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