,749,778
Foreign currency transactions		(5,229,231	)
Short positions		(896,457	)
Swap contracts		(234,962,614	)
Allocated from Oppenheimer Master Event-Linked Bond Fund, LLC		178,059
Allocated from Oppenheimer Master Loan Fund, LLC		(4,315,961	)
Net realized loss		(197,517,639	)
Net change in unrealized appreciation (depreciation) on:
Investments		(462,371,211	)
Translation of assets and liabilities denominated in foreign currencies		(132,606,093	)
Futures contracts		8,034,576
Option contracts written		(290,527	)
Short positions		412,795
Swap contracts		(12,546,395	)
Unfunded loan commitments		1,718,957
Allocated from Oppenheimer Master Event-Linked Bond Fund, LLC		(838,725	)
Allocated from Oppenheimer Master Loan Fund, LLC		(45,192,707	)
Net change in unrealized depreciation		(643,679,330	)
Net Decrease in Net Assets Resulting from Operations	$	(623,041,777	)

1.	The fund invests in certain affiliated mutual funds that expect to be treated as partnerships for tax purposes. See Note 1 of accompanying Notes.
2.	Net of expense waivers and/or reimbursements of $147.
3.	Net of expense waivers and/or reimbursements of $10,253.

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	218,155,192		$	140,904,592
Net realized gain (loss)		(197,517,639	)		93,909,628
Net change in unrealized appreciation (depreciation)		(643,679,330	)		19,532,851
Net increase (decrease) in net assets resulting from operations		(623,041,777	)		254,347,071
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(36,989,595	)		(22,674,018	)
Service shares		(140,242,199	)		(53,839,537	)
		(177,231,794	)		(76,513,555	)
Distributions from net realized gain:
Non-Service shares		(8,547,484	)		—
Service shares		(33,595,865	)		—
		(42,143,349	)		—
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions:
Non-Service shares		73,339,965			88,509,398
Service shares		617,334,287			1,341,464,972
		690,674,252			1,429,974,370
Net Assets
Total increase (decrease)		(151,742,668	)		1,607,807,886
Beginning of period		3,610,627,409			2,002,819,523
End of period (including accumulated net investment income of $54,184,535 and $174,553,620, respectively)	$	3,458,884,741		$	3,610,627,409

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	5.56		$	5.26		$	5.11		$	5.21		$	5.05
Income (loss) from investment operations:
Net investment income1		.30			.28			.26			.25			.22
Net realized and unrealized gain (loss)		(1.04	)		.21			.11			(.12	)		.20
Total from investment operations		(.74	)		.49			.37			.13			.42
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.27	)		(.19	)		(.22	)		(.23	)		(.26	)
Distributions from net realized gain		(.06	)		—			—			—			—
Total dividends and distributions to shareholders		(.33	)		(.19	)		(.22	)		(.23	)		(.26	)
Net asset value, end of period	$	4.49		$	5.56		$	5.26		$	5.11		$	5.21
Total Return, at Net Asset Value2		(14.21	)%		9.69	%		7.49	%		2.67	%		8.67	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	648,570		$	734,611		$	606,632		$	538,141		$	614,915
Average net assets (in thousands)	$	753,062		$	664,668		$	564,248		$	550,201		$	584,878
Ratios to average net assets:3,4
Net investment income		5.78	%		5.34	%		5.05	%		4.91	%		4.50	%
Total expenses		0.59	%5		0.59	%5		0.64	%5		0.71	%		0.74	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.57	%		0.57	%		0.63	%		0.71	%		0.74	%
Portfolio turnover rate6		86	%		76	%		93	%		98	%		88	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Includes the Fund’s share of the Master Funds’ allocated expenses and/or net investment income.
5.	Total expenses including indirect expenses from Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC were as follows:

Year Ended December 31, 2008	0.60	%
Year Ended December 31, 2007	0.61	%
Year Ended December 31, 2006	0.64	%

6. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	634,319,548	$	594,845,589
Year Ended December 31, 2007	$	1,061,009,472	$	1,120,098,096
Year Ended December 31, 2006	$	742,785,501	$	749,719,239
Year Ended December 31, 2005	$	890,029,144	$	873,786,459
Year Ended December 31, 2004	$	959,649,113	$	973,488,511

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	5.65		$	5.34		$	5.19		$	5.29		$	5.13
Income (loss) from investment operations:
Net investment income1		.29			.28			.25			.21			.19
Net realized and unrealized gain (loss)		(1.06	)		.22			.11			(.08	)		.22
Total from investment operations		(.77	)		.50			.36			.13			.41
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.26	)		(.19	)		(.21	)		(.23	)		(.25	)
Distributions from net realized gain		(.06	)		—			—			—			—
Total dividends and distributions to shareholders		(.32	)		(.19	)		(.21	)		(.23	)		(.25	)
Net asset value, end of period	$	4.56		$	5.65		$	5.34		$	5.19		$	5.29
Total Return, at Net Asset Value2		(14.49	)%		9.55	%		7.23	%		2.48	%		8.43	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	2,810,315		$	2,876,016		$	1,396,188		$	658,107		$	242,705
Average net assets (in thousands)	$	3,152,967		$	2,075,028		$	1,016,582		$	408,515		$	150,040
Ratios to average net assets:3,4
Net investment income		5.54	%		5.08	%		4.83	%		4.20	%		3.82	%
Total expenses		0.84	%5		0.84	%5		0.89	%5		0.96	%		0.99	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.82	%		0.82	%		0.88	%		0.96	%		0.99	%
Portfolio turnover rate6		86	%		76	%		93	%		98	%		88	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Includes the Fund’s share of the Master Funds’ allocated expenses and/or net investment income.
5.	Total expenses including indirect expenses from Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC were as follows:

Year Ended December 31, 2008	0.85	%
Year Ended December 31, 2007	0.86	%
Year Ended December 31, 2006	0.89	%

6. The portfolio turnover rate excludes purchases and sales of To Be Announced (TBA) mortgage-related securities as follows:

	Purchase Transactions		Sale Transactions
Year Ended December 31, 2008	$	634,319,548	$	594,845,589
Year Ended December 31, 2007	$	1,061,009,472	$	1,120,098,096
Year Ended December 31, 2006	$	742,785,501	$	749,719,239
Year Ended December 31, 2005	$	890,029,144	$	873,786,459
Year Ended December 31, 2004	$	959,649,113	$	973,488,511

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Strategic Bond Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, 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. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Structured Securities. The Fund invests in structured securities whose market values, interest rates and/or redemption prices are linked to the performance of underlying foreign currencies, interest rate spreads, stock market indices, prices of individual securities, commodities or other financial instruments or the occurrence of other specific events. The structured securities are often leveraged, increasing the volatility of each note’s market value relative to the change in the underlying linked financial element or event. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying Statement of Operations. The Fund records a realized gain or loss when a structured security is sold or matures.

Event-Linked Bonds. The Fund may invest in “event-linked” bonds. Event-linked bonds, which are sometimes referred to as “catastrophe” bonds, are fixed income securities for which the return of principal and payment of interest is contingent on the non-occurrence of a specific trigger event, such as a hurricane, earthquake, or other occurrence that leads to physical or economic loss. If the trigger event occurs prior to maturity, the Fund may lose all or a portion of its principal in addition to interest otherwise due from the security. Event-linked bonds may expose the Fund to certain other risks, including issuer default, adverse regulatory or jurisdictional interpretations, liquidity risk and adverse tax consequences. The Fund records the net change in market value of event-linked bonds on the Statement of Operations as a change in unrealized appreciation or depreciation on investments. The Fund records a realized gain or loss on the Statement of Operations upon the sale or maturity of such securities.

Securities on a When-Issued or Delayed Delivery Basis. The Fund may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis. “When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis normally takes place within six months and possibly as long as two years or more after the 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 purchase of securities on a when-issued basis may increase the volatility of the Fund’s net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. When the Fund engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Fund to lose the opportunity to obtain or dispose of the security at a price and yield it considers advantageous. The Fund maintains internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase.

     As of December 31, 2008, the Fund had purchased securities issued on a when-issued or delayed delivery basis and sold securities issued on a delayed delivery basis as follows:

	When-Issued or Delayed
	Delivery Basis Transactions
Purchased securities	$	72,960,143
Sold securities		26,790,819

The Fund may enter into “forward roll” transactions with respect to mortgage-related securities. In this type of transaction, the Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security (same type, coupon and maturity) at a later date at a set price. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. The Fund records the incremental difference between the forward purchase and sale of each forward roll as realized gain (loss) on investments or as fee income in the case of such transactions that have an associated fee in lieu of a difference in the forward purchase and sale price.

     Risks of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Fund to receive inferior securities at redelivery as compared to the securities sold to the counterparty; counterparty credit risk. To assure its future payment of the purchase price, the Fund maintains internally designated assets with a market value equal to or greater than the payment obligation under the roll.

Securities Sold Short. The Fund may short sell when-issued securities for future settlement. The value of the open short position is recorded as a liability, and the Fund records an unrealized gain or loss for the change in value of the open short position. The Fund records a realized gain or loss when the short position is closed out.

Credit Risk. The Fund invests in high-yield, non-investment-grade bonds, which may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of December 31, 2008, securities with an aggregate market value of $3,122,761, representing 0.09% of the Fund’s net assets, were in default.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments in OFI Liquid Assets Fund, LLC. The Fund is permitted to invest cash collateral received in connection with its securities lending activities. Pursuant to the Fund’s Securities Lending Procedures, the Fund may invest cash collateral in, among other investments, an affiliated money market fund. OFI Liquid Assets Fund, LLC (“LAF”) is a limited liability company whose investment objective is to seek current income and stability of principal. The Manager is also the investment adviser of LAF. LAF is not registered under the Investment Company Act of 1940. However, LAF does comply with the investment restrictions applicable to registered money market funds set forth in Rule 2a-7 adopted under the Investment Company Act. The Fund’s investment in LAF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

Investments in Oppenheimer Master Funds. The Fund is permitted to invest in entities sponsored and/or advised by the Manager or an affiliate. Certain of these entities in which the Fund invests are mutual funds registered under the Investment Company Act of 1940 that expect to be treated as partnerships for tax purposes, specifically Oppenheimer Master Loan Fund, LLC and Oppenheimer Master Event-Linked Bond Fund, LLC (the “Master Funds”). Each master fund has its own investment risks, and those risks can affect the value of the Fund’s investments and therefore the value of the Fund’s shares. To the extent that the Fund invests more of its assets in one master fund than in another, the Fund will have greater exposure to the risks of that master fund.

     The investment objective of Oppenheimer Master Loan Fund, LLC is to seek as high a level of current income and preservation of capital as is consistent with investing primarily in loans and other debt securities. The investment objective of Oppenheimer Master Event-Linked Bond Fund, LLC is to seek a high level of current income principally derived from interest on debt securities. The Fund’s investments in the master funds are included in the Statement of Investments. The Fund recognizes income and gain/(loss) on its investments in each master fund according to its allocated pro-rata share, based on its relative proportion of total outstanding master fund shares held, of the total net income earned and the net gain/(loss) realized on investments sold by the master funds. As a shareholder, the Fund is subject to its proportional share of master funds’s expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in the master funds.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation
					Based on Cost of
					Securities and
Undistributed	Undistributed		Accumulated		Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3,4,5,6		Tax Purposes
$13,516,297	$	—	$	34,364,903	$	537,299,769

1.	As of December 31, 2008, the Fund had $4,149,094 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
2.	The Fund had $29,563,300 of post-October foreign currency losses which were deferred.
3.	The Fund had $66,312 of post-October passive foreign investment company losses which were deferred.
4.	The Fund had $586,197 of straddle losses which were deferred.
5.	During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.
6.	During the fiscal year ended December 31, 2007, the Fund utilized $13,349,869 of capital loss carryforward to offset capital gains realized in that fiscal year.
	Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.
	Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Reduction to		Reduction to
	Accumulated		Accumulated Net
Increase	Net Investment		Realized Loss
to Paid-in Capital	Income		on Investments7
$241,246	$	161,292,483	$	161,051,237

7. $241,246 was distributed in connection with Fund share redemptions.

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	184,452,300	$	76,513,555
Long-term capital gain		34,922,843		—
Total	$	219,375,143	$	76,513,555

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	4,450,823,896
Federal tax cost of other investments		62,378,815
Total federal tax cost	$	4,513,202,711
Gross unrealized appreciation	$	228,283,863
Gross unrealized depreciation		(765,583,632	)
Net unrealized depreciation	$	(537,299,769	)

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		44,736,337		$	230,966,547			27,845,638		$	149,207,278
Dividends and/or distributions reinvested		8,575,721			45,537,079			4,394,189			22,674,018
Redeemed		(40,970,673	)		(203,163,661	)		(15,524,784	)		(83,371,898	)
Net increase		12,341,385		$	73,339,965			16,715,043		$	88,509,398
Service Shares
Sold		147,318,126		$	805,889,322			244,861,091		$	1,327,141,100
Dividends and/or distributions reinvested		32,192,234			173,838,064			10,255,150			53,839,537
Redeemed		(72,462,189	)		(362,393,099	)		(7,224,289	)		(39,515,665	)
Net increase		107,048,171		$	617,334,287			247,891,952		$	1,341,464,972

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund, OFI Liquid Assets Fund, LLC and the Master Funds, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	1,943,814,933	$	1,746,455,568
U.S. government and government agency obligations		607,453,670		435,933,647
To Be Announced (TBA) mortgage-related securities		634,319,548		594,845,589

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Next $200 million	0.60
Over $1 billion	0.50

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $20,020 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s)

NOTES TO FINANCIAL STATEMENTS Continued

4. Fees and Other Transactions with Affiliates Continued of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investments in IMMF and the Master Funds. During the year ended December 31, 2008, the Manager waived $936,254 for management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into foreign currency exchange contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

     Risks to the Fund include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received.

6. Futures Contracts

A futures contract is a commitment to buy or sell a specific amount of a financial instrument at a negotiated price on a stipulated future date. The Fund may buy and sell futures contracts and may also buy or write put or call options on these futures contracts.

     Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund’s assets are valued.

     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.

     Futures contracts are reported on a schedule following the Statement of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted in the Statement of Assets and Liabilities. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. Realized gains (losses) are reported in the Statement of Operations at the closing or expiration of futures contracts.

     Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market where the Fund is unable to liquidate the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Fund’s securities.

7. Option Activity

The Fund may buy and sell put and call options, or write put and covered call options. 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. The difference between the premium received or paid, and market value of the option, is recorded as unrealized appreciation or depreciation. The net change in unrealized appreciation or depreciation is reported in the Statement of Operations. When an option is exercised, the cost of the security purchased or the proceeds of the security sale are adjusted by the amount of premium received or paid. Upon the expiration or closing of the option transaction, a gain or loss is reported in the Statement of Operations.

     Securities designated to cover outstanding call or put options are noted in the Statement of Investments where applicable. Options written are reported in a schedule following the Statement of Investments and as a liability in the Statement of Assets and Liabilities.

     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 that there may be an illiquid market where the Fund is unable to close the contract.

Written option activity for the year ended December 31, 2008 was as following:

	Call Options						Put Options
	Number of			Amount of			Number of			Amount of
	Contracts			Premiums			Contracts			Premiums
Options outstanding as of December 31, 2007		2,878,960,000		$	384,268			6,960,000		$	52,511
Options written		29,120,540,000			9,814,468			29,271,190,000			10,018,159
Options closed or expired		(14,995,360,000	)		(5,562,707	)		(17,435,710,000	)		(4,923,106	)
Options exercised		(16,999,195,000	)		(4,557,509	)		(11,837,495,000	)		(5,069,044	)
Options outstanding as of December 31, 2008		4,945,000		$	78,520			4,945,000		$	78,520

8. Swap Contracts

The Fund may enter into privately negotiated agreements with a counterparty to exchange or “swap” payments at specified future intervals based on the return of an asset (such as a stock, bond or currency) or non-asset reference (such as an interest rate or index). The swap agreement will specify the “notional” amount of the asset or non-asset reference to which the contract relates. As derivative contracts, swaps typically do not have an associated cost at contract inception. At initiation, contract terms are typically set at market value such that the value of the swap is $0. If a counterparty specifies terms that would result in the contract having a value other than $0 at initiation, one counterparty will pay the other an upfront payment to equalize the contract. Subsequent changes in market value are calculated based upon changes in the performance of the asset or non-asset reference multiplied by the notional value of the contract. Contract types may include credit default, interest rate, total return, and currency swaps.

     Swaps are marked to market daily using quotations primarily from pricing services, counterparties or brokers. Swap contracts are reported on a schedule following the Statement of Investments. The value of the contracts is separately disclosed on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) is comprised of the change in the valuation of the swap combined with the accrued interest due to (owed by) the Fund at termination or settlement

NOTES TO FINANCIAL STATEMENTS Continued

8. Swap Contracts Continued

The net change in this amount during the period is included on the Statement of Operations. Any payment received or paid to initiate a contract is recorded as a cost of the swap in the Statement of Assets and Liabilities and as a component of unrealized gain or loss on the Statement of Operations until contract termination; upon contract termination, this amount is recorded as realized gain or loss on the Statement of Operations. Excluding amounts paid at contract initiation as described above, the Fund also records any periodic payments received from (paid to) the counterparty, including at termination, as realized gain (loss) on the Statement of Operations.

     Risks of entering into swap contracts include credit, market and liquidity risk. Credit risk arises from the possibility that the counterparty fails to make a payment when due or otherwise defaults under the terms of the contract. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received. Market risk is the risk that the value of the contract will depreciate due to unfavorable changes in the performance of the asset or non-asset reference. Liquidity risk is the risk that the Fund may be unable to close the contract prior to its termination.

Credit Default Swap Contracts. A credit default swap is a bilateral contract that enables an investor to buy or sell protection on a debt security against a defined-issuer credit event, such as the issuer’s failure to make timely payments of interest or principal on the debt security, bankruptcy or restructuring. The Fund may enter into credit default swaps either by buying or selling protection on a single security or a basket of securities (the “reference asset”).

     The buyer of protection pays a periodic fee to the seller of protection based on the notional amount of debt securities underlying the swap contract. The seller of protection agrees to compensate the buyer of protection for future potential losses as a result of a credit event on the reference asset. The contract effectively transfers the credit event risk of the reference asset from the buyer of protection to the seller of protection.

     The ongoing value of the contract will fluctuate throughout the term of the contract based primarily on the credit risk of the reference asset. If the credit quality of the reference asset improves relative to the credit quality at contract initiation, the buyer of protection may have an unrealized loss greater than the anticipated periodic fee owed. This unrealized loss would be the result of current credit protection being cheaper than the cost of credit protection at contract initiation. If the buyer elects to terminate the contract prior to its maturity, and there has been no credit event, this unrealized loss will become realized. If the contract is held to maturity, and there has been no credit event, the realized loss will be equal to the periodic fee paid over the life of the contract.

     If there is a credit event, the buyer of protection can exercise its rights under the contract and receive a payment from the seller of protection equal to the notional amount of the reference asset less the market value of the reference asset. Upon exercise of the contract the difference between the value of the underlying reference asset and the notional amount is recorded as realized gain (loss) and is included on the Statement of Operations.

     Risks of credit default swaps include credit, market and liquidity risk. Additional risks include but are not limited to: the cost of paying for credit protection if there are no credit events or the cost of selling protection when a credit event occurs (paying the notional amount to the protection buyer); and pricing transparency when assessing the value of a credit default swap.

     As of the period end, the Fund has sold credit protection through credit default swaps to gain exposure to the credit risk of individual securities and/or indexes that are either unavailable or considered to be less attractively priced in the bond market. The Fund has also engaged in pairs trades by purchasing protection through a credit default swap referenced to the debt of an issuer, and simultaneously selling protection through a credit default swap referenced to the debt of a different issuer with the intent to realize gains from the pricing differences of the two issuers who are expected to have similar market risks. Pairs trades attempt to gain exposure to credit risk while hedging or offsetting the effects of overall market movements. In addition, the Fund has engaged in spread curve trades by simultaneously purchasing and selling protection through credit default swaps referenced to the same issuer but with different maturities. Spread curve trades attempt to gain exposure to credit risk on a forward basis by realizing gains on the expected differences in spreads.

Interest Rate Swap Contracts. An interest rate swap is an agreement between counterparties to exchange periodic payments based on interest rates. One cash flow stream will typically be a floating rate payment based upon a specified interest rate while the other is typically a fixed interest rate.

     Risks of interest rate swaps include credit, market and liquidity risk. Additional risks include but are not limited to, interest rate risk. There is a risk, based on future movements of interest rates that the payments made by the Fund under a swap agreement will be greater than the payments it received.

Total Return Swap Contracts. A total return swap is an agreement between counterparties to exchange periodic payments based on asset or non-asset references. One cash flow is typically based on a non-asset reference (such as an interest rate or index) and the other on the total return of a reference asset (such as a security or a basket of securities). The total return of the reference asset typically includes appreciation or depreciation on the reference asset, plus any interest or dividend payments.

     Risks of total return swaps include credit, market and liquidity risk.

Currency Swaps. A currency swap is an agreement between counterparties to exchange different currencies equivalent to the notional value at contract inception and reverse the exchange of the same notional values of those currencies at contract termination. The contract may also include periodic exchanges of cash flows based on a specified index or interest rate.

     Risks of currency swaps include credit, market and liquidity risk. Additional risks of currency swaps include, but are not limited to, exchange rate risk. Due to the exchange of currency at contract termination, changes in currency exchange rates may result in the Fund paying an amount greater than the amount received. There is also a risk, based on movements of interest rates or indexes that periodic payments made by the Fund will be greater than the payments received.

Swaption Transactions. The Fund may enter into a swaption contract which grants the purchaser the right, but not the obligation, to enter into an interest rate swap at a preset rate within a specified period of time. The purchaser pays a premium to the swaption writer who bears the risk of unfavorable changes in the preset rate on the underlying interest rate swap.

     Swaptions are marked to market daily using primarily quotations from counterparties and brokers. Written swap-tions are reported on a schedule following the Statement of Investments. Written swaptions are reported as a liability in the Statement of Assets and Liabilities. The difference between the premium received or paid, and market value of the swaption, is recorded as unrealized appreciation or depreciation. The net change in unrealized appreciation or depreciation is reported in the Statement of Operations. When a swaption is exercised, the cost of the swap is adjusted by the amount of premium paid or received. Upon the expiration or closing of an unexercised swaption contract, a gain or loss is reported in the Statement of Operations for the amount of the premium paid or received.

     Swaption contracts written by the Fund do not give rise to counterparty credit risk as they obligate the Fund, not its counterparty, to perform. The Fund generally will incur a greater risk when it writes a swaption than when it purchases a swaption. When the Fund purchases a swaption it risks losing only the amount of the premium they have paid if the option expires unexercised. When the Fund writes a swaption it will become obligated, upon exercise of the option, according to the terms of the underlying agreement.

NOTES TO FINANCIAL STATEMENTS Continued

9. Illiquid or Restricted Securities

As of December 31, 2008, investments in securities included issues that are illiquid or restricted. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security may have a contractual restriction on its resale and is valued under methods approved by the Board of Trustees as reflecting fair value. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid and restricted securities. Certain restricted securities, eligible for resale to qualified institutional purchasers, may not be subject to that limitation. Securities that are illiquid or restricted are marked with an applicable footnote on the Statement of Investments. Restricted securities are reported on a schedule following the Statement of Investments.

10. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand. As of December 31, 2008, the Fund had on loan securities valued at $318,788,944. Collateral of $325,265,870 was received for the loans, of which all was received in cash and subsequently invested in approved instruments.

11. Unfunded Purchase Commitments

Pursuant to the terms of certain indenture agreements, the Fund has unfunded purchase commitments of $21,735,999 at December 31, 2008. The Fund generally will maintain with its custodian, liquid investments having an aggregate value at least equal to the amount of unfunded purchase loan commitments. The following commitments are subject to funding based on the borrower’s discretion. The Fund is obligated to fund these commitments at the time of the request by the borrower. These commitments have been excluded from the Statement of Investments.

As of December 31, 2008, the Fund had unfunded purchase commitments as follows:

	Commitment
	Termination		Unfunded
	Date		Amount
Deutsche Bank AG, Opic Reforma I Credit Linked Nts.		10/23/13	$	9,735,999

				Commitment
	Interest			Termination		Unfunded		Unrealized
	Rate			Date		Amount		Appreciation
Deutsche Bank AG; An unfunded commitment that the Fund receives 0.125% quarterly; and will pay out, upon request, up to 12,000,000 USD to a Peruvian Trust through Deutsche Bank’s Global Note Program. Upon funding requests, the unfunded portion decreases and new structured securities will be created and held by the fund to maintain a consistent exposure level.		0.50	%		9/20/10	$	12,000,000	$	1,718,957

12. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

13. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of Oppenheimer Value Fund/VA:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Value Fund/VA (the “Fund”), a series of Oppenheimer Variable Account Funds, including the statement of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Denver, Colorado
February 11, 2009

STATEMENT OF INVESTMENTS December 31, 2008

	Shares		Value
Common Stocks—92.2%
Consumer Discretionary—6.7%
Media—6.7%
Cablevision Systems Corp. New York Group, Cl. A		1,380	$	23,239
Cinemark Holdings, Inc.		5,400		40,122
Liberty Global, Inc., Series C1		3,198		48,546
News Corp., Inc., Cl. A		15,142		137,641
Time Warner Cable, Inc., Cl. A1		3,120		66,924
				316,472
Consumer Staples—9.0%
Beverages—2.6%
Molson Coors Brewing Co., Cl. B		720		35,222
PepsiCo, Inc.		1,560		85,441
				120,663
Food & Staples Retailing—2.9%
Kroger Co. (The)		5,200		137,332
Food Products—1.2%
Campbell Soup Co.		1,830		54,918
Tobacco—2.3%
Philip Morris International, Inc.		2,481		107,948
Energy—8.8%
Oil, Gas & Consumable Fuels—8.8%
Chevron Corp.		3,300		244,101
Devon Energy Corp.		2,580		169,532
				413,633
Financials—18.3%
Capital Markets—7.7%
Credit Suisse Group AG, ADR		3,640		102,866
Julius Baer Holding AG		4,129		158,558
Morgan Stanley		6,210		99,608
				361,032
Consumer Finance—2.3%
SLM Corp.1		12,240		108,936
Diversified Financial Services—3.2%
Bank of America Corp.		5,810		81,805
JPMorgan Chase & Co.		2,070		65,267
				147,072
Insurance—5.1%
Assurant, Inc.		790		23,700
Everest Re Group Ltd.		2,697		205,350
National Financial Partners Corp.		3,730		11,339
				240,389
Health Care—15.1%
Health Care Providers & Services—5.1%
Aetna, Inc.		4,330		123,405
WellPoint, Inc.1		2,820		118,807
				242,212
Life Sciences Tools & Services—0.9%
Thermo Fisher Scientific, Inc.1		1,220		41,565
Pharmaceuticals—9.1%
Abbott Laboratories		2,560		136,627
Schering-Plough Corp.		8,650		147,310
Wyeth		3,780		141,788
				425,725
Industrials—9.6%
Aerospace & Defense—1.7%
Goodrich Corp.		2,160		79,963
Air Freight & Logistics—1.0%
United Parcel Service, Inc., Cl. B		850		46,886
Industrial Conglomerates—4.4%
Siemens AG, Sponsored ADR		554		41,966
Tyco International Ltd.		7,550		163,080
				205,046
Machinery—1.9%
Navistar International Corp.1		4,103		87,722
Trading Companies & Distributors—0.6%
Aircastle Ltd.		6,020		28,776
Information Technology—5.8%
Communications Equipment—4.8%
QUALCOMM, Inc.		3,540		126,838
Research in Motion Ltd.1		2,390		96,986
				223,824
Semiconductors & Semiconductor Equipment—1.0%
Lam Research Corp.1		810		17,237
Varian Semiconductor
Equipment Associates, Inc.1		1,780		32,254
				49,491
Materials—6.7%
Chemicals—6.7%
Lubrizol Corp. (The)		5,897		214,592
Mosaic Co. (The)		2,950		102,070
				316,662
Telecommunication Services—3.9%
Diversified Telecommunication Services—3.9%
AT&T, Inc.		6,440		183,540

STATEMENT OF INVESTMENTS Continued

	Shares			Value
Utilities—8.3%
Electric Utilities—4.9%
American Electric Power Co., Inc.		3,600		$	119,808
Exelon Corp.		1,976			109,885
					229,693
Multi-Utilities—3.4%
PG&E Corp.		4,120			159,485
Total Common Stocks (Cost $5,092,221)					4,328,985
Preferred Stocks—2.7%
Petroleo Brasileiro SA, Sponsored ADR (Cost $206,305)		6,290			128,379
Investment Company—14.2%
Oppenheimer Institutional Money Market Fund, Cl. E, 1.96%2,3 (Cost $664,973)		664,973			664,973
Total Investments, at Value (Cost $5,963,499)		109.1	%		5,122,337
Liabilities in Excess of Other Assets		(9.1	)		(426,193	)
Net Assets		100.0	%	$	4,696,144

Industry classifications are unaudited.

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	December 31, 2007		Additions		Reductions		December 31, 2008
Oppenheimer Institutional Money Market Fund, Cl. E		177,433		5,896,250		5,408,710		664,973

	Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E	$	664,973	$	8,029

3. Rate shown is the 7-day yield as of December 31, 2008.

Valuation Inputs

Various data inputs are used in determining the value of each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:

1) Level 1—quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than quoted prices that are observable for the asset (such as quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The market value of the Fund’s investments was determined based on the following inputs as of December 31, 2008:

	Investments in		Other Financial
Valuation Description	Securities		Instruments*
Level 1—Quoted Prices	$	4,963,779	$	—
Level 2—Other Significant Observable Inputs		158,558		—
Level 3—Significant Unobservable Inputs		—		—
Total	$	5,122,337	$	—

* Other financial instruments include options written, currency contracts, futures, forwards and swap contracts. Currency contracts and forwards are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Options written and swaps are reported at their market value at measurement date.

See the accompanying Notes for further discussion of the methods used in determining value of the Fund’s investments, and a summary of changes to the valuation techniques, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $5,298,526)	$	4,457,364
Affiliated companies (cost $664,973)		664,973
		5,122,337
Cash		33,965
Receivables and other assets:
Investments sold		135,001
Shares of beneficial interest sold		20,958
Dividends		11,030
Due from Manager		15
Other		5,105
Total assets		5,328,411
Liabilities
Payables and other liabilities:
Investments purchased		578,768
Shareholder communications		9,467
Shares of beneficial interest redeemed		7,240
Distribution and service plan fees		3,984
Trustees’ compensation		1,780
Transfer and shareholder servicing agent fees		9
Other		31,019
Total liabilities		632,267
Net Assets	$	4,696,144
Composition of Net Assets
Par value of shares of beneficial interest	$	692
Additional paid-in capital		7,763,131
Accumulated net investment income		2,584
Accumulated net realized loss on investments and foreign currency transactions		(2,229,198	)
Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies		(841,065	)
Net Assets	$	4,696,144
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $6,215 and 1,246 shares of beneficial interest outstanding)	$	4.99
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $4,689,929 and 690,778 shares of beneficial interest outstanding)	$	6.79

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2008

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $4,734)	$	141,789
Affiliated companies		8,029
Interest		87
Total investment income		149,905
Expenses
Management fees		48,203
Distribution and service plan fees—Service shares		11,571
Transfer and shareholder servicing agent fees:
Non-Service shares		22
Service shares		84
Shareholder communications:
Non-Service shares		2,014
Service shares		23,599
Legal, auditing and other professional fees		30,845
Trustees’ compensation		6,062
Custodian fees and expenses		49
Other		8,464
Total expenses		130,913
Less reduction to custodian expenses		(41	)
Less waivers and reimbursements of expenses		(37,020	)
Net expenses		93,852
Net Investment Income		56,053
Realized and Unrealized Loss
Net realized loss on:
Investments from unaffiliated companies		(1,910,920	)
Foreign currency transactions		(16,477	)
Net realized loss		(1,927,397	)
Net change in unrealized depreciation on:
Investments		(1,269,415	)
Translation of assets and liabilities denominated in foreign currencies		(3,599	)
Net change in unrealized depreciation		(1,273,014	)
Net Decrease in Net Assets Resulting from Operations	$	(3,144,358	)

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2008			2007
Operations
Net investment income	$	56,053		$	39,402
Net realized loss		(1,927,397	)		(87,194	)
Net change in unrealized appreciation (depreciation)		(1,273,014	)		7,138
Net decrease in net assets resulting from operations		(3,144,358	)		(40,654	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(2,000	)		(14,051	)
Service shares		(47,216	)		(22,582	)
		(49,216	)		(36,633	)
Distributions from net realized gain:
Non-Service shares		—			(64,829	)
Service shares		—			(232,359	)
		—			(297,188	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(1,475,254	)		(1,050,500	)
Service shares		1,155,875			6,521,885
		(319,379	)		5,471,385
Net Assets
Total increase (decrease)		(3,512,953	)		5,096,910
Beginning of period		8,209,097			3,112,187
End of period (including accumulated net investment income (loss) of $2,584 and $(2,761), respectively)	$	4,696,144		$	8,209,097

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	11.73		$	11.58		$	11.16		$	12.26		$	12.90
Income (loss) from investment operations:
Net investment income (loss)1		.12			.10			(.03	)		.02			(.01	)
Net realized and unrealized gain (loss)		(4.44	)		.59			1.61			.71			1.82
Total from investment operations		(4.32	)		.69			1.58			.73			1.81
Dividends and/or distributions to shareholders:
Dividends from net investment income		(2.42	)		(.10	)		(.01	)		(.02	)		(.03	)
Distributions from net realized gain		—			(.44	)		(1.15	)		(1.81	)		(2.42	)
Total dividends and/or distributions to shareholders		(2.42	)		(.54	)		(1.16	)		(1.83	)		(2.45	)
Net asset value, end of period	$	4.99		$	11.73		$	11.58		$	11.16		$	12.26
Total Return, at Net Asset Value2		(36.43	)%		5.89	%		14.03	%		5.88	%		14.50	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	6		$	1,728		$	2,657		$	2,562		$	2,815
Average net assets (in thousands)	$	857		$	2,753		$	2,695		$	2,878		$	3,370
Ratios to average net assets:3
Net investment income (loss)		1.07	%		0.80	%		(0.29	)%		0.15	%		(0.08	)%
Total expenses		1.48	%4		1.49	%4		2.14	%4		1.78	%		1.82	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.25	%		1.25	%		2.14	%		1.78	%		1.82	%
Portfolio turnover rate		175	%		142	%		124	%		86	%		100	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	1.48	%
Year Ended December 31, 2007	1.49	%
Year Ended December 31, 2006	2.14	%

See accompanying Notes to Financial Statements.

Service Shares Year Ended December 31,	2008			2007			20061
Per Share Operating Data
Net asset value, beginning of period	$	11.75		$	11.57		$	11.89
Income (loss) from investment operations:
Net investment income (loss)2		.08			.06			(.05	)
Net realized and unrealized gain (loss)		(4.97	)		.60			.88
Total from investment operations		(4.89	)		.66			.83
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.07	)		(.04	)		—
Distributions from net realized gain		—			(.44	)		(1.15	)
Total dividends and/or distributions to shareholders		(.07	)		(.48	)		(1.15	)
Net asset value, end of period	$	6.79		$	11.75		$	11.57
Total Return, at Net Asset Value3		(41.62	)%		5.70	%		6.81	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	4,690		$	6,481		$	455
Average net assets (in thousands)	$	5,561		$	3,527		$	268
Ratios to average net assets:4
Net investment income (loss)		0.84	%		0.49	%		(1.30	)%
Total expenses5		2.13	%		1.63	%		2.89	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.50	%		1.50	%		2.88	%
Portfolio turnover rate		175	%		142	%		124	%

1.	For the period from September 18, 2006 (inception of offering) to December 31, 2006.
2.	Per share amounts calculated based on the average shares outstanding during the period.
3.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
4.	Annualized for periods less than one full year.
5.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2008	2.13	%
Year Ended December 31, 2007	1.63	%
Period Ended December 31, 2006	2.89	%

See accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Value Fund/VA (the “Fund”) is a separate series of Oppenheimer Variable Account Funds, an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek long-term growth of capital by investing primarily in common stocks with low price-earnings ratios and better-than-anticipated earnings. Realization of current income is a secondary consideration. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers two classes of shares. Both classes are sold at their offering price, which is the net asset value per share, to separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. The class of shares designated as Service shares is subject to a distribution and service plan. Both classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class.

     The following is a summary of significant accounting policies consistently followed by the Fund.

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.

     Effective for fiscal periods beginning after November 15, 2007, FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements, establishes a hierarchy for measuring fair value of assets and liabilities. As required by the standard, each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Quoted prices in active markets for identical securities are classified as “Level 1”, inputs other than quoted prices for an asset that are observable are classified as “Level 2” and unobservable inputs, including the Manager’s judgment about the assumptions that a market participant would use in pricing an asset or liability are classified as “Level 3”. The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund’s investments under these levels of classification is included following the Statement of Investments.

     Securities are valued using quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers. These securities are typically classified within Level 1 or 2; however, they may be designated as Level 3 if the dealer or portfolio pricing service values a security through an internal model with significant unobservable market data inputs.

     Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which traded, prior to the time when the Fund’s assets are valued. Securities whose principal exchange is NASDAQ^® are valued based on the official closing prices reported by NASDAQ prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked” prices, and if not, at the current day’s closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded.

     Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.

     Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities, collateralized mortgage obligations and other asset-backed securities are valued at the mean between the “bid” and “asked” prices.

     “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. These securities are typically designated as Level 2.

     In the absence of a readily available quoted market price, including for securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund’s assets are valued but after the close of the securities’ respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Trustees (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

     Fair valued securities may be classified as “Level 3” if the valuation primarily reflects the Manager’s own assumptions about the inputs that market participants would use in valuing such securities.

     There have been no significant changes to the fair valuation methodologies during the period.

Foreign Currency Translation. The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.

     The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Investment in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund’s investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.

Investments With Off-Balance Sheet Market Risk. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund’s Statement of Assets and Liabilities.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Federal Taxes. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.

					Net Unrealized
					Depreciation
					Based on Cost of
					Securities and
Undistributed	Undistributed		Accumulated		Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3,4		Tax Purposes
$4,364	$	—	$	2,053,476	$	1,016,789

1. As of December 31, 2008, the Fund had $1,303,597 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2008, details of the capital loss carryforward was as follows:

Expiring
2016	$	1,303,597

2. As of December 31, 2008, the Fund had $749,879 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.

3. During the fiscal year ended December 31, 2008, the Fund did not utilize any capital loss carryforward.

4. During the fiscal year ended December 31, 2007, the Fund did not utilize any capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.

Accordingly, the following amounts have been reclassified for December 31, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Reduction to
Reduction to	Accumulated Net
Accumulated Net	Realized Loss on
Investment Income	Investments
$1,492	$	1,492

The tax character of distributions paid during the years ended December 31, 2008 and December 31, 2007 was as follows:

	Year Ended		Year Ended
	December 31, 2008		December 31, 2007
Distributions paid from:
Ordinary income	$	49,216	$	113,473
Long-term capital gain		—		220,348
Total	$	49,216	$	333,821

The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2008 are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities	$	6,139,223
Federal tax cost of other investments		375
Total federal tax cost	$	6,139,598
Gross unrealized appreciation	$	98,017
Gross unrealized depreciation		(1,114,806	)
Net unrealized depreciation	$	(1,016,789	)

Trustees’ Compensation. The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

Custodian Fees. “Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.

Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.

Indemnifications. The Fund’s organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2008						Year Ended December 31, 2007
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		957		$	8,036			—		$	—
Dividends and/or distributions reinvested		409			2,000			—			—
Redeemed		(147,464	)		(1,485,290	)		(82,215	)		(1,050,500	)
Net decrease		(146,098	)	$	(1,475,254	)		(82,215	)	$	(1,050,500	)
Service Shares
Sold		461,846		$	4,322,028			525,491		$	6,694,320
Dividends and/or distributions reinvested		7,057			47,216			21,569			254,941
Redeemed		(329,902	)		(3,213,369	)		(34,566	)		(427,376	)
Net increase		139,001		$	1,155,875			512,494		$	6,521,885

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in Oppenheimer Institutional Money Market Fund and OFI Liquid Assets Fund, LLC, for the year ended December 31, 2008, were as follows:

	Purchases		Sales
Investment securities	$	10,970,714	$	11,375,242

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Over $800 million	0.60

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2008, the Fund paid $91 to OFS for services to the Fund.

     Additionally, funds offered in variable annuity separate accounts are subject to minimum fees of $10,000 per class, for class level assets of $10 million or more. Each class is subject to the minimum fee in the event that the per account fee does not equal or exceed the applicable minimum fee.

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan (the “Plan”) in accordance with Rule 12b-1 under the Investment Company Act of 1940 for Service shares to pay OppenheimerFunds Distributor, Inc. (the “Distributor”), for distribution related services, personal service and account maintenance for the Fund’s Service shares. Under the Plan, payments are made periodically at an annual rate of up to 0.25% of the average annual net assets of Service shares of the Fund. The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product that offers Fund shares, for providing personal service and maintenance of accounts of their variable contract owners that hold Service shares. These fees are paid out of the Fund’s assets on an on-going basis and increase operating expenses of the Service shares, which results in lower performance compared to the Fund’s shares that are not subject to a service fee. Fees incurred by the Fund under the Plan are detailed in the Statement of Operations.

Waivers and Reimbursements of Expenses. Effective January 1, 2007, the Manager voluntarily agreed to an expense waiver of any “Total expenses” over 1.25% of average annual net assets for Non-Service shares and 1.50% of average annual net assets for Service shares. During the year ended December 31, 2008, OFS waived $1,987 and $34,759 for Non-Service and Service shares, respectively. The expense waiver is a voluntary undertaking and may be terminated by the Manager at any time.

     OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. During the year ended December 31, 2008, OFS waived $6 for Non-Service shares. This undertaking may be amended or withdrawn at any time.

     The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF. During the year ended December 31, 2008, the Manager waived $268 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into foreign currency exchange contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

     Risks to the Fund include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund’s loss will consist of the net amount of contractual payments that the Fund has not yet received.

     As of December 31, 2008, the Fund had no outstanding forward contracts.

6. Recent Accounting Pronouncement

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

NOTES TO FINANCIAL STATEMENTS Continued

7. Change In Independent Registered Public Accounting Firm (Unaudited)

At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

Appendix A

RATINGS DEFINITIONS

Below are summaries of the rating definitions used by the nationally-recognized rating agencies listed below. Those ratings represent the opinion of the agency as to the credit quality of issues that they rate. The summaries below are based upon publicly available information provided by the rating organizations.

Moody's Investors Service, Inc. ("Moody's")

Long-Term Ratings: Bonds and Preferred Stock Issuer Ratings

Aaa: Bonds and preferred stock rated "Aaa" are judged to be the best quality. They carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, the changes that can be expected are most unlikely to impair the fundamentally strong position of such issues.
 

Aa: Bonds and preferred stock rated "Aa" are judged to be of high quality by all standards. Together with the "Aaa" group, they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as with "Aaa" securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than that of "Aaa" securities.
 

A: Bonds and preferred stock rated "A" possess many favorable investment attributes and are to be considered as upper-medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment some time in the future.
 

Baa: Bonds and preferred stock rated "Baa" are considered medium-grade obligations; that is, they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and have speculative characteristics as well.
 

Ba: Bonds and preferred stock rated "Ba" are judged to have speculative elements. Their future cannot be considered well-assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
 

B: Bonds and preferred stock rated "B" generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
 

Caa: Bonds and preferred stock rated "Caa" are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds and preferred stock rated "Ca" represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
 

C: Bonds and preferred stock rated "C" are the lowest class of rated bonds and can be regarded as having extremely poor prospects of ever attaining any real investment standing.
 
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from "Aa" through "Caa." The modifier "1" indicates that the obligation ranks in the higher end of its generic rating category; the modifier "2" indicates a mid-range ranking; and the modifier "3" indicates a ranking in the lower end of that generic rating category. Advanced refunded issues that are secured by certain assets are identified with a # symbol.

Prime Rating System (Short-Term Ratings – Taxable Debt)

These ratings are opinions of the ability of issuers to honor senior financial obligations and contracts. Such obligations generally have an original maturity not exceeding one year, unless explicitly noted.

Prime-1: Issuer has a superior ability for repayment of senior short-term debt obligations.
 

Prime-2: Issuer has a strong ability for repayment of senior short-term debt obligations. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
 

Prime-3: Issuer has an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained.
 

Not Prime: Issuer does not fall within any Prime rating category.
 

Standard & Poor's Ratings Services ("Standard & Poor's"), a division of The McGraw-Hill Companies, Inc.

Long-Term Issue Credit Ratings

Issue credit ratings are based in varying degrees, on the following considerations:

·      Likelihood of payment-capacity and willingness of the obligor to meet its financial commitment on an obligation in accordance with the terms of the obligation;

·      Nature of and provisions of the obligation; and

·      Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

The issue ratings definitions are expressed in terms of default risk. As such, they pertain to senior obligations of an entity. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above.

AAA: An obligation rated "AAA" have the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong.

AA: An obligation rated "AA" differ from the highest rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong.
 

A: An obligation rated "A" are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong.
 

BBB: An obligation rated "BBB" exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
 

BB, B, CCC, CC, and C

An obligation rated "BB," "B," "CCC," "CC," and "C" are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.

BB: An obligation rated "BB" are less vulnerable to nonpayment than other speculative issues. However, they face major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation.
 

B: An obligation rated "B" are more vulnerable to nonpayment than obligations rated "BB," but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation.

CCC: An obligation rated "CCC" are currently vulnerable to nonpayment, and are dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.

CC: An obligation rated "CC" are currently highly vulnerable to nonpayment.

C: Subordinated debt or preferred stock obligations rated "C" are currently highly vulnerable to nonpayment. The "C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued. A "C" also will be assigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that is currently paying.
 
D: An obligation rated "D" are in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
 

The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

c: The "c" subscript is used to provide additional information to investors that the bank may terminate its obligation to purchase tendered bonds if the long-term credit rating of the issuer is below an investment-grade level and/or the issuer's bonds are deemed taxable.

p: The letter "p" indicates that the rating is provisional. A provisional rating assumes the successful completion of the project financed by the debt being rated and indicates that payment of debt service requirements is largely or entirely dependent upon the successful, timely completion of the project. This rating, however, while addressing credit quality subsequent to completion of the project, makes no comment on the likelihood of or the risk of default upon failure of such completion. The investor should exercise his own judgment with respect to such likelihood and risk.

Continuance of the ratings is contingent upon Standard & Poor's receipt of an executed copy of the escrow agreement or closing documentation confirming investments and cash flows.

r: The "r" highlights derivative, hybrid, and certain other obligations that Standard & Poor's believes may experience high volatility or high variability in expected returns as a result of noncredit risks. Examples of such obligations are securities with principal or interest return indexed to equities, commodities, or currencies; certain swaps and options; and interest-only and principal-only mortgage securities. The absence of an 'r' symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R. Not rated.

 

Debt obligations of issuers outside the United States and its territories are rated on the same basis as domestic corporate and municipal issues. The ratings measure the creditworthiness of the obligor but do not take into account currency exchange and related uncertainties.

Bond Investment Quality Standards

Under present commercial bank regulations issued by the Comptroller of the Currency, bonds rated in the top four categories ("AAA," "AA," "A," "BBB," commonly known as investment-grade ratings) generally are regarded as eligible for bank investment. Also, the laws of various states governing legal investments impose certain rating or other standards for obligations eligible for investment by savings banks, trust companies, insurance companies, and fiduciaries in general
 

Short-Term Issue Credit Ratings

Short-term ratings are generally assigned to those obligations considered short-term in the relevant market. In the U.S., for example, that means obligations with an original maturity of no more than 365 days-including commercial paper.

A-1: A short-term obligation rated "A-1" is rated in the highest category by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong.
 

A-2: A short-term obligation rated "A-2" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory.

A-3: A short-term obligation rated "A-3" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
 

B: A short-term obligation rated "B" is regarded as having significant speculative characteristics. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation.
 

C: A short-term obligation rated "C" is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.

D: A short-term obligation rated "D" is in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.

Notes:
A Standard & Poor's note rating reflects the liquidity factors and market access risks unique to notes. Notes due in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment:

·      Amortization schedule-the larger the final maturity relative to other maturities, the more likely it will
be treated as a note; and

·      Source of payment-the more dependent the issue is on the market for its refinancing, the more likely
it will be treated as a note.

SP-1: Strong capacity to pay principal and interest. An issue with a very strong capacity to pay debt service is given a (+) designation.
 

SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
 

SP-3: Speculative capacity to pay principal and interest.
 

Fitch, Inc.

International credit ratings assess the capacity to meet foreign currency or local currency commitments. Both "foreign currency" and "local currency" ratings are internationally comparable assessments. The local currency rating measures the probability of payment within the relevant sovereign state's currency and jurisdiction and therefore, unlike the foreign currency rating, does not take account of the possibility of foreign exchange controls limiting transfer into foreign currency.
 

International Long-Term Credit Ratings

The following ratings scale applies to foreign currency and local currency ratings.

Investment Grade:

AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of credit risk. They are assigned only in the case of exceptionally strong capacity for timely payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

AA: Very High Credit Quality. "AA" ratings denote a very low expectation of credit risk. They indicate a very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
 

A: High Credit Quality. "A" ratings denote a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.

BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. This is the lowest investment-grade category.

Speculative Grade:

BB: Speculative. "BB" ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time. However, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade.

B: Highly Speculative. "B" ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met. However, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.

CCC, CC C: High Default Risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. A "CC" rating indicates that default of some kind appears probable. "C" ratings signal imminent default.
 

DDD, DD, and D: Default. The ratings of obligations in this category are based on their prospects for achieving partial or full recovery in a reorganization or liquidation of the obligor. While expected recovery values are highly speculative and cannot be estimated with any precision, the following serve as general guidelines. "DDD" obligations have the highest potential for recovery, around 90%-100% of outstanding amounts and accrued interest. "DD" indicates potential recoveries in the range of 50%-90%, and "D" the lowest recovery potential, i.e., below 50%.
 

Entities rated in this category have defaulted on some or all of their obligations. Entities rated "DDD" have the highest prospect for resumption of performance or continued operation with or without a formal reorganization process. Entities rated "DD" and "D" are generally undergoing a formal reorganization or liquidation process; those rated "DD" are likely to satisfy a higher portion of their outstanding obligations, while entities rated "D" have a poor prospect for repaying all obligations.
 
Plus (+) and minus (-) signs may be appended to a rating symbol to denote relative status within the major rating categories. Plus and minus signs are not added to the "AAA" category or to categories below "CCC," nor to short-term ratings other than "F1" (see below).

International Short-Term Credit Ratings

The following ratings scale applies to foreign currency and local currency ratings. A short-term rating has a time horizon of less than 12 months for most obligations, or up to three years for U.S. public finance securities, and thus places greater emphasis on the liquidity necessary to meet financial commitments in a timely manner.

F1: Highest credit quality. Strongest capacity for timely payment of financial commitments. May have an added "+" to denote any exceptionally strong credit feature.

 

F2: Good credit quality. A satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of higher ratings.
 

F3: Fair credit quality. Capacity for timely payment of financial commitments is adequate. However, near-term adverse changes could result in a reduction to non-investment grade.
 

B: Speculative. Minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions.
 

C: High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.

D: Default. Denotes actual or imminent payment default.

Dominion Bond Rating Service Limited ("DBRS")

R-1: Short term debt rated "R-1 (high)" is of the highest credit quality, and indicates an entity which possesses unquestioned ability to repay current liabilities as they fall due. Entities rated in this category normally maintain strong liquidity positions, conservative debt levels and profitability which is both stable and above average. Companies achieving an "R-1 (high)" rating are normally leaders in structurally sound industry segments with proven track records, sustainable positive future results and no substantial qualifying negative factors. Given the extremely tough definition which DBRS has established for an "R-1 (high)", few entities are strong enough to achieve this rating. Short term debt rated "R-1 (middle)" is of superior credit quality and, in most cases, ratings in this category differ from "R-1 (high)" credits to only a small degree. Given the extremely tough definition which DBRS has for the "R-1 (high)" category (which few companies are able to achieve), entities rated "R-1 (middle)" are also considered strong credits which typically exemplify above average strength in key areas of consideration for debt protection. Short term debt rated "R-1 (low)" is of satisfactory credit quality. The overall strength and outlook for key liquidity, debt and profitability ratios is not normally as favorable as with higher rating categories, but these considerations are still respectable. Any qualifying negative factors which exist are considered manageable, and the entity is normally of sufficient size to have some influence in its industry.

R-2: Short term debt rated "R-2" is of adequate credit quality and within the three subset grades (high, middle, low), debt protection ranges from having reasonable ability for timely repayment to a level which is considered only just adequate. The liquidity and debt ratios of entities in the "R-2" classification are not as strong as those in the "R-1" category, and the past and future trend may suggest some risk of maintaining the strength of key ratios in these areas. Alternative sources of liquidity support are considered satisfactory; however, even the strongest liquidity support will not improve the commercial paper rating of the issuer. The size of the entity may restrict its flexibility, and its relative position in the industry is not typically as strong as the "R-1 credit". Profitability trends, past and future, may be less favorable, earnings not as stable, and there are often negative qualifying factors present which could also make the entity more vulnerable to adverse changes in financial and economic conditions.

B- 5

Appendix B

Major Shareholders. As of April 1, 2009, the total number of shares outstanding, and the number of shares and approximate percentage of Fund shares held of record by separate accounts of the following insurance companies (and their respective subsidiaries) and by OppenheimerFunds, Inc. ("OFI") were as follows. ["*" indicates less than 5% of the outstanding shares of that fund or class]:

Oppenheimer Variable Account Funds (consisting of 11 separate Funds)	Total Shares in the fund	Allianz	Allstate Life of NY	Allstate Life Ins. Co.	Commonwealth Annuity and Life
Balanced Fund/VA Non-Service Shares	18,482,937.833	*	*	*	*
Balanced Fund/VA Service Shares	8,341,498.374	*	447,375.108	1,951,349.260	461,816.895
			5.36%	23.39%	5.54%
Capital Appreciation Fund/VA Non-Service Shares	31,386,972.966	*	*	*	*
Capital Appreciation Fund/VA Service Shares	12,242,791.524	*	*	1,401,217.677	*
				11.45%
Core Bond Fund/VA Non-Service Shares	22,416,401.925	*	*	*	*
Core Bond Fund/VA Service Shares	7,780,394.247	*	1,041,683.550	5,055,143.183	*
			13.39%	64.97%
Global Securities Fund/VA Non-Service Shares	58,322,128.983	4,108,707.108	*	*	*
		7.04%
Global Securities Fund/VA Service Shares	39,235,158.494	*	*	*	*
Global Securities Fund/VA Class 3 shares	8,625,948.200	*	*	*	*
Global Securities Fund/VA Class 4 shares	3,129,295.912	*	*	*	*
High Income Fund/VA Non-Service Shares	41,192,665.884	6,810,953.112	*	*	*
		16.53%
High Income/VA Service Shares	30,913,213.145	*	2,715,493.494	8,211,056.431	2,094,056.372
			8.78%	26.56%	6.77%
High Income/VA Class 3 Shares	1,681,924.270	*	*	*	*
High Income/VA Class 4 Shares	3,393,929.904	*	*	*	*
Main Street Fund/VA Non-Service Shares	28,777,209.202	4,042,747.264	*	*	*
		14.04%
Main Street Fund/VA Service Shares	69,039,729.646	*	*	4,196,015.139	*
				6.08%
Main Street Small Cap Fund/VA Non-Service Shares	5,861,784.349	*	*	*	*
Main Street Small Cap Fund/VA Service Shares	58,804,217.156	*	*	*	*
MidCap Fund/VA Non-Service Shares	16,184,504.073	*	*	*	*
MidCap Fund/VA Service Shares	777,881.847	*	69,555.804	303,719.321	*
			8.94%	39.04%
Money Fund/VA Non-Service Shares	245,790,463.750	*	*	*	*
Strategic Bond Fund/VA Non-Service Shares	142,995,496.571	*	*	*	*
Strategic Bond Fund/VA Service Shares	620,769,163.321	*	*	*	*
Value Fund/VA Non-Service Shares	2,135.135	*	*	*	*
Value Fund/VA Service Shares	630,099.434	*	*	*	*

Oppenheimer Variable Account Funds (consisting of 11 separate Funds)	Cuna	Genworth Life and Annuity	Genworth Life Insurance Co. NY	Hartford Life & Annuity Co.	Hartford Life Insurance Co.
Balanced Fund/VA Non-Service Shares	*	2,497,393.062	*	*	*
		13.51%
Balanced Fund/VA Service Shares	*	3,959,824.991	629,967.375	*	*
		47.47%	7.55%
Capital Appreciation Fund/VA Non-Service Shares	*	*	*	*	*
		*
Capital Appreciation Fund/VA Service Shares	*	*	*	1,450,647.034	3,320,727.137
				11.85%	27.12%
Core Bond Fund/VA Non-Service Shares	*	3,580,617.210	*	*	*
		15.97%
Core Bond Fund/VA Service Shares	*	*	*	*	*
Global Securities Fund/VA Non-Service Shares	*	*	*	*	*
Global Securities Fund/VA Service Shares	*	4,814,644.914	*	6,834,789.864	13,389,792.934
		12.27%		17.42%	34.13%
Global Securities Fund/VA Class 3 shares	*	*	*	*	*
Global Securities Fund/VA Class 4 shares	*	*	*	*	*
High Income Fund/VA Non-Service Shares	*	5,024,217.513	*	*	*
		12.20%
High Income/VA Service Shares	*	*	*	*	*
High Income/VA Class 3 Shares	*	*	*	*	*
High Income/VA Class 4 Shares	*	*	*	*	*
Main Street Fund/VA Non-Service Shares	*	*	*	*	*
Main Street Fund/VA Service Shares	*	7,314,322.474	*	*	*
		10.59%
Main Street Small Cap Fund/VA Non-Service Shares	*	*	*	*	*
Main Street Small Cap Fund/VA Service Shares	*	3,629,922.475	*	4,754,032.390	12,115,771.933
		6.17%		8.08%	20.60%
MidCap Fund/VA Non-Service Shares	*	919,722.042	*	*	*
		5.68%
MidCap Fund/VA Service Shares	*	74.599.927	*	65,533.720	105,482.685
		9.59%		8.42%	13.56%
Money Fund/VA Non-Service Shares	*	*	*	*	*
Strategic Bond Fund/VA Non-Service Shares	*	*	*	*	*
Strategic Bond Fund/VA Service Shares	*	*	*	*	*
Value Fund/VA Non-Service Shares	*	*	*	*	*
Value Fund/VA Service Shares	*	*	*	124,063.336	*
				19.69%

Oppenheimer Variable Account Funds (consisting of 11 separate Funds)	ING Life Insurance and Annuity	Lincoln Benefit	Mass Mutual	Merrill Lynch	Minnesota Life
Balanced Fund/VA Non-Service Shares	*	*	6,698,508.656	1,987,215.846	*
			36.24%	10.75%
Balanced Fund/VA Service Shares	*	*	*	*	*
Capital Appreciation Fund/VA Non-Service Shares	*	*	16,552,912.500	*	*
			52.74%
Capital Appreciation Fund/VA Service Shares	*	*	*	*	*
Core Bond Fund/VA Non-Service Shares	*	*	9,220,602.049	*	*
			41.13%
Core Bond Fund/VA Service Shares	*	*	*	*	*
Global Securities Fund/VA Non-Service Shares	*	*	36,448,078.466	*	*
			62.50%
Global Securities Fund/VA Service Shares	*	*	*	*	*
Global Securities Fund/VA Class 3 shares	*	*	*	*	*
Global Securities Fund/VA Class 4 shares	*	*	*	*	*
High Income Fund/VA Non-Service Shares	*	*	23,266,833.837	*	*
			56.48%
High Income/VA Service Shares	*	*	*	*	13,450,302.757
					43.51%
High Income/VA Class 3 Shares	*	*	*	*	*
High Income/VA Class 4 Shares	*	*	*	*	*
Main Street Fund/VA Non-Service Shares	*	*	8,830,664.361	*	*
			30.69%
Main Street Fund/VA Service Shares	*	*	*	*	*
Main Street Small Cap Fund/VA Non-Service Shares	1,913,896.024	368,650.398	488,797.454	*	*
	32.65%	6.29%	8.34%
Main Street Small Cap Fund/VA Service Shares	*	3,378,209.134	*	*	*
		6.24%
MidCap Fund/VA Non-Service Shares	*	*	11,900,343.886	*	*
			73.53%
MidCap Fund/VA Service Shares	*	54.187.327	*	*	*
		6.97%
Money Fund/VA Non-Service Shares	*	*	177,491,809.610	*	*
			72.21%
Strategic Bond Fund/VA Non-Service Shares	*	*	129,874,802.239	*	*
			90.82%
Strategic Bond Fund/VA Service Shares	*	*	*	*	*
Value Fund/VA Non-Service Shares	*	2,097.488	*	*	*
		98.24%
Value Fund/VA Service Shares	*	*	*	*	*

Oppenheimer Variable Account Funds (consisting of 11 separate Funds)	Nationwide	Protective	RiverSource Life	RiverSource Life NY	SunLife Financial
Balanced Fund/VA Non-Service Shares	6,502,992.202	*	*	*	*
	35.18%
Balanced Fund/VA Service Shares	*	*	*	*	666,504.660
					7.99%
Capital Appreciation Fund/VA Non-Service Shares	10,086,664.691	*	*	*	*
	32.14%
Capital Appreciation Fund/VA Service Shares	1,600,650.551	655,245.050	1,340,738.808	*	838,203.539
	13.07%	5.35%	10.95%		6.85%
Core Bond Fund/VA Non-Service Shares	8,095,203.592	*	*	*	*
	36.11%
Core Bond Fund/VA Service Shares	*	*	*	*	*
Global Securities Fund/VA Non-Service Shares	13,454,916.490	*	*	*	*
	23.07%
Global Securities Fund/VA Service Shares	*	*	4,783,822.805	*	*
			12.19%
Global Securities Fund/VA Class 3 shares	8,625,948.200	*	*	*	*
	100.00%
Global Securities Fund/VA Class 4 shares	3,129,295.912	*	*	*	*
	100.00%
High Income Fund/VA Non-Service Shares	*	*	*	*	*
High Income/VA Service Shares	2,114,220.992	*	*	*	*
	6.84%
High Income/VA Class 3 Shares	1,681,924.270	*	*	*	*
	100%
High Income/VA Class 4 Shares	3,393,929.904	*	*	*	*
	100%
Main Street Fund/VA Non-Service Shares	10,917,760.302	1,491,283.339	*	*	*
	37.94%	5.18%
Main Street Fund/VA Service Shares	15,916,712.053	*	*	*	36,400,243.140
	23.05%				52.72%
Main Street Small Cap Fund/VA Non-Service Shares	2,128,110.043	*	*	*	*
	36.30%
Main Street Small Cap Fund/VA Service Shares	15,366,893.646	*	6,426,628.084	*	*
	26.13%		10.93%
MidCap Fund/VA Non-Service Shares	2,743,572.546	*	*	*	*
	16.95%
MidCap Fund/VA Service Shares	*	*	*	*	*
Money Fund/VA Non-Service Shares	*	56,873,097.780	*	*	*
		23.14%
Strategic Bond Fund/VA Non-Service Shares	*	8,976,715.370	*	*	*
		6.28%
Strategic Bond Fund/VA Service Shares	*	*	543,452,363.602	*	*
			87.54%
Value Fund/VA Non-Service Shares	*	*	*	*	*
Value Fund/VA Service Shares	*	*	379,082.369	113,526.837	*
			60.16%	18.02%

Oppenheimer Variable Account Funds (consisting of 11 separate Funds)	Security Benefit Life Insurance Co.	Pruco Life Arizona	Phoenix
Balanced Fund/VA Non-Service Shares	*	*	*
Balanced Fund/VA Service Shares	*	*	*
Capital Appreciation Fund/VA Non-Service Shares	*	*	*
Capital Appreciation Fund/VA Service Shares	*	*	*
Core Bond Fund/VA Non-Service Shares	*	*	*
Core Bond Fund/VA Service Shares	1,571,158.056	*	*
	20.19%
Global Securities Fund/VA Non-Service Shares	*	*	*
Global Securities Fund/VA Service Shares	*	*	*
Global Securities Fund/VA Class 3 shares	*	*	*
Global Securities Fund/VA Class 4 shares	*	*	*
High Income Fund/VA Non-Service Shares	*	*	*
High Income/VA Service Shares	*	*	*
High Income/VA Class 3 Shares	*	*	*
High Income/VA Class 4 Shares	*	*	*
Main Street Fund/VA Non-Service Shares	*	*	*
Main Street Fund/VA Service Shares	*	*	*
Main Street Small Cap Fund/VA Non-Service Shares	*	*	*
Main Street Small Cap Fund/VA Service Shares	*	*	3,452,594.491
			5.87%
MidCap Fund/VA Non-Service Shares	*	*	*
MidCap Fund/VA Service Shares	*	48,634.200	*
		6.25%
Money Fund/VA Non-Service Shares	*	*	*
Strategic Bond Fund/VA Non-Service Shares	*	*	*
Strategic Bond Fund/VA Service Shares	*	*	*
Value Fund/VA Non-Service Shares	*	*	*
Value Fund/VA Service Shares	*	*	*

Oppenheimer Variable Account Funds

Internet Website:

http://www.oppenheimerfunds.com

Investment Advisor

OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street, 11^th Floor
New York, New York 10281-1008

Distributor

OppenheimerFunds Distributor, Inc.
Two World Financial Center
225 Liberty Street, 11^th Floor
New York, New York 10281-1008

Transfer Agent

OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1.800.981.2871

Custodian Bank

     JPMorgan Chase Bank
     4 Chase Metro Tech Center

     Brooklyn, New York 11245

Independent Registered Public Accounting Firm

     KPMG LLP

707 Seventeenth Street

Denver, Colorado 80202

Counsel to the Independent Trustees

K&L Gates LLP

70 West Madison Street, Suite 3100
Chicago, Illinois 60602

1234

PXOVAF.001.0409

OPPENHEIMER VARIABLE ACCOUNT FUNDS

FORM N-1A

PART C

OTHER INFORMATION

Item 23. Exhibits

(a)      Seventeenth Amended and Restated Declaration of Trust dated 4/30/06: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(b)     Amended By-Laws dated 10/24/00: Previously filed with Registrant’s Post-Effective Amendment No. 36 (4/17/01), and incorporated herein by reference.

(c)     (i)     Oppenheimer Aggressive Growth Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(ii)      Oppenheimer Aggressive Growth Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(iii)      Oppenheimer Balanced Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 45 (04/28/05), and incorporated herein by reference.

(iv)      Oppenheimer Balanced Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 45 (04/28/05), and incorporated herein by reference.

(v)      Oppenheimer Capital Appreciation Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(vi)      Oppenheimer Capital Appreciation Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(vii)      Oppenheimer Core Bond Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 45 (04/28/05), and incorporated herein by reference.

(viii)      Oppenheimer Core Bond Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 45 (04/28/05), and incorporated herein by reference.

(ix)      Oppenheimer Global Securities Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(x)      Oppenheimer Global Securities Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xi)      Oppenheimer Global Securities Fund/VA Class 3 Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 40 (2/11/03), and incorporated herein by reference.

(xii)      Oppenheimer Global Securities Fund/VA Class 4 Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 42 (2/11/04), and incorporated herein by reference.

(xiii)      Oppenheimer High Income Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xiv)      Oppenheimer High Income Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xv)      Oppenheimer Main Street Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 41 (4/28/03) and incorporated herein by reference.

(xvi)      Oppenheimer Main Street Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 41 (4/28/03) and incorporated herein by reference.

(xvii)      Oppenheimer Main Street Small Cap Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xviii)      Oppenheimer Main Street Small Cap Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xix)      Oppenheimer Money Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xx)      Oppenheimer Money Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xxi)      Oppenheimer Strategic Bond Fund/VA Non-Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xxii)      Oppenheimer Strategic Bond Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(xxiii)      Oppenheimer Value Fund/VA Service Class Specimen Share Certificate: Previously filed with Registrant’s Post-Effective Amendment No. 38 (10/08/02), and incorporated herein by reference.

(d)     (i)     Amended and Restated Investment Advisory Agreement for Oppenheimer Aggressive Growth Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(ii)     Amended and Restated Investment Advisory Agreement for Oppenheimer Balanced Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(iii)     Amended and Restated Investment Advisory Agreement for Oppenheimer Bond Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(iv)     Amendment No. 1 to the Amended and Restated investment Advisory Agreement for Oppenheimer Core Bond Fund/VA dated 4/10/07: Previously filed with Registrant’s Post-Effective Amendment No. 52 (4/24/07), and incorporated herein by reference.

(v)     Amended and Restated Investment Advisory Agreement for Oppenheimer Capital Appreciation Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(vi)     Amended and Restated Investment Advisory Agreement for Oppenheimer Global Securities Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(vii)     Amended and Restated Investment Advisory Agreement for Oppenheimer High Income Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(viii)     Amended and Restated Investment Advisory Agreement for Oppenheimer Main Street Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(ix)     Amended and Restated Investment Advisory Agreement for Oppenheimer Main Street Small Cap Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(x)     Amended and Restated Investment Advisory Agreement for Oppenheimer Money Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(xi)     Amended and Restated Investment Advisory Agreement for Oppenheimer Strategic Bond Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(xii)     Amended and Restated Investment Advisory Agreement for Oppenheimer Value Fund/VA dated 1/1/05: Previously filed with Registrant’s Post-Effective Amendment No. 44 (2/25/05), and incorporated herein by reference.

(e)     (i)     General Distributors Agreement for Service shares of Oppenheimer Aggressive Growth Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(ii)      General Distributors Agreement for Service shares of Oppenheimer Bond Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(iii)      General Distributors Agreement for Service shares of Oppenheimer Capital Appreciation Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(iv)      General Distributors Agreement for Service shares of Oppenheimer Global Securities Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(v)      General Distributors Agreement for Service shares of Oppenheimer High Income Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(vi)      General Distributors Agreement for Service shares of Oppenheimer Main Street Growth & Income Fund/VA dated 5/1/98: Filed with Post-Effective Amendment 32 (4/29/98), and incorporated herein by reference.

(vii)      General Distributors Agreement for Service shares of Oppenheimer Main Street Small Cap Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(viii)      General Distributors Agreement for Service shares of Oppenheimer Money Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(ix)      General Distributors Agreement for Service shares of Oppenheimer Multiple Strategies Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(x)      General Distributors Agreement for Service shares of Oppenheimer Strategic Bond Fund/VA dated 5/1/98: Filed with Post-Effective Amendment No. 32 (4/29/98), and incorporated herein by reference.

(xi)      General Distributors Agreement for Service shares of Oppenheimer Value Fund/VA dated 10/22/02: Filed with Registrant’s Post-Effective Amendment No. 39 (12/20/02) and incorporated herein by reference.

(xii)      Form of Participation Agreement: Previously filed with Registrant’s Post-Effective Amendment No. 52 (4/24/07), and incorporated herein by reference.

(f)     Form of Oppenheimer Funds Compensation Deferral Plan, as Amended and Restated Effective January 1, 2008: Previously filed with Post-Effective Amendment No. 18 to the Registration Statement of Oppenheimer International Bond Fund (Reg. No. 33-58383), (12/20/07), and incorporated herein by reference.

(g)      Global Custody Agreement dated August 16, 2002: Previously filed with Post-Effective Amendment No. 51 to the Registration Statement of Oppenheimer Capital Appreciation Fund (Reg. No. 2-69719), (10/23/06), and incorporated herein by reference.

(h)     Not applicable.
 
(i)     (i)     Opinion and Consent of Counsel dated 3/14/85: Previously filed with Registrant’s Pre-Effective Amendment No. 1 (3/20/85), refiled with Registrant’s Post-Effective Amendment No. 27 (4/27/95) pursuant to Item 102 of Regulation S-T, and incorporated herein by reference.

(ii)      Opinion and Consent of Counsel dated 4/28/86: Previously filed with Registrant’s Post-Effective Amendment No. 5 (8/12/86), refiled with Registrant’s Post-Effective Amendment No. 27 (4/27/95) pursuant to Item 102 of Regulation S-T, and incorporated herein by reference.

(iii)      Opinion and Consent of Counsel dated 7/31/86: Previously filed with Registrant’s Post-Effective Amendment No. 5 (8/12/86), refiled with Registrant’s Post-Effective Amendment No. 27 (4/27/95) pursuant to Item 102 of Regulation S-T, and incorporated herein by reference.

(iv)      Opinion and Consent of Counsel dated 1/21/87: Previously filed with Registrant’s Post-Effective Amendment No. 7 (2/6/87), refiled with Registrant’s Post-Effective Amendment No. 27 (4/27/95), pursuant to Item 102 of Regulation S-T, and incorporated herein by reference.

(v)      Opinion and Consent of Counsel dated July 31, 1990: Previously filed with Registrant’s Post-Effective Amendment No. 15 (9/19/90), refiled with Registrant’s Post-Effective Amendment No. 27 (4/27/95) pursuant to Item 102 of Regulation S-T, and incorporated herein by reference.

(vi)      Opinion and Consent of Counsel dated April 23, 1993: Previously filed with Registrant’s Post-Effective Amendment No. 22 (4/30/93), refiled with Registrant’s Post-Effective Amendment No. 27 (4/27/95) pursuant to Item 102 of Regulation S-T, and incorporated herein by reference.

(vii)      Opinion and Consent of Counsel dated April 18, 1995: Filed with Post-Effective Amendment No. 29 (4/22/96), and incorporated herein by reference.

(viii)      Opinion and Consent of Counsel dated May 1, 1998: Previously filed with Registrant’s Post-Effective Amendment No. 35 (4/26/00), and incorporated herein by reference.

(ix)      Opinion and Consent of Counsel dated 12/20/02: Previously filed with Registrant’s Post-Effective Amendment No. 45 (04/28/05), and incorporated herein by reference.

(j)     Independent Registered Public Accounting Firm’s Consent: Filed herewith.

(k)     Not applicable.
 

(l)     Investment Letter dated 3/14/85 from Monarch Life Insurance Company to Registrant: Previously filed with Registrant’s Post-Effective Amendment No. 37 (4/24/02), and incorporated herein by reference.

(m)     (i)     Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Aggressive Growth Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(ii)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Balanced Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(iii)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Capital Appreciation Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(iv)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Core Bond Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(v)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Global Securities Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(vi)      Amended and Restated Service Plan and Agreement for Class 4 shares of Oppenheimer Global Securities Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(vii)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer High Income Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(viii)      Amended and Restated Service Plan and Agreement for Class 4 shares of Oppenheimer High Income Fund/VA dated 4/30/06: Previously filed with Registrant’s Post-Effective Amendment No. 52 (4/24/07), and incorporated herein by reference.

(ix)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Main Street Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(x)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Main Street Small Cap Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(xi)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Money Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(xii)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Strategic Bond Fund/VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(xiii)      Amended and Restated Distribution and Service Plan and Agreement for Service shares of Oppenheimer Value Fund /VA dated 10/28/05: Previously filed with Registrant’s Post-Effective Amendment No. 48 (04/28/06), and incorporated herein by reference.

(n)     Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through 10/24/06:  Previously filed with Post-Effective Amendment No. 62 to the Registration Statement of Oppenheimer Capital Income Fund (Reg. No. 2-33043), 11/21/06, and incorporated herein by reference.

(o)     Power of Attorney dated August 20, 2008 for all Trustees/Directors and

Officers: Previously filed with the Pre-Effective Amendment No. 1 to the Registration Statement of Oppenheimer Target Distribution Fund (Reg. No. 333-153032), (10/29/08), and incorporated herein by reference

(p)     Amended and Restated Code of Ethics of the Oppenheimer Funds dated August 30, 2007 under Rule 17j-1 of the Investment Company Act of 1940: Previously filed with the Initial Registration Statement of Oppenheimer Portfolio Series Fixed Income Investor Fund (Reg. No. 333-146105), (09/14/07), and incorporated herein by reference.

Item 24. - Persons Controlled by or Under Common Control with the Fund

None.
 

Item 25. - Indemnification

Reference is made to the provisions of Article Seven of Registrant's Amended and Restated Declaration of Trust filed as Exhibit 23(a) to this Registration Statement, and incorporated herein by reference.
 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of Registrant pursuant to the foregoing provisions or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a trustee, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

Item 26. - Business and Other Connections of the Investment Adviser

(a)     OppenheimerFunds, Inc. is the investment adviser of the Registrant; it and certain subsidiaries and affiliates act in the same capacity to other investment companies, including without limitation those described in Parts A and B hereof and listed in Item 26(b) below.
 
(b)     There is set forth below information as to any other business, profession, vocation or employment of a substantial nature in which each officer and director of OppenheimerFunds, Inc. is, or at any time during the past two fiscal years has been, engaged for his/her own account or in the capacity of director, officer, employee, partner or trustee.

Name and Current Position with OppenheimerFunds, Inc.	Other Business and Connections During the Past Two Years
Timothy L. Abbuhl, Vice President	Treasurer of Centennial Asset Management Corporation; Vice President and Assistant Treasurer of OppenheimerFunds Distributor, Inc.
Patrick Adams Vice President	None
Robert Agan, Senior Vice President	Senior Vice President of Shareholder Financial Services, Inc. and Shareholders Services, Inc.; Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and OFI Private Investments Inc.
Carl Algermissen, Vice President & Associate Counsel	Assistant Secretary of Centennial Asset Management Corporation.
Michael Amato, Vice President	None
Nicole Andersen, Assistant Vice President	None
Janette Aprilante, Vice President & Secretary	Secretary (since December 2001) of: Centennial Asset Management Corporation, OppenheimerFunds Distributor, Inc., HarbourView Asset Management Corporation (since June 2003), Oppenheimer Real Asset Management, Inc., Shareholder Financial Services, Inc., Shareholder Services, Inc., Trinity Investment Management Corporation (since January 2005), OppenheimerFunds Legacy Program, OFI Private Investments Inc. (since June 2003) and OFI Institutional Asset Management, Inc. (since June 2003). Assistant Secretary of OFI Trust Company (since December 2001).
Dmitri Artemiev Assistant Vice President	Formerly (until January 2007) Analyst/Developer at Fidelity Investments.
Hany S. Ayad, Vice President	None
Paul Aynsley, Vice President	Formerly Vice President at Kepler Equities (December 2006 – February 2008)
James F. Bailey, Senior Vice President	Senior Vice President of Shareholder Services, Inc. (since March 2006).
Robert Baker, Vice President	None
John Michael Banta, Assistant Vice President	None
Michael Barnes, Assistant Vice President	None
Adam Bass, Assistant Vice President	None
Kevin Baum, Vice President	None
Jeff Baumgartner, Vice President	Vice President of HarbourView Asset Management Corporation.
Marc Baylin, Vice President	Vice President of OFI Institutional Asset Management, Inc.
Todd Becerra, Assistant Vice President	None
Kathleen Beichert, Senior Vice President	Vice President of OppenheimerFunds Distributor, Inc.
Gerald B. Bellamy, Vice President	Vice President (Sales Manager of the International Division) of OFI Institutional Asset Management, Inc.
Emanuele Bergagnine, Assistant Vice President	Assistant Vice President of OFI Institutional Asset Management, Inc.
Robert Bertucci, Assistant Vice President: Rochester Division	None
Rajeev Bhaman, Senior Vice President	Vice President of OFI Institutional Asset Management, Inc.
Craig Billings, Vice President	None
Mark Binning, Assistant Vice President	None
Julie Blanchard, Assistant Vice President	Formerly Fund Accounting Manager at OppenheimerFunds, Inc. (April 2006 – February 2008).
Beth Bleimehl, Assistant Vice President	None
Lisa I. Bloomberg, Vice President & Deputy General Counsel	Assistant Secretary of Oppenheimer Real Asset Management, Inc.
Veronika Boesch, Vice President	None
Chad Boll, Vice President	None
Antulio N. Bomfim, Vice President	None
Michelle Borre Massick, Vice President	None
Lori E. Bostrom, Vice President & Deputy General Counsel	Assistant Secretary of OppenheimerFunds Legacy Program.
David J. Bowers Assistant Vice President	Formerly (until July 2007) Analyst at Evergreen Investments.
John Boydell, Vice President	None
Richard Britton, Vice President	None
Garrett C. Broadrup, Vice President & Assistant Counsel	None
Michael Bromberg, Assistant Vice President	None
Holly Broussard, Vice President	None
Roger Buckley, Assistant Vice President	Formerly Manager in Finance (May 2006 – February 2008) at OppenheimerFunds, Inc.
Carla Buffulin, Assistant Vice President	None
Stephanie Bullington, Assistant Vice President	None
Paul Burke, Vice President	None
Mark Burns, Vice President	None
JoAnne Butler, Assistant Vice President	None
Christine Calandrella, Assistant Vice President	Formerly Director of Empower Network (March 2007 – September 2007).
Dale Campbell. Assistant Vice President
Debra Casey, Vice President	None
Lisa Chaffee, Vice President	None
Ronald Chibnik, Vice President	None
Patrick Sheng Chu, Assistant Vice President	None
Brett Clark, Vice President	None
Jennifer Clark, Assistant Vice President	Formerly Manager at OppenheimerFunds, Inc. (February 2006 – February 2008). Assistant Vice President at Shareholder Financial Services, Inc., Shareholder Services, Inc., and OFI Private Investments Inc.
H.C. Digby Clements, Senior Vice President: Rochester Division	None
Thomas Closs, Assistant Vice President	None
David Cole, Assistant Vice President	Formerly Manager at OppenheimerFunds, Inc (May 2006 – January 2008).
Eric Compton, Vice President	None
Gerald James Concepcion, Assistant Vice President	None
Susan Cornwell, Senior Vice President	Senior Vice President of Shareholder Financial Services, Inc. and Shareholder Services, Inc.; Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and OppenheimerFunds Legacy Program.
Cheryl Corrigan, Assistant Vice President	None
Belinda J. Cosper, Assistant Vice President	None
Scott Cottier, Vice President: Rochester Division	None
Geoffrey Craddock Senior Vice President	Formerly Senior Vice President and Head of Market Risk Management for CIBC.
Terry Crady, Assistant Vice President	Formerly IT Development Manager at OppenheimerFunds, Inc.
George Curry, Vice President	Vice President of OppenheimerFunds Distributor, Inc.
Kevin Dachille, Vice President	None
Rushan Dagli, Vice President	Vice President of OFI Private Investments Inc., Shareholder Financial Services, Inc. and Shareholder Services, Inc.
John Damian, Senior Vice President	None
Jason Davis, Assistant Vice President	Formerly Manager at OppenheimerFunds, Inc.
Robert Dawson, Assistant Vice President	None
John Delano, Vice President	None
Kendra Delisa, Assistant Vice President	None
Damaris De Los Santos, Assistant Vice President	Formerly Senior Account Executive (July 2003 – February 2008).
Richard Demarco, Assistant Vice President	None
Craig P. Dinsell, Executive Vice President	None
Randall C. Dishmon, Vice President	None
Rebecca K. Dolan, Vice President	None
Steven D. Dombrower, Vice President	Senior Vice President of OFI Private Investments Inc.; Vice President of OppenheimerFunds Distributor, Inc.
Sara Donahue, Assistant Vice President	None
Alicia Dopico, Assistant Vice President	Formerly (until August 2007) Manager at OppenheimerFunds, Inc.
Thomas Doyle, Assistant Vice President	None
Bruce C. Dunbar, Senior Vice President	None
Brian Dvorak, Vice President	None
Richard Edmiston, Vice President	None
Taylor Edwards, Vice President & Assistant Counsel	None
Venkat Eleswarapu, Vice President	None
Christopher Emanuel, Vice President	None
Daniel R. Engstrom, Vice President	None
James Robert Erven, Assistant Vice President	None
George R. Evans, Senior Vice President & Director of International Equities	None
Edward N. Everett, Vice President	None
Kathy Faber, Assistant Vice President	None
David Falicia, Assistant Vice President	Assistant Secretary (as of July 2004) of HarbourView Asset Management Corporation.
Rachel Fanopoulos, Assistant Vice President	Formerly Manager (until August 2007) at OppenheimerFunds, Inc.
Matthew Farkas, Vice President and Assistant Counsel	None
Kristie Feinberg, Vice President and Assistant Treasurer	Assistant Treasurer of Oppenheimer Acquisition Corp., Centennial Asset Management Corp., OFI Institutional Asset Management Inc. and OFI Institutional Asset Management; Treasurer of OppenheimerFunds Legacy Program, Oppenheimer Real Asset Management, Inc.
William Ferguson, Assistant Vice President	None
Emmanuel Ferreira, Vice President	None
Ronald H. Fielding, Senior Vice President; Chairman of the Rochester Division	Vice President of OppenheimerFunds Distributor, Inc.; Director of ICI Mutual Insurance Company; Governor of St. John’s College; Chairman of the Board of Directors of International Museum of Photography at George Eastman House.
Steven Fling, Assistant Vice President	None
David Foxhoven, Senior Vice President	Assistant Vice President of OppenheimerFunds Legacy Program; Vice President of HarbourView Asset Management Corporation.
Colleen M. Franca, Vice President	None
Dominic Freud, Vice President	None
Hazem Gamal, Vice President	None
Charles Gapay, Assistant Vice President	None
Seth Gelman, Vice President	None
Timothy Gerlach, Assistant Vice President	None
Alan C. Gilston, Vice President	None
Jacqueline Girvin-Harkins, Assistant Vice President	None
William F. Glavin, Jr., Chief Executive Officer	Formerly Executive Vice President and co-Chief Operating Officer of MassMutual Financial Group.
Jill E. Glazerman, Senior Vice President	None
Kevin Glenn, Assistant Vice President	Formerly Tax Manager at OppenheimerFunds, Inc. (December 2006 – February 2008).
Raquel Granahan, Senior Vice President	Senior Vice President of OFI Private Investments Inc.; Vice President of OppenheimerFunds Distributor, Inc., and OppenheimerFunds Legacy Program.
Robert B. Grill, Senior Vice President	None
Marilyn Hall, Vice President	None
Kelly Haney, Assistant Vice President	None
Steve Hauenstein, Assistant Vice President	None
Thomas B. Hayes, Vice President	None
Bradley Hebert, Assistant Vice President	Manager at OppenheimerFunds, Inc. (October 2004 – February 2008).
Heidi Heikenfeld, Assistant Vice President	None
Annika Helgerson, Assistant Vice President	None
Daniel Herrmann, Vice President	Vice President of OFI Private Investments Inc.
Benjamin Hetrick, Assistant Vice President	Manager at OppenheimerFunds, Inc (May 2006 – December 2007).
Dennis Hess, Vice President	None
Joseph Higgins, Vice President	Vice President of OFI Institutional Asset Management, Inc.
Dorothy F. Hirshman, Vice President	None
Daniel Hoelscher, Assistant Vice President	None
Eivind Holte, Vice President	Formerly Vice President at U.S. Trust (June 2005 – October 2007)
Craig Holloway Assistant Vice President	None
Lucienne Howell, Vice President	None
Brian Hourihan, Vice President & Deputy General Counsel	Assistant Secretary of Oppenheimer Real Asset Management, Inc., HarbourView Asset Management Corporation, OFI Institutional Asset Management, Inc. (since April 2006) and Trinity Investment Management Corporation.
Edward Hrybenko, Vice President	Vice President of OppenheimerFunds Distributor, Inc.
Jason Hubersberger, Vice President	None
Kevin Andrew Huddleston, Assistant Vice President	None
Scott T. Huebl, Vice President	Assistant Vice President of OppenheimerFunds Legacy Program.
Douglas Huffman, Assistant Vice President	None
Margaret Hui, Vice President	None
Dana Hunter, Assistant Vice President	None
John Huttlin, Vice President	Senior Vice President (Director of the International Division) (since January 2004) of OFI Institutional Asset Management, Inc.; Director (since June 2003) of OppenheimerFunds International Distributor Limited.
James G. Hyland, Assistant Vice President	None
Kelly Bridget Ireland, Vice President	None
Kathleen T. Ives, Vice President, Deputy General Counsel & Assistant Secretary	Vice President and Assistant Secretary of OppenheimerFunds Distributor, Inc. and Shareholder Services, Inc.; Assistant Secretary of Centennial Asset Management Corporation, OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc.
Frank V. Jennings, Senior Vice President	None
Lisa Kadehjian, Assistant Vice President	None
Charles Kandilis, Assistant Vice President	None
Rezo Kanovich, Assistant Vice President	None
Amee Kantesaria, Assistant Vice President and Assistant Counsel	None
Thomas W. Keffer, Senior Vice President	Senior Vice President of OppenheimerFunds Distributor, Inc.
James Kennedy, Senior Vice President	None
Michael Keogh, Vice President	Vice President of OppenheimerFunds Distributor, Inc.
John Kiernan, Vice President & Marketing Compliance Manager	None
Audrey Kiszla, Vice President	None
Richard Knott, Executive Vice President	President and Director of OppenheimerFunds Distributor, Inc.; Executive Vice President of OFI Private Investments Inc.; Executive Vice President & Director of Centennial Asset Management Corporation.
Daniel Kohn, Vice President	None
Samuel Koren, Vice President and Deputy General Counsel
Martin S. Korn, Senior Vice President	None
Tatyana Kosheleva, Assistant Vice President	None
Michael Kotlartz, Vice President	None
Brian Kramer, Vice President	None
S. Arthur Krause, Assistant Vice President	None.
Alexander Kurinets, Assistant Vice President	None
Gloria LaFond, Assistant Vice President	None
Lisa Lamentino, Vice President	None
Tracey Lange, Vice President	Vice President of OppenheimerFunds Distributor, Inc. and OFI Private Investments Inc.
Jeffrey P. Lagarce, Senior Vice President	President of OFI Institutional Asset Management, Inc. as of January 2005.
John Latino, Vice President	None
Gayle Leavitt, Assistant Vice President	None
Christopher M. Leavy, Senior Vice President	Senior Vice President of OFI Private Investments Inc., OFI Institutional Asset Management, Inc., and Trinity Investment Management Corporation
Randy Legg, Vice President & Associate Counsel	None
Michael S. Levine, Vice President	None
Brian Levitt, Vice President	None
Gang Li, Vice President	None
Shanquan Li, Vice President	None
Julie A. Libby, Senior Vice President	Senior Vice President and Chief Operating Officer of OFI Private Investments Inc.
Daniel Lifshey, Assistant Vice President	None
Mitchell J. Lindauer, Vice President & Assistant General Counsel	None
Bill Linden, Assistant Vice President	None
Malissa B. Lischin, Vice President	Assistant Vice President of OppenheimerFunds Distributor, Inc.
Justin Livengood, Vice President	None
Christina Loftus, Vice President	None
David P. Lolli, Assistant Vice President	None
Daniel G. Loughran Senior Vice President: Rochester Division	None
Patricia Lovett, Senior Vice President	Vice President of Shareholder Financial Services, Inc. and Senior Vice President of Shareholder Services, Inc.
Misha Lozovik, Vice President	None
Dongyan Ma, Assistant Vice President	None
Matthew Maley, Assistant Vice President	Formerly Operations Manager at Bear Stearns (June 2005 – February 2008).
Daniel Martin, Assistant Vice President	None
Jerry Mandzij, Vice President	None
William T. Mazzafro, Vice President	None
Trudi McCanna, Vice President	None
Neil McCarthy, Vice President	None
Elizabeth McCormack, Vice President	Vice President and Assistant Secretary of HarbourView Asset Management Corporation.
John McCullough, Vice President	None
Joseph McDonnell, Vice President	None
Joseph McGovern, Vice President	None
Charles L. McKenzie, Senior Vice President	Chairman of the Board, Director, Chief Executive Officer and President of OFI Trust Company; Chairman, Chief Executive Officer, Chief Investment Officer and Director of OFI Institutional Asset Management, Inc.; Chief Executive Officer, President, Senior Managing Director and Director of HarbourView Asset Management Corporation; Chairman, President and Director of Trinity Investment Management Corporation and Vice President of Oppenheimer Real Asset Management, Inc.
William McNamara, Assistant Vice President	None
Mary McNamee, Vice President	None
Michael Medev, Assistant Vice President	None
Krishna Memani, Senior Vice President	Formerly Managing Director and Head of the U.S. and European Credit Analyst Team at Deutsche Bank Securities (June 2006 through January 2009).
Jay Mewhirter, Vice President	None
Andrew J. Mika, Senior Vice President	None
Jan Miller, Assistant Vice President	None
Scott Miller, Vice President	Formerly Assistant Vice President at AXA Distributors, LLC (July 2005 – February 2008).
Rejeev Mohammed, Assistant Vice President	None
Sarah Morrison, Assistant Vice President	None
Jill Mulcahy, Vice President: Rochester Division	None
John V. Murphy, Chairman & Director	Chief Executive Officer of OppenheimerFunds, Inc. (from June 2001 until December 2008); President and Management Director of Oppenheimer Acquisition Corp.; President and Director of Oppenheimer Real Asset Management, Inc.; Chairman and Director of Shareholder Services, Inc. and Shareholder Financial Services, Inc.; Director of OppenheimerFunds Distributor, Inc., OFI Institutional Asset Management, Inc., Trinity Investment Management Corporation, Tremont Group Holdings, Inc., HarbourView Asset Management Corporation and OFI Private Investments Inc.; Executive Vice President of Massachusetts Mutual Life Insurance Company; Director of DLB Acquisition Corporation; a member of the Investment Company Institute’s Board of Governors.
Suzanne Murphy, Vice President	Vice President of OFI Private Investments Inc.
Thomas J. Murray, Vice President	None
Christina Nasta, Vice President	Vice President of OppenheimerFunds Distributor, Inc.
Paul Newman, Assistant Vice President	None
William Norman, Assistant Vice President	None
James B. O’Connell, Assistant Vice President	None
Matthew O’Donnell, Vice President	None
Lisa Ogren, Assistant Vice President	Formerly Manager at OppenheimerFunds, Inc.
Tony Oh, Assistant Vice President	None
John J. Okray, Vice President & Assistant Counsel	None
Kristina Olson, Vice President	None
Lerae A. Palumbo, Assistant Vice President	None
David P. Pellegrino, Senior Vice President	None
Robert H. Pemble, Vice President	None
Lori L. Penna, Vice President	None
Brian Petersen, Vice President	Assistant Treasurer of OppenheimerFunds Legacy Program.
Marmeline Petion-Midy, Assistant Vice President	None
David Pfeffer, Senior Vice President, Chief Financial Officer & Treasurer	Treasurer of Oppenheimer Acquisition Corp.; Senior Vice President of HarbourView Asset Management Corporation since February 2004.
James F. Phillips, Senior Vice President	None
Gary Pilc, Vice President	None
Jeaneen Pisarra, Vice President	None
Christine Polak, Vice President	None
Sergei Polevikov, Assistant Vice President	None
Jeffrey Portnoy, Assistant Vice President	None
David Preuss, Assistant Vice President	None
Ellen Puckett, Assistant Vice President	None
Jodi Pullman, Assistant Vice President	Formerly Product Manager at OppenheimerFunds, Inc. (January 2007 – February 2008).
Paul Quarles, Assistant Vice President	None
Michael E. Quinn, Vice President	None
Julie S. Radtke, Vice President	None
Timothy Raeke, Assistant Vice President	Formerly (as of July 2007) Vice President at MFS Investment Management.
Norma J. Rapini, Assistant Vice President: Rochester Division	None
Corry E. Read, Assistant Vice President	None
Marc Reinganum, Vice President	None
Jill Reiter, Assistant Vice President	None
Jason Reuter, Assistant Vice President	Formerly Manager at OppenheimerFunds, Inc. (February 2006 – February 2008).
Eric Rhodes, Assistant Vice President	None
Maria Ribeiro De Castro, Vice President	None
Grace Roberts, Assistant Vice President	None
David Robertson, Senior Vice President	Senior Vice President of OppenheimerFunds Distributor, Inc.; President and Director of Centennial Asset Management Corporation.
Robert Robis, Vice President	None
Antoinette Rodriguez, Vice President	None
Lucille Rodriguez, Assistant Vice President	None
Stacey Roode, Senior Vice President	None
Jeffrey S. Rosen, Vice President	None
Richard Royce, Vice President	None
Erica Rualo, Assistant Vice President	None
Adrienne Ruffle, Vice President & Assistant Counsel	Assistant Secretary of OppenheimerFunds Legacy Program.
Kim Russomanno, Assistant Vice President	None
Gerald Rutledge, Vice President	None
Julie Anne Ryan, Vice President	None
Timothy Ryan, Vice President	None
Matthew Torpey, Assistant Vice President	None
Rohit Sah, Vice President	None
Gary Salerno, Assistant Vice President	Formerly (as of May 2007) Separate Account Business Liaison at OppenheimerFunds, Inc.
Valerie Sanders, Vice President	None
Kurt Savallo, Assistant Vice President	Formerly Senior Business Analyst at OppenheimerFunds, Inc.
Mary Beth Schellhorn, Assistant Vice President	None
Ellen P. Schoenfeld, Vice President	None
Kathleen Schmitz, Assistant Vice President	Assistant Vice President of HarbourView Asset Management Corporation. Formerly Fund Accounting Manager at OppenheimerFunds, Inc. (November 2004 – February 2008).
Patrick Schneider, Assistant Vice President	None
Scott A. Schwegel, Assistant Vice President	None
Allan P. Sedmak, Assistant Vice President	None
Jennifer L. Sexton, Vice President	Senior Vice President of OFI Private Investments Inc.
Asutosh Shah, Vice President	None
Kamal Shah, Vice President	None
Navin Sharma, Vice President	None
Tammy Sheffer, Vice President	None
Mary Dugan Sheridan, Vice President	None
Nicholas Sherwood, Assistant Vice President	Formerly Manager at OppenheimerFunds, Inc. (February 2006 – February 2008).
David C. Sitgreaves, Assistant Vice President	None
Michael Skatrud, Assistant Vice President	Formerly (as of March 2007) Corporate Bond Analyst at Putnam Investments.
Kevin Smith, Vice President	None
Paul Snogren Assistant Vice President	None
Louis Sortino, Vice President: Rochester Division	None
Keith J. Spencer, Senior Vice President	None
Marco Antonio Spinar, Assistant Vice President	None
Alice Stein, Vice President & Assistant Counsel	Director and Vice President at Morgan Stanley Investment Management from (2004 – 2008).
Brett Stein, Vice President	None
Richard A. Stein, Vice President: Rochester Division	None
Arthur P. Steinmetz, Senior Vice President	Senior Vice President of HarbourView Asset Management Corporation; Vice President of OFI Institutional Asset Management, Inc.
Jennifer Stevens, Vice President	None
Benjamin Stewart, Assistant Vice President	None
Peter Strzalkowski, Vice President	Vice President of HarbourView Asset Management, Inc. Formerly (as of August 2007). Founder/Managing Partner at Vector Capital Management.
Agata Stzrelichowski, Assistant Vice President
Michael Sussman, Vice President	Vice President of OppenheimerFunds Distributor, Inc.
Brian C. Szilagyi, Assistant Vice President	None
Vincent Toner, Vice President	None
Melinda Trujillo, Vice President	None
Leonid Tsvayg, Assistant Vice President	None
Keith Tucker, Vice President	None
Angela Uttaro, Assistant Vice President: Rochester Division	None
Mark S. Vandehey, Senior Vice President & Chief Compliance Officer	Vice President and Chief Compliance Officer of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and Shareholder Services, Inc.; Chief Compliance Officer of HarbourView Asset Management Corporation, Oppenheimer Real Asset Management, Inc., Shareholder Financial Services, Inc., Trinity Investment Management Corporation, OppenheimerFunds Legacy Program, OFI Private Investments Inc. and OFI Trust Company and OFI Institutional Asset Management, Inc.
Maureen Van Norstrand, Vice President	None
Nancy Vann, Vice President & Associate Counsel	None
Rene Vecka, Assistant Vice President: Rochester Division	None
Elaine Villas-Obusan, Assistant Vice President	None
Ryan Virag, Assistant Vice President	None
Jake Vogelaar, Assistant Vice President	None
Phillip F. Vottiero, Vice President	None
Mark Wachter, Vice President	Formerly Manager at OppenheimerFunds, Inc. (March 2005 – February 2008).
Lisa Walsh, Assistant Vice President	None
Darren Walsh, Executive Vice President	President and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc.
Richard Walsh, Vice President	Vice President of OFI Private Investments.
Thomas Waters, Vice President	Vice President of OFI Institutional Asset Management, Inc.
Deborah Weaver, Vice President	None
Jerry A. Webman, Senior Vice President	Senior Vice President of HarbourView Asset Management Corporation.
Christopher D. Weiler, Vice President: Rochester Division	None
Christine Wells, Vice President	None
Joseph J. Welsh, Vice President	Vice President of HarbourView Asset Management Corporation.
Adam Wilde, Assistant Vice President	None
Troy Willis, Assistant Vice President, Rochester Division	None
Mitchell Williams, Vice President	None
Julie Wimer, Assistant Vice President	None
Donna M. Winn, Senior Vice President	President, Chief Executive Officer & Director of OFI Private Investments Inc.; Director & President of OppenheimerFunds Legacy Program; Senior Vice President of OppenheimerFunds Distributor, Inc.
Brian W. Wixted, Senior Vice President	Treasurer of HarbourView Asset Management Corporation; OppenheimerFunds International Ltd., Oppenheimer Real Asset Management, Inc., Shareholder Services, Inc., Shareholder Financial Services, Inc., OFI Private Investments Inc., OFI Institutional Asset Management, Inc., OppenheimerFunds plc and OppenheimerFunds Legacy Program; Treasurer and Chief Financial Officer of OFI Trust Company; Assistant Treasurer of Oppenheimer Acquisition Corp.
Carol E. Wolf, Senior Vice President	Senior Vice President of HarbourView Asset Management Corporation and of Centennial Asset Management Corporation; Vice President of OFI Institutional Asset Management, Inc; serves on the Board of the Colorado Ballet.
Meredith Wolff, Vice President	Vice President of OppenheimerFunds Distributor, Inc.
Oliver Wolff, Assistant Vice President	None
Kurt Wolfgruber, President, Chief Investment Officer & Director	Director of OppenheimerFunds Distributor, Inc., Director of Tremont Group Holdings, Inc., HarbourView Asset Management Corporation and OFI Institutional Asset Management, Inc. (since June 2003). Management Director of Oppenheimer Acquisition Corp. (since December 2005).
Caleb C. Wong, Vice President	None
Edward C. Yoensky, Assistant Vice President	None
Geoff Youell, Assistant Vice President	None
Lucy Zachman, Vice President	None
Robert G. Zack, Executive Vice President & General Counsel	General Counsel of Centennial Asset Management Corporation; General Counsel and Director of OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel of HarbourView Asset Management Corporation and OFI Institutional Asset Management, Inc.; Senior Vice President, General Counsel and Director of Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private Investments Inc.; Executive Vice President, General Counsel and Director of OFI Trust Company; Director and Assistant Secretary of OppenheimerFunds International Limited; Vice President, Secretary and General Counsel of Oppenheimer Acquisition Corp.; Director and Assistant Secretary of OppenheimerFunds International Distributor Limited ; Vice President of OppenheimerFunds Legacy Program; Vice President and Director of Oppenheimer Partnership Holdings Inc.; Director of OFI Institutional Asset Management, Ltd.
Anna Zatulovskaya, Assistant Vice President	None
Mark D. Zavanelli, Vice President	Vice President of OFI Institutional Asset Management, Inc.
Sara Zervos, Vice President	None
Alex Zhou, Assistant Vice President	None
Ronald Zibelli, Jr. Vice President	Formerly Managing Director and Small Cap Growth Team Leader at Merrill Lynch.

The Oppenheimer Funds include the following:

Centennial Government Trust

Centennial Money Market Trust

Limited Term New York Municipal Fund (a series of Rochester Portfolio Series)

OFI Tremont Core Strategies Hedge Fund

Oppenheimer Absolute Return Fund

Oppenheimer AMT-Free Municipals

Oppenheimer AMT-Free New York Municipals

Oppenheimer Balanced Fund

Oppenheimer Baring China Fund

Oppenheimer Baring Japan Fund

Oppenheimer Baring SMA International Fund

Oppenheimer California Municipal Fund

Oppenheimer Capital Appreciation Fund

Oppenheimer Capital Income Fund

Oppenheimer Cash Reserves

Oppenheimer Champion Income Fund

Oppenheimer Commodity Strategy Total Return Fund

Oppenheimer Convertible Securities Fund (a series of Bond Fund Series)

Oppenheimer Core Bond Fund (a series of Oppenheimer Integrity Funds)

Oppenheimer Developing Markets Fund

Oppenheimer Discovery Fund

Oppenheimer Emerging Growth Fund

Oppenheimer Equity Fund, Inc.

Oppenheimer Equity Income Fund, Inc.

Oppenheimer Global Fund

Oppenheimer Global Opportunities Fund

Oppenheimer Global Value Fund

Oppenheimer Gold & Special Minerals Fund

Oppenheimer International Bond Fund

Oppenheimer Institutional Money Market Fund

Oppenheimer International Diversified Fund

Oppenheimer International Growth Fund

Oppenheimer International Small Company Fund

Oppenheimer Limited Term California Municipal Fund

Oppenheimer Limited-Term Government Fund

Oppenheimer Limited Term Municipal Fund (a series of Oppenheimer Municipal Fund)

Oppenheimer Main Street Fund (a series of Oppenheimer Main Street Funds, Inc.)

Oppenheimer Main Street Opportunity Fund

Oppenheimer Main Street Small Cap Fund

Oppenheimer Master Event-Linked Bond Fund, LLC

Oppenheimer Master Loan Fund, LLC

Oppenheimer Master International Value Fund, LLC

Oppenheimer MidCap Fund

Oppenheimer Money Market Fund, Inc.

Oppenheimer Multi-State Municipal Trust (3 series):

Oppenheimer New Jersey Municipal Fund

Oppenheimer Pennsylvania Municipal Fund

Oppenheimer Rochester National Municipals

Oppenheimer Portfolio Series (4 series)

Active Allocation Fund

Equity Investor Fund

Conservative Investor Fund

Moderate Investor Fund

Oppenheimer Portfolio Series Fixed Income Active Allocation Fund
Oppenheimer Principal Protected Main Street Fund (a series of Oppenheimer Principal

Protected Trust)

Oppenheimer Principal Protected Main Street Fund II (a series of Oppenheimer Principal

Protected Trust II)

Oppenheimer Principal Protected Main Street Fund III (a series of Oppenheimer Principal

Protected Trust III)

Oppenheimer Quest For Value Funds (3 series)

Oppenheimer Quest Balanced Fund

Oppenheimer Quest Opportunity Value Fund

Oppenheimer Small- & Mid-Cap Value Fund

Oppenheimer Quest International Value Fund, Inc.

Oppenheimer Real Estate Fund

Oppenheimer Rising Dividends Fund, Inc.

Oppenheimer Rochester Arizona Municipal Fund

Oppenheimer Rochester Double Tax-Free Municipals

Oppenheimer Rochester General Municipal Fund

Oppenheimer Rochester Maryland Municipal Fund

Oppenheimer Rochester Massachusetts Municipal Fund

Oppenheimer Rochester Michigan Municipal Fund

Oppenheimer Rochester Minnesota Municipal Fund

Oppenheimer Rochester North Carolina Municipal Fund

Oppenheimer Rochester Ohio Municipal Fund

Oppenheimer Rochester Virginia Municipal Fund

Oppenheimer Select Value Fund

Oppenheimer Senior Floating Rate Fund

Oppenheimer Series Fund, Inc. (1 series):

Oppenheimer Value Fund

Oppenheimer SMA Core Bond Fund

Oppenheimer SMA International Bond Fund

Oppenheimer Strategic Income Fund

Oppenheimer Transition 2010 Fund

Oppenheimer Transition 2015 Fund

Oppenheimer Transition 2020 Fund

Oppenheimer Transition 2025 Fund

Oppenheimer Transition 2030 Fund

Oppenheimer Transition 2040 Fund

Oppenheimer Transition 2050 Fund

Oppenheimer U.S. Government Trust

Oppenheimer Variable Account Funds (11 series):

Oppenheimer Balanced Fund/VA

Oppenheimer Capital Appreciation Fund/VA

Oppenheimer Core Bond Fund/VA

Oppenheimer Global Securities Fund/VA

Oppenheimer High Income Fund/VA

Oppenheimer Main Street Fund/VA

Oppenheimer Main Street Small Cap Fund/VA

Oppenheimer MidCap Fund/VA

Oppenheimer Money Fund/VA

Oppenheimer Strategic Bond Fund/VA

Oppenheimer Value Fund/VA

Panorama Series Fund, Inc. (3 series):

Growth Portfolio

Oppenheimer International Growth Fund/VA

Total Return Portfolio

Rochester Fund Municipals
 
The address of the Oppenheimer funds listed above, Shareholder Financial Services, Inc., Shareholder Services, Inc., Centennial Asset Management Corporation, and OppenheimerFunds Legacy Program is 6803 South Tucson Way, Centennial, Colorado 80112-3924.
 
The address of OppenheimerFunds, Inc., OppenheimerFunds Distributor, Inc., HarbourView Asset Management Corporation, Oppenheimer Acquisition Corp., OFI Private Investments Inc., OFI Institutional Asset Management, Inc. Oppenheimer Real Asset Management, Inc. and OFI Trust Company is Two World Financial Center, 225 Liberty Street, 11^th Floor, New York, New York 10281-1008.
 
The address of OppenheimerFunds International Ltd. is 70 Sir John Rogerson’s Quay, Dublin 2, Ireland.
 

The address of OFI Institutional Asset Management, Ltd., is One Silk Road, London, England EC27 8HQ.

The address of Trinity Investment Management Corporation is 301 North Spring Street, Bellefonte, Pennsylvania 16823.
 

The address of OppenheimerFunds International Distributor Limited is 13^th Floor, Printing House, 6 Duddell Street, Central, Hong Kong.

Item 27. Principal Underwriter

(a)     OppenheimerFunds Distributor, Inc. is the Distributor of the Registrant's shares. It is also the Distributor of each of the other registered open-end investment companies for which OppenheimerFunds, Inc. is the investment adviser, as described in Part A and Part B of this Registration Statement and listed in Item 26(b) above (except Panorama Series Fund, Inc.) and for MassMutual Institutional Funds.
 
(b)     The directors and officers of the Registrant's principal underwriter are:

Name & Principal Business Address	Position & Office with Underwriter	Position and Office with Registrant
Timothy Abbhul(1)	Vice President and Treasurer	None
Robert Agan(1)	Vice President	None
Anthony Allocco(2)	Assistant Vice President	None
Janette Aprilante(2)	Secretary	None
James Barker 1723 W. Nelson Street Chicago, IL 60657	Vice President	None
Kathleen Beichert(1)	Senior Vice President	None
Rocco Benedetto(2)	Vice President	None
Christopher Bergeron	Vice President	None
Rick Bettridge 11504 Flowering Plum Lane Highland, UT 84003	Vice President	None
David A. Borrelli 105 Black Calla Ct. San Ramon, CA 94583	Vice President	None
Jeffrey R. Botwinick 4431 Twin Pines Drive Manlius, NY 13104	Vice President	None
Sarah Bourgraf(1)	Vice President	None
Bryan Bracchi 1124 Hampton Dr. Allen, TX. 75013	Vice President	None
Joshua Broad(2)	Vice President	None
Kevin E. Brosmith 5 Deer Path South Natlick, MA 01760	Senior Vice President	None
Jeffrey W. Bryan 1048 Malaga Avenue Coral Gables, FL 33134	Vice President	None
Ross Burkstaller 211 Tulane Drive SE Albuquerque, NM 87106	Vice President	None
Robert Caruso 15 Deforest Road Wilton, CT 06897	Vice President	None
Donelle Chisolm(2)	Assistant Vice President	None
Andrew Chronofsky	Vice President	None
Angelanto Ciaglia(2)	Vice President	None
Melissa Clayton(2)	Assistant Vice President	None
Craig Colby(2)	Vice President	None
Rodney Constable(1)	Vice President	None
Susan Cornwell(1)	Vice President	None
Neev Crane 1530 Beacon Street, Apt. #1403 Brookline, MA 02446	Vice President	None
Michael Daley 40W387 Oliver Wendell Holmes St St. Charles, IL 60175	Vice President	None
Fredrick Davis 14431 SE 61st Street Bellevue, WA 98006	Vice President	None
John Davis(2)	Vice President	None
Stephen J. Demetrovits(2)	Vice President	None
Steven Dombrower 13 Greenbrush Court Greenlawn, NY 11740	Vice President	None
Beth Arthur Du Toit(1)	Vice President	None
Kent M. Elwell 35 Crown Terrace Yardley, PA 19067	Vice President	None
Gregg A. Everett 4328 Auston Way Palm Harbor, FL 34685-4017	Vice President	None
George R. Fahey 9511 Silent Hills Lane Lone Tree, CO 80124	Senior Vice President	None
Eric C. Fallon 10 Worth Circle Newton, MA 02458	Vice President	None
Kristie Feinberg(2)	Assistant Treasurer	None
James Fereday	Vice President	None
Joseph Fernandez 1717 Richbourg Park Drive Brentwood, TN 37027	Vice President	None
Mark J. Ferro 104 Beach 221st Street Breezy Point, NY 11697	Senior Vice President	None
Ronald H. Fielding(3)	Vice President	None
Eric P. Fishel 725 Boston Post Rd., #12 Sudbury, MA 01776	Vice President	None
Patrick W. Flynn 14083 East Fair Avenue Englewood, CO 80111	Senior Vice President	None
John (“J”) Fortuna(2)	Vice President	None
Jayme D. Fowler 3818 Cedar Springs Road, #101-349 Dallas, TX 75219	Vice President	None
William Friebel 2919 St. Albans Forest Circle Glencoe, MO 63038	Vice President	None
Alyson Frost(2)	Assistant Vice President	None
Charlotte Gardner(1)	Vice President	None
David Goldberg(2)	Assistant Vice President	None
Michael Gottesman 255 Westchester Way Birmingham, MI 48009	Vice President	None
Raquel Granahan(2)	Vice President	None
Robert Grill(2)	Senior Vice President	None
Eric Grossjung 4002 N. 194th Street Elkhorn, NE 68022	Vice President	None
Michael D. Guman 3913 Pleasant Avenue Allentown, PA 18103	Vice President	None
James E. Gunter 603 Withers Circle Wilmington, DE 19810	Vice President	None
Kevin J. Healy(2)	Vice President	None
Kenneth Henry(2)	Vice President	None
Wendy G. Hetson(2)	Vice President	None
Jennifer Hoelscher(1)	Assistant Vice President	None
Edward Hrybenko(2)	Vice President	None
Amy Huber(1)	Assistant Vice President	None
Brian F. Husch 37 Hollow Road Stonybrook, NY 11790	Vice President	None
Patrick Hyland(2)	Assistant Vice President	None
Keith Hylind(2)	Vice President	None
Kathleen T. Ives(1)	Vice President & Assistant Secretary	Assistant Secretary
Shonda Rae Jaquez(2)	Vice President	None
Eric K. Johnson 8588 Colonial Drive Lone Tree, CO 80124	Vice President	None
Elyse Jurman 5486 NW 42 Ave Boca Raton, FL 33496	Vice President	None
Thomas Keffer(2)	Senior Vice President	None
Michael Keogh(2)	Vice President	None
Brian Kiley(2)	Vice President	None
Richard Klein 4820 Fremont Avenue South Minneapolis, MN 55419	Senior Vice President	None
Richard Knott(1)	President and Director	None
Brent A. Krantz 61500 Tam McArthur Loop Bend, OR 97702	Senior Vice President	None
Eric Kristenson(2)	Vice President	None
David T. Kuzia 10258 S. Dowling Way Highlands Ranch, CO 80126	Vice President	None
Tracey Lange(2)	Vice President	None
John Laudadio	Vice President	None
Jesse Levitt(2)	Vice President	None
Julie Libby(2)	Senior Vice President	None
Eric J. Liberman 27 Tappan Ave., Unit West Sleepy Hollow, NY 10591	Vice President	None
Malissa Lischin(2)	Assistant Vice President	None
Christina Loftus(2)	Vice President	None
Thomas Loncar 1401 North Taft Street, Apt. 726 Arlington, VA 22201	Vice President	None
Peter Maddox(2)	Vice President	None
Michael Malik 546 Idylberry Road San Rafael, CA 94903	Vice President	None
Steven C. Manns 1627 N. Hermitage Avenue Chicago, IL 60622	Vice President	None
Todd A. Marion 24 Midland Avenue Cold Spring Harbor, NY 11724	Vice President	None
LuAnn Mascia(2)	Vice President	None
Michael McDonald 11749 S Cormorant Circle Parker, CO 80134	Vice President	None
John C. McDonough 533 Valley Road New Canaan, CT 06840	Senior Vice President	None
Kent C. McGowan 9510 190th Place SW Edmonds, WA 98020	Vice President	None
Brian F. Medina 3009 Irving Street Denver, CO 80211	Vice President	None
William Meerman 4939 Stonehaven Drive Columbus, OH 43220	Vice President	None
Saul Mendoza 503 Vincinda Crest Way Tampa FL 33619	Vice President	None
Mark Mezzanotte 16 Cullen Way Exeter, NH 03833	Vice President	None
Clint Modler(1)	Vice President	None
Robert Moser 9650 East Aspen Hill Circle Lone Tree, CO 80124	Vice President	None
David W. Mountford 7820 Banyan Terrace Tamarac, FL 33321	Vice President	None
Matthew Mulcahy(2)	Vice President	None
Wendy Jean Murray 32 Carolin Road Upper Montclair, NJ 07043	Vice President	None
John S. Napier 17 Hillcrest Ave. Darien, CT 06820	Vice President	None
Christina Nasta(2)	Vice President	None
Kevin P. Neznek(2)	Vice President	None
Christopher Nicholson(2)	Vice President	None
Chad Noel	Vice President	None
Alan Panzer 6755 Ridge Mill Lane Atlanta, GA 30328	Vice President	None
Maria Paster(2)	Assistant Vice President	None
Donald Pawluk(2)	Vice President	None
Brian C. Perkes 6 Lawton Ct. Frisco, TX 75034	Vice President	None
Wayne Perry 3900 Fairfax Drive Apt 813 Arlington, VA 22203	Vice President	None
Charles K. Pettit(2)	Vice President	None
Aaron Pisani(1)	Vice President	None
Rachel Powers(1)	Vice President	None
Nicole Pretzel(2)	Vice President	None
Minnie Ra 100 Dolores Street, #203 Carmel, CA 93923	Vice President	None
Dustin Raring 27 Blakemore Drive Ladera Ranch, CA 92797	Vice President	None
Michael A. Raso 3 Vine Place Larchmont, NY 10538	Vice President	None
Richard E. Rath 46 Mt. Vernon Ave. Alexandria, VA 22301	Vice President	None
Ramsey Rayan(2)	Vice President	None
William J. Raynor(4)	Vice President	None
Corry Read(2)	Vice President	None
David R. Robertson(2)	Senior Vice President	None
Ian M. Roche 7070 Bramshill Circle Bainbridge, OH 44023	Vice President	None
Michael Rock 9016 Stourbridge Drive Huntersville, NC 28078	Vice President	None
Stacy Roode(2)	Vice President	None
Thomas Sabow 6617 Southcrest Drive Edina, MN 55435	Vice President	None
John Saunders 2251 Chantilly Ave. Winter Park, FL 32789	Vice President	None
Thomas Schmitt 40 Rockcrest Rd Manhasset, NY 11030	Vice President	None
William Schories 3 Hill Street Hazlet, NJ 07730	Vice President	None
Jennifer Sexton(2)	Vice President	None
Eric Sharp 862 McNeill Circle Woodland, CA 95695	Vice President	None
Debbie A. Simon 55 E. Erie St., #4404 Chicago, IL 60611	Vice President	None
Bryant Smith	Vice President	None
Christopher M. Spencer 2353 W 118th Terrace Leawood, KS 66211	Vice President	None
John A. Spensley 375 Mallard Court Carmel, IN 46032	Vice President	None
Michael Staples 4255 Jefferson St Apt 328 Kansas City, MO 64111	Vice President	None
Alfred St. John(2)	Vice President	None
Bryan Stein 8 Longwood Rd. Voorhees, NJ 08043	Vice President	None
Wayne Strauss(3)	Assistant Vice President	None
Brian C. Summe 2479 Legends Way Crestview Hills, KY 41017	Vice President	None
Kenneth Sussi(2)	Vice President	None
Michael Sussman(2)	Vice President	None
George T. Sweeney 5 Smokehouse Lane Hummelstown, PA 17036	Senior Vice President	None
James Taylor(2)	Assistant Vice President	None
Paul Temple(2)	Vice President	None
Troy Testa	Vice President	None
David G. Thomas 16628 Elk Run Court Leesburg, VA 20176	Vice President	None
Mark S. Vandehey(1)	Vice President and Chief Compliance Officer	Vice President and Chief Compliance Officer
Vincent Vermette(2)	Vice President	None
Teresa Ward(1)	Vice President	None
Janeanne Weickum(1)	Vice President	None
Michael J. Weigner 4905 W. San Nicholas Street Tampa, FL 33629	Vice President	None
Donn Weise 3249 Earlmar Drive Los Angeles, CA 90064	Vice President	None
Chris G. Werner 98 Crown Point Place Castle Rock, CO 80108	Vice President	None
Ryan Wilde(1)	Vice President	None
Julie Wimer(2)	Assistant Vice President	None
Donna Winn(2)	Senior Vice President	None
Peter Winters 911 N. Organce Ave, Pat. 514 Orlando, FL 32801	Vice President	None
Patrick Wisneski(1)	Vice President	None
Kurt Wolfgruber(2)	Director	None
Meredith Wolff(2)	Vice President	None
Michelle Wood(2)	Vice President	None
Cary Patrick Wozniak 18808 Bravata Court San Diego, CA 92128	Vice President	None
John Charles Young 3914 Southwestern Houston, TX 77005	Vice President	None
Jill Zachman(2)	Vice President	None
Robert G. Zack(2)	General Counsel & Director	Vice President & Secretary
Steven Zito(1)	Vice President	None

⁽¹⁾6803 South Tucson Way, Centennial, CO 80112-3924

⁽²⁾Two World Financial Center, 225 Liberty Street, 11^th Floor, New York, NY 10281-1008

⁽³⁾350 Linden Oaks, Rochester, NY 14623

⁽⁴⁾Independence Wharf, 470 Atlantic Avenue, 11^th Floor, Boston, MA 02210

(c)     Not applicable.
 

Item 28. Location of Accounts and Records

The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and rules promulgated thereunder are in the possession of OppenheimerFunds, Inc. at its offices at 6803 South Tucson Way, Centennial, Colorado 80112-3924.

Item 29. Management Services

Not applicable
 

Item 30. Undertakings

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 30th day of April, 2009.
 
 

Oppenheimer Variable Account Funds

                                                                                               By:     /s/ John V. Murphy*               

                                                                                                           John V. Murphy, President,
                                                                                                           Principal Executive Officer and Trustee

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities on the dates indicated:
 

Signatures TitleDate

William L. Armstrong*                                                 Chairman of the                              April 30, 2009
William L. Armstrong                                                    Board of Trustees
 
 

John V. Murphy*                                                          President, Principal                         April 30, 2009
John V. Murphy                                                            Executive Officer and Trustee
 
 

Brian W. Wixted*                                                           Treasurer, Principal                         April 30, 2009
Brian W. Wixted                                                            Financial & Accounting Officer
 

George C. Bowen*                                                         Trustee                                           April 30, 2009
George C. Bowen
 
 

Edward L. Cameron*                                                       Trustee                                          April 30, 2009
Edward L. Cameron
 
 

Jon S. Fossel*                                                                   Trustee                                          April 30, 2009
Jon S. Fossel
 
 

Sam Freedman*                                                                 Trustee                                          April 30, 2009
Sam Freedman
 
 

Beverly L. Hamilton*                                                           Trustee                                         April 30, 2009
Beverly L. Hamilton
 
 

Robert J. Malone*                                                               Trustee                                          April 30, 2009

Robert J. Malone
 
 

F. William Marshall, Jr.*                                                       Trustee                                          April 30, 2008
F. William Marshall, Jr.

*By:     /s/ Mitchell J. Lindauer     
     Mitchell J. Lindauer, Attorney-in-Fact

OPPENHEIMER VARIABLE ACCOUNT FUNDS

Post-Effective Amendment No. 53
 
Registration No. 2-93177

EXHIBIT INDEX

Exhibit No.Description

23(j)     Independent Registered Public Accounting Firm’s Consent

EX-99.J

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Post-Effective Amendment No. 54 to Registration Statement No. 2-93177 on Form N-1A of our reports dated February 11, 2009, relating to the financial statements and financial highlights of Oppenheimer Variable Account Funds, including Oppenheimer Global Securities Fund/VA, Oppenheimer Balanced Fund/VA, Oppenheimer Main Street Small Cap Fund/VA, Oppenheimer Strategic Bond Fund/VA, Oppenheimer Value Fund/VA, Oppenheimer Capital Appreciation Fund/VA, Oppenheimer High Income Fund/VA, Oppenheimer Core Bond Fund/VA, Oppenheimer Money Fund/VA, Oppenheimer MidCap Fund/VA, and Oppenheimer Main Street Fund/VA, appearing in the Annual Report on Form N-CSR of Oppenheimer Variable Account Funds, for the year ended December 31, 2008, and to the references to us under the headings “Independent Registered Public Accounting Firm” in the Statement of Additional Information and “Financial Highlights” in the Prospectus, which are part of such Registration Statement.

/s/ DELOITTE & TOUCHE LLP

Denver, Colorado

April 27, 2009