485BPOS

Registration No. 2-93177

File No. 811-4108

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933     [X]

Pre-Effective Amendment No.      [ ]
Post-Effective Amendment No. 56     [X]

and/or

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

Amendment No. 52

Oppenheimer Variable Account Funds

(Exact Name of Registrant as Specified in Charter)

6803 South Tucson Way, Centennial, Colorado 80112-3924

(Address of Principal Executive Offices)     (Zip Code)

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

Robert G. Zack, Esq.
OppenheimerFunds, Inc.

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

(Name and Address of Agent for Service)

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

     [ ]     immediately upon filing pursuant to paragraph (b)
     [X]     on April 30, 2010 pursuant to paragraph (b)
     [ ]     60 days after filing pursuant to paragraph (a)(1)
     [ ]     on ______________pursuant to paragraph (a)(1)
     [ ]     75 days after filing pursuant to paragraph (a)(2)
     [ ]     on _______________ pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

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

Oppenheimer

Balanced Fund/VA
A series of Oppenheimer Variable Account Funds

Share Classes:

     Service Shares

     Non-Service Shares

Prospectus dated April 30, 2010

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

Oppenheimer Balanced Fund/VA is a mutual fund that seeks high total investment return, which includes current income and capital appreciation. The Fund allocates its investments among equity and debt securities.

 

Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class you are eligible to purchase.

 

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

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	5
The Fund's Past Performance	8
Investment Adviser	9
Portfolio Managers	9
Purchase and Sale of Fund Shares	10
Taxes	10
Payments to Broker-Dealers and Other Financial Intermediaries	10
MORE ABOUT THE FUND
About the Fund's Investments	11
How the Fund is Managed	23
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	25
Dividends, Capital Gains and Taxes	31
Financial Highlights	32

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective.  The Fund seeks high total investment return, which includes current income and capital appreciation.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares
Management Fees	0.75%	0.75%
Distribution and/or Service (12b-1) Fees	None	0.25%
Acquired Fund Fees and Expenses	0.02%	0.02%
Other Expenses	0.14%	0.15%
Total Annual Fund Operating Expenses	0.91%	1.17%
Fee Waiver and Expense Reimbursement*	(0.23%)	(0.24%)
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement	0.68%	0.93%

* The Manager has voluntarily agreed to waive a portion of the management fee and/or reimburse certain expenses so that total annual fund operating expenses will not exceed 0.67% of average annual net assets for Non-Service Shares and 0.92% of average annual net assets for Service Shares. The Manager has also voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. This voluntary expense limitation and indirect management fee waiver and reimbursement may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Service Shares	$	95	$	350	$	624	$	1,407
Non-Service Shares	$	70	$	268	$	483	$	1,103

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 87% of the average value of its portfolio.

Principal Investment Strategies. The Fund buys a variety of different types of securities to seek its investment objective. The Fund may invest in equity securities and debt securities of both domestic and foreign issuers and in issuers in any capitalization range. There is no limit on the amount of the Fund's assets that can be invested in foreign securities in developed markets. However, the Fund does not normally expect to invest more than 35% of its total assets in foreign issuers and may not invest more than 10% of its net assets in the securities of governments and companies in emerging markets and it may not invest more than 20% of its net assets in foreign debt securities.
In selecting securities to buy, the portfolio managers use different investment styles to seek diversification across asset classes. They normally maintain a mix of stocks, debt securities and cash, although the Fund is not required to allocate its assets in any fixed proportion. The Fund's asset allocations will change over time as the portfolio managers seek relative opportunities but will generally include:

• Equity securities: Equity securities are securities that represent an ownership interest in a company. They include common stock, preferred stock and securities convertible into common stock. The Fund will normally invest in stocks and other equity securities, primarily common stocks of U.S. and foreign companies. In selecting equity securities to buy, the portfolio managers mainly look for potential capital appreciation. The portfolio managers employ both "growth" and "value" styles in selecting stocks. Value investing uses fundamental analysis to seek companies whose intrinsic value is greater than the current price of their securities. Companies whose earnings and stock prices are expected to increase at a faster rate than the overall market are considered "growth companies."

• Debt securities: Debt securities are securities representing money borrowed by the issuer that must be repaid, specifying the amount of principal, the interest or discount rate, and the time or times at which payments are due. The Fund will normally invest in fixed-income senior securities, such as bonds and notes. The debt securities the Fund may buy include securities issued by U.S. and foreign companies, securities issued or guaranteed by the U.S. Government and its agencies and instrumentalities, mortgage-related securities (including private issuer mortgage-backed securities), debt obligations of foreign governments, and money market instruments. The Fund may invest without limit in lower-grade, high-yield debt securities, sometimes referred to as "junk bonds". In selecting debt securities to buy, the portfolio managers look for both income and for total return. The Fund has no requirements as to the maturity of the debt securities it can buy and the average maturity of the Fund's portfolio can be expected to change over time. The Fund may invest in debt securities that pay interest at fixed or floating rates.

• Derivative Securities: The Fund may also invest in derivative instruments. A derivative is an instrument whose value depends on (or is derived from) the value of an underlying asset or other measure. The derivative instruments in which the Fund may invest include: options, futures, forward contracts, swaps, "structured" notes and "zero-coupon" and "stripped" securities that pay only the interest or only the principal portion of a debt obligation. When interest rates change, the prices of those securities may go up or down more than the prices of other types of debt securities.

In seeking diversification of the Fund's portfolio over asset classes, issuers, and economies, the portfolio managers consider overall and relative economic conditions in U.S. and foreign markets. At times, the Fund may focus more on investing for capital appreciation with less emphasis on seeking income. At other times, perhaps when stock markets are less stable, the Fund might have a greater relative emphasis on income-seeking investments, such as government securities and money market instruments.

The Fund may buy foreign currencies but only in connection with the purchase and sale of foreign securities and not for speculation.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar investment objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Investing in Equity Securities. Stocks and other equity securities fluctuate in price. The value of the Fund's portfolio may be affected by changes in the equity markets generally. Equity markets may experience great short-term volatility and may fall sharply at times. Different markets may behave differently from each other and U.S. equity markets may move in the opposite direction from one or more foreign markets.

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

Main Risks of Debt Securities. Debt securities may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or repay principal, the Fund's income or share value might be reduced. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can also reduce the market value of the issuer's securities. Interest rate risk is the risk that when prevailing interest rates fall, the values of already-issued debt securities generally rise; and when prevailing interest rates rise, the values of already-issued debt securities generally fall, and may be worth less than the amount the Fund paid for them. When interest rates change, the values of longer-term debt securities usually change more than the values of shorter-term debt securities. When interest rates fall, debt securities may be repaid more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes normally have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

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

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

     Special Risks of Lower-Grade Securities. Lower-grade securities, whether rated or unrated, may be subject to wider market fluctuation, greater credit risk and greater risk of loss of income and principal than investment-grade securities. The market for lower-grade securities may be less liquid and therefore they may be harder to sell at an acceptable price, especially during times of market volatility or decline.

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

Main Risks of Derivative Investments. Derivatives may be volatile and may require the payment of premiums, can increase portfolio turnover, may be illiquid, may not perform as expected and the Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

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

Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking high total return from their investment from a fund that allocates its assets among different types of securities. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund that invests in stocks and foreign securities. The Fund is not a short-term trading vehicle and is not designed for investors needing an assured level of current income but may be appropriate for longer-term investors. The Fund is not a complete investment program. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

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

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5, and 10 years compare with those of two broad measures of market performance that reflect the markets in which the Fund typically invests. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were.  The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/BalancedFundVA.

During the period shown, the highest return before taxes for a calendar quarter was 14.27% (2nd qtr 09) and the lowest return before taxes for a calendar quarter was -30.11% (4th qtr 08).

The following table shows the average annual total returns before taxes for each class of the Fund's shares. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index of U.S. dollar denominated, investment-grade, SEC registered U.S. corporate, government and mortgage-backed securities.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 2-9-87)	21.89%	(3.76%)	1.03%
Service Shares (inception 5-1-02)	21.60%	(4.00%)	0.14%
S & P 500 Index	26.47%	0.42%	(0.95%)
(reflects no deduction for fees, expenses or taxes)			2.46%1
Barclays Capital U.S. Aggregate Bond Index	5.93%	4.97%	6.33%
(reflects no deduction for fees, expenses or taxes)			5.39%1

1. From 4-30-02.

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Managers. Emmanuel Ferreira manages the equity component of the Fund's portfolio and Krishna Memani and Peter Strzalkowski manage the fixed-income component of the Fund's portfolio. Mr. Ferreira has been a portfolio manager of the Fund since January 2003 and Vice President of the Fund since February 2003. Mr. Memani has been a portfolio manager and Vice President of the Fund since April 2009. Mr. Strzalkowski has been a portfolio manager of the Fund since April 2009 and Vice President of the Fund since May 2009.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT THE FUND

About the Fund's Investments

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

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

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

In selecting equity securities to buy, the portfolio managers mainly look for potential capital appreciation. The portfolio managers employ both "growth" and "value" styles in selecting stocks.

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

Value Investing.

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

 Value investing seeks stocks that are undervalued in the market by various measures such as the stock's price/ earnings ratio. They employ fundamental analysis of a company's financial statements and management structure, operations and product development, as well as the industry of which the company is part. A security may be undervalued because the market is not aware of the issuer's intrinsic value, does not yet recognize its future potential, or the issuer may be temporarily out of favor. The Fund seeks to realize gains in the prices of those securities when other investors recognize their real or prospective worth.
Value investing entails the risk that if the market does not recognize that the securities selected by the Fund are undervalued, the prices of those securities might not appreciate as anticipated. The portfolio managers' value approach could also result in acquiring fewer investments in securities that increase in price rapidly during times of market advances. This could cause the Fund to underperform other funds that seek capital appreciation but that employ only a growth or non-value approach to investing. Value investing has also gone in and out of favor during past market cycles and is likely to continue to do so. During periods when value investing is out of favor or when markets are unstable, the securities of "value" companies may underperform the securities of "growth" companies.

Growth Investing.

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

 Growth investing seeks stocks that the managers believe have possibilities for increases in stock price because of strong earnings growth compared to the market, the development of new products or services or other favorable economic factors. The portfolio managers also consider the effect of worldwide trends on the growth of particular business sectors and looks for companies that may benefit from those trends.
If a growth company's earnings or stock price fails to increase as anticipated, or if its business plans do not produce the expected results, its securities may decline sharply. Growth companies may be newer or smaller companies that may experience greater stock price fluctuations and risks of loss than larger, more established companies. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Therefore, they may not pay any dividends for some time. Growth investing has gone in and out of favor during past market cycles and is likely to continue to do so. During periods when growth investing is out of favor or when markets are unstable, it may be more difficult to sell growth company securities at an acceptable price. Growth stocks may also be more volatile than other securities because of investor speculation.

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

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

       "Zero-coupon" or "stripped" securities may be particularly sensitive to interest rate changes.  Interest rate changes may have different effects on the values of mortgage-related securities because of prepayment and extension risks.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Structured notes are subject to interest rate risk. They are also subject to credit risk with respect both to the issuer and, if applicable, to the underlying security or borrower. If the underlying investment or index does not perform as anticipated, the structured note might pay less interest than the stated coupon payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult to value them or sell them at an acceptable price. In some cases, the Fund may enter into agreements with an issuer of structured notes to purchase a minimum amount of those notes over time.

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

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

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

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

Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. Derivative transactions may require the payment of premiums and can increase portfolio turnover. For example, if a call option sold by the Fund was exercised on an investment that had increased in value above the call price, the Fund would be required to sell the investment at the call price and would not be able to realize any additional profit. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform as expected. As a result, the Fund could realize little or no income or lose principal from the investment, or a hedge might be unsuccessful.  Derivatives are also subject to credit risk, since the Fund may lose money if the issuer of the derivative fails to pay the amount due.

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

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

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

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

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

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

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

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

Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation of a borrower. They are typically purchased from banks or dealers that have made the loan, or are members of the loan syndicate, and that act as the servicing agent for the principal and interest payments. The loans may be to U.S. or foreign companies. Participation interests may be collateralized or uncollateralized and are subject to the credit risk of the servicing agent as well as the credit risk of the borrower. If the Fund purchases a participation interest, it may only be able to enforce its rights through the lender. The Fund can also buy interests in trusts and other entities that hold loan obligations. In that case the Fund will be subject to the trust's credit risks as well as the credit risks of the servicing agent and the underlying loans. In some cases, participation interests, whether held directly by the Fund or indirectly through an interest in a trust or other entity, may be partially "unfunded," meaning that the Fund may be required to advance additional money on future dates.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

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

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2009, was 0.75% of the Fund's average annual net assets for each class of shares.

From April 1, 2009 through March 31, 2010, the Manager voluntarily waived the advisory fee by 0.08% of the Fund's average annual net assets. That voluntary waiver was applied after all other waivers and/or reimbursements.  The Manager has voluntarily agreed to waive a portion of the advisory fee and/or reimburse certain expenses so that total annual fund operating expenses will not exceed 0.67% of average annual net assets for Non-Service Shares and 0.92% of average annual net assets for Service Shares. The Manager has also voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. Each undertaking may be amended or withdrawn after one year from the date of this prospectus.

After all waivers and reimbursements, actual total annual fund operating expenses for the fiscal year ended December 31, 2009 were 0.62% for Non-Service Shares and 0.87% for Service Shares.  The Fund's management fee and other annual operating expenses may vary in future years.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

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

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

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

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

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

MORE ABOUT YOUR INVESTMENT

How to Buy and Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limitations on Frequent Transactions

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

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

Policies on Disruptive Activity

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

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

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

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

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

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

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

Financial Highlights

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

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$8.45	$16.41	$17.69	$17.07	$17.35
Income (loss) from investment operations:
Net investment income1	.25	.41	.43	.40	.33
Net realized and unrealized gain (loss)	1.60	(7.03)	.19	1.38	.31
Total from investment operations	1.85	(6.62)	.62	1.78	.64
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	(.39)	(.46)	(.36)	(.30)
Distributions from net realized gain	--	(.95)	(1.44)	(.80)	(.62)
Total dividends and/or distributions to shareholders	--	(1.34)	(1.90)	(1.16)	(.92)
Net asset value, end of period	$10.30	$8.45	$16.41	$17.69	$17.07
Total Return, at Net Asset Value2	21.89%	(43.47)%	3.79%	11.15%	3.89%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$159,797	$169,621	$385,948	$435,639	$503,753
Average net assets (in thousands)	$159,013	$295,669	$418,103	$456,513	$522,754
Ratios to average net assets:3
Net investment income	2.71%	3.14%	2.55%	2.42%	1.98%
Total expenses	0.89%4	0.76%4	0.75%4	0.75%4	0.74%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.60%	0.67%	0.73%	0.75%	0.74%
Portfolio turnover rate5	87%	67%	68%	76%	67%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009 0.91%
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, 2009 $ 504,698,365 $ 520,212,670
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

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$8.38	$16.28	$17.57	$16.97	$17.26
Income (loss) from investment operations:
Net investment income1	.22	.37	.38	.36	.29
Net realized and unrealized gain (loss)	1.59	(6.97)	.19	1.37	.31
Total from investment operations	1.81	(6.60)	.57	1.73	.60
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	(.35)	(.42)	(.33)	(.27)
Distributions from net realized gain	--	(.95)	(1.44)	(.80)	(.62)
Total dividends and/or distributions to shareholders	--	(1.30)	(1.86)	(1.13)	(.89)
Net asset value, end of period	$10.19	$8.38	$16.28	$17.57	$16.97
Total Return, at Net Asset Value2	21.60%	(43.62)%	3.49%	10.86%	3.67%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$88,746	$68,798	$121,399	$111,363	$88,156
Average net assets (in thousands)	$77,101	$100,164	$117,012	$100,010	$72,977
Ratios to average net assets:3
Net investment income	2.42%	2.90%	2.30%	2.17%	1.74%
Total expenses	1.15%4	1.01%4	1.00%4	1.01%4	1.00%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.85%	0.92%	0.98%	1.01%	1.00%
Portfolio turnover rate5	87%	67%	68%	76%	67%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009 1.17%
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, 2009 $ 504,698,365 $ 520,212,670
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

INFORMATION AND SERVICES

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

How to Request More Information

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

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

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

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

SP0670.001.0410

Oppenheimer

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

Share Classes:

     Service Shares

     Non-Service Shares

Prospectus dated April 30, 2010 

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

Oppenheimer Capital Appreciation Fund/VA is a mutual fund that seeks capital appreciation by investing in securities of well-known, established companies.

 

Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus and explains how to select shares of the Fund as an investment under that insurance product and which share class you are eligible to purchase.

 

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

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	4
The Fund's Past Performance	6
Investment Adviser	7
Portfolio Manager	7
Purchase and Sale of Fund Shares	7
Taxes	7
Payments to Broker-Dealers and Other Financial Intermediaries	8
ABOUT THE FUND
About the Fund's Investments	9
How the Fund is Managed	14
INVESTING IN THE FUND
How to Buy and Sell Shares	16
Dividends, Capital Gains and Taxes	21
Financial Highlights	22

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective. The Fund seeks capital appreciation by investing in securities of well-known, established companies.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares
Management Fees	0.66%	0.66%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses	0.12%	0.13%
Total Annual Fund Operating Expenses	0.78%	1.04%
Fee Waiver and Expense Reimbursement*	0.00%	(0.01%)
Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement	0.78%	1.03%

* Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, would not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. This voluntary expense limitation may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Service Shares	$	106	$	332	$	576	$	1,277
Non-Service Shares	$	80	$	250	$	435	$	970

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 46% of the average value of its portfolio.

Principal Investment Strategies. The Fund mainly invests in common stocks of companies referred to as "growth companies." Growth companies are companies whose earnings and stock prices are expected to increase at a faster rate than the overall market. These are mainly well-known, established companies but may be in any capitalization range. The Fund focuses on domestic securities but may purchase foreign securities as well. The portfolio manager looks for growth companies with stock prices that she believes are reasonable in relation to overall stock market valuations. In seeking broad diversification of the Fund's portfolio among industries and market sectors, the portfolio manager focuses on a number of factors that may vary in particular cases and over time. Currently, the portfolio manager looks for:

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

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

• stocks with reasonable valuations relative to their growth potential.

The Fund may sell the stocks of companies that the portfolio manager believes no longer meet the above criteria, but is not required to do so.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

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

Main Risks of Investing in Stock. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience great short-term volatility and may fall sharply at times. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

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

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

Main Risks of Derivative Investments. Derivatives may be volatile and may require the payment of premiums, can increase portfolio turnover, may be illiquid, may not perform as expected and the Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

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

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

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5, and 10 years compare with those of two broad measures of market performance that reflect the markets in which the Fund typically invests. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:https://www.oppenheimerfunds.com/fund/investors/overview/CapitalAppreciationFundVA.

During the period shown, the highest return before taxes for a calendar quarter was 19.10% (2qtr09) and the lowest return before taxes for a calendar quarter was -27.73% (4qtr08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes. The Russell 1000 Growth Index is an unmanaged index of 1,000 U.S. large-cap growth stocks.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 4-3-85)	44.52%	0.39%	(0.93%)
Service Shares (inception 9-18-01)	44.15%	0.14%	2.04%
S&P 500 Index	26.47%	0.42%	(0.95%)
(reflects no deduction for fees, expenses or taxes)			2.80%1
Russell 1000 Growth Index	37.21%	1.63%	(3.99%)
(reflects no deduction for fees, expenses or taxes)			2.66%1

1. From 09-30-01.

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Manager. Julie Van Cleave, CFA, has been portfolio manager of the Fund since April 26, 2010.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT YOUR INVESTMENT

About the Fund's Investments

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     The Fund has percentage limits on its use of hedging instruments.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

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

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2009, was 0.66% of the Fund's average annual net assets for each class of shares.

Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. This undertaking may be amended or withdrawn after one year from the date of this prospectus. Actual total annual operating expenses for the fiscal year ended December 31, 2009, were those shown in the Annual Fund Operating Expenses table earlier in this prospectus. The Fund's management fee and other operating expenses may vary in future years.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

The Portfolio Manager. The Fund's portfolio is managed by Julie Van Cleave, CFA, who is primarily responsible for the day-to-day management of the Fund's investments.

Ms. Van Cleave has been a Vice President and Senior Portfolio Manager of the Manager since April 2010. Prior to joining the Manager, she was Managing Director, U.S. Large-Cap Growth Equity, and lead portfolio manager at Deutsche Asset Management from December 2002 to February 2009. Prior to 2002, Ms. Van Cleave was a Managing Director, a portfolio manager and a team leader with Mason Street Advisors, a wholly owned subsidiary of Northwestern Mutual Life.

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

INVESTING IN THE FUND 

How to Buy and Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limitations on Frequent Transactions

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

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

Policies on Disruptive Activity

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

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

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

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

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

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

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

Financial Highlights

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

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$25.67	$47.18	$41.43	$38.52	$36.99
Income (loss) from investment operations:
Net investment income1	.09	.10	.07	.07	.18
Net realized and unrealized gain (loss)	11.27	(21.55)	5.78	2.98	1.68
Total from investment operations	11.36	(21.45)	5.85	3.05	1.86
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.09)	(.06)	(.10)	(.14)	(.33)
Net asset value, end of period	$36.94	$25.67	$47.18	$41.43	$38.52
Total Return, at Net Asset Value2	44.52%	(45.52)%	14.15%	7.95%	5.10%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$1,074,190	$829,931	$1,631,791	$1,598,967	$1,652,282
Average net assets (in thousands)	$ 927,670	$1,256,525	$1,631,686	$1,615,352	$1,658,910
Ratios to average net assets:3
Net investment income	0.29%	0.25%	0.15%	0.17%	0.47%
Total expenses	0.78%4	0.66%4	0.65%4	0.67%4	0.66%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.78%	0.66%	0.65%	0.67%	0.66%
Portfolio turnover rate	46%	67%	59%	47%	70%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.78%
             Year Ended December 31, 20080.66%
             Year Ended December 31, 20070.65%
             Year Ended December 31, 20060.67%

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$25.42	$46.78	$41.09	$38.23	$36.73
Income (loss) from investment operations:
Net investment income (loss)1	.01	-- 2	(.05)	(.03)	.08
Net realized and unrealized gain (loss)	11.21	(21.36)	5.74	2.96	1.69
Total from investment operations	11.22	(21.36)	5.69	2.93	1.77
Dividends and/or distributions to shareholders:
Dividends from net investment income	-- 2	--	-- 2	(.07)	(.27)
Net asset value, end of period	$36.64	$25.42	$46.78	$41.09	$38.23
Total Return, at Net Asset Value3	44.15%	(45.66)%	13.86%	7.68%	4.87%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$444,170	$313,931	$546,887	$463,140	$381,852
Average net assets (in thousands)	$368,634	$454,558	$510,874	$426,539	$301,780
Ratios to average net assets:4
Net investment income (loss)	0.03%	0.00%5	(0.10)%	(0.08)%	0.20%
Total expenses	1.04%6	0.91%6	0.91%6	0.92%6	0.91%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.03%	0.91%	0.91%	0.92%	0.91%
Portfolio turnover rate	46%	67%	59%	47%	70%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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. Less than 0.005%.
6. Total expenses including indirect expenses from affiliated fund were as follows:
             Year Ended December 31, 20091.04%
             Year Ended December 31, 20080.91%
             Year Ended December 31, 20070.91%
             Year Ended December 31, 20060.92%

INFORMATION AND SERVICES

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

How to Request More Information

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

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

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

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

SP0610.001.0410

Oppenheimer

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

Share Classes:

     Service Shares

     Non-Service Shares

Prospectus dated April 30, 2010

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

Oppenheimer Core Bond Fund/VA is a mutual fund whose main objective is to seek a high level of current income. As a secondary objective, the Fund seeks capital appreciation when consistent with its primary objective. 

 

Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class you are eligible to purchase.

 

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

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	5
The Fund's Past Performance	8
Investment Adviser	9
Portfolio Managers	9
Purchase and Sale of Fund Shares	9
Taxes	9
Payments to Broker-Dealers and Other Financial Intermediaries	10
MORE ABOUT THE FUND
About the Fund's Investments	11
How the Fund is Managed	22
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	24
Dividends, Capital Gains and Taxes	29
Financial Highlights	31

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective. The Fund's main objective is to seek a high level of current income. As a secondary objective, the Fund seeks capital appreciation when consistent with its primary objective.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares
Management Fees	0.60%	0.60%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses	0.15%	0.16%
Acquired Fund Fees and Expenses	0.01%	0.01%
Total Annual Fund Operating Expenses	0.76%	1.02%
Fee Waiver and Expense Reimbursement*	(0.01)%	(0.02)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement	0.75%	1.00%

*Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.75% for Non-Service Shares and 1.00% for Service Shares. The Manager has also voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. This voluntary expense limitation and indirect management fee waiver and reimbursement may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Non-Service Shares	$	77	$	243	$	423	$	945
Service Shares	$	103	$	324	$	564	$	1,252

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 143% of the average value of its portfolio.

Principal Investment Strategies.  Under normal market conditions, the Fund invests at least 80% of its net assets, plus borrowings for investment purposes, in investment-grade debt securities (generally referred to as "bonds"). A debt security is a security representing money borrowed by the issuer that must be repaid. The terms of a debt security specify the amount of principal, the interest rate or discount, and the time or times at which payments are due. Debt securities can include:

• Domestic and foreign corporate debt obligations;

• Domestic and foreign government debt obligations, including U.S. Government securities;

• Mortgage-related securities;

• Asset-backed securities; and

• Other debt obligations.

     The portfolio managers' overall strategy is to build a diversified portfolio of corporate and government bonds. The Fund's investments in U.S. Government securities may include securities issued or guaranteed by the U.S. Government or by its agencies or federally-chartered entities referred to as "instrumentalities." There is no required allocation of the Fund's assets among the classes of securities, but the Fund focuses mainly on U.S. Government securities and investment-grade corporate debt securities. When market conditions change, the portfolio managers might change the Fund's relative asset allocation.
     The Fund can invest up to 20% of its total assets in lower-grade, high-yield debt securities that are below investment-grade (commonly referred to as "junk bonds"). "Investment grade" debt securities are rated in one of the top four categories by nationally recognized statistical rating organizations such as Moody's or Standard & Poor's. The Fund may also invest in unrated securities, in which case the Manager may internally assign ratings to certain of those securities, after assessing their credit quality, in categories similar to those of nationally recognized statistical rating organizations.
     The Fund has no limitations on the range of maturities of the debt securities in which it can invest and may hold securities with short-, medium- or long-term maturities. The maturity of a security differs from its effective duration, which attempts to measure the sensitivity of a security's price to interest rate changes. For example, if a bond has an effective duration of three years, a 1% increase in general interest rates would be expected to cause the bond's value to decline about 3% while a 1% decrease in general interest rates would be expected to cause the bond's value to increase about 3%. To try to decrease volatility, the Fund seeks to maintain a weighted average effective portfolio duration of three to six years, measured using the effective duration of the securities included in its portfolio and the amount invested in each of those securities. However, the duration of the portfolio might not meet that target due to market events.
     The Fund may invest in foreign debt securities, including securities issued by foreign governments or companies in both developed markets and emerging markets.
     The Fund may also use derivatives to seek increased returns or to try to manage investment risks. Options, futures, forward contracts, swaps, zero-coupon and stripped securities, "structured" notes and certain mortgage-related securities are examples of the types of derivatives the Fund can use.
     In selecting investments for the Fund, the Fund's portfolio managers analyze the overall investment opportunities and risks in different sectors of the debt securities markets by focusing on business cycle analysis and relative values between the corporate and government sectors. The Fund mainly seeks to earn income on its investments, plus any capital appreciation that may arise from decreases in interest rates, from improving credit fundamentals for a particular sector or security or from the use of other investment techniques.
     The Fund may sell securities that the portfolio managers believe no longer meet the above criteria.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar investment objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Debt Securities. Debt securities may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or repay principal, the Fund's income or share value might be reduced. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can also reduce the market value of the issuer's securities. Interest rate risk is the risk that when prevailing interest rates fall, the values of already-issued debt securities generally rise; and when prevailing interest rates rise, the values of already-issued debt securities generally fall, and may be worth less than the amount the Fund paid for them. When interest rates change, the values of longer-term debt securities usually change more than the values of shorter-term debt securities. When interest rates fall, debt securities may be repaid more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes normally have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

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

     Special Risks of Lower-Grade Securities. Lower-grade securities, whether rated or unrated, may be subject to wider market fluctuation, greater credit risk and greater risk of loss of income and principal than investment-grade securities. The market for lower-grade securities may be less liquid and therefore they may be harder to sell at an acceptable price, especially during times of market volatility or decline.

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

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

     Special Risks of Developing and Emerging Markets. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. The governments of developing and emerging market countries may also be more unstable than the governments of more developed countries. These countries generally have less developed securities markets or exchanges, and legal and accounting systems. Securities may be more difficult to sell at an acceptable price and may be more volatile than securities in countries with more mature markets. The value of developing or emerging market currencies may fluctuate more than the currencies of countries with more mature markets. Investments in developing or emerging market countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of a company's assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Investments in companies in developing or emerging market countries may be considered speculative.

Main Risks of Derivative Investments. Derivatives may be volatile and may require the payment of premiums, can increase portfolio turnover, may be illiquid, may not perform as expected and the Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

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

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

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5, and 10 years compare with those of broad measures of market performance that reflect the markets in which the Fund typically invests. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/CoreBondFundVA.

During the period shown, the highest return before taxes for a calendar quarter was 8.52% (3rd Quarter 09) and the lowest return before taxes for a calendar quarter was -29.59% (4th Quarter 08).

The following table shows the average annual total returns before taxes for each class of the Fund's shares. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index of U.S. dollar denominated, investment-grade, U.S. corporate, government and mortgage-backed securities. The Barclays Capital Credit Index is an index of non-convertible U.S. investment grade corporate bonds. The Citigroup Broad Investment Grade Bond Index is an index of institutionally traded U.S. Treasury Bonds, government-sponsored bonds, mortgage-backed securities and corporate securities.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 4-3-85)	9.61%	(5.51)%	0.57%
Service Shares (inception 5-1-02)	9.05%	(5.78)%	(1.37)%
Barclays Capital U.S. Aggregate Bond Index	5.93%	4.97%	6.33%
(reflects no deductions for fees, expenses or taxes)			5.39%1
Barclays Capital Credit Index	16.04%	4.67%	6.64%
(reflects no deductions for fees, expenses or taxes)			5.58%1
Citigroup Broad Investment Grade Bond Index	5.06%	5.22%	6.47%
(reflects no deductions for fees, expenses or taxes)			5.94%1

1.  From 4-30-02

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Managers. Krishna Memani and Peter A. Strzalkowski are Vice Presidents of the Fund and have been portfolio managers for the Fund since April 2009.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT THE FUND

About the Fund's Investments

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

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

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

Debt securities may be subject to the following risks:

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

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

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

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

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

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

Because the Fund may purchase securities that are not rated by any nationally recognized statistical rating organization, the Manager may internally assign ratings to certain of those securities, after assessing their credit quality, in categories similar to those of nationally recognized statistical rating organizations. However, the Manager's rating does not constitute a guarantee of the credit quality. In evaluating the credit quality of a particular security, whether rated or unrated, the Manager will normally take into consideration a number of factors. Unrated securities also are considered investment-grade or below-investment grade if judged by the Manager to be comparable to rated investment-grade or below-investment grade securities. Some unrated securities may not have an active trading market, which means that the Fund might have difficulty selling them promptly at an acceptable price.

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

Duration.  As a principal investment strategy, the Fund expects that under normal market

What is "Duration"? Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. "Effective duration" attempts to measure the expected percentage change in the value of a bond or portfolio resulting from a change in prevailing interest rates (measured by a change in U.S. Treasury security rates). The change in the value of a bond or portfolio can be approximated by multiplying its duration by a change in interest rates. For example, if a bond has an effective duration of three years, a 1% increase in general interest rates would be expected to cause the bond's value to decline about 3% while a 1% decrease in general interest rates would be expected to cause the bond's value to increase 3%.

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

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

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

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

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

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

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

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

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

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

Foreign Investments. The Fund can buy a variety of securities issued by foreign governments and companies, as well as "supra-national" entities, such as the World Bank. The Fund's foreign investments primarily include bonds, debentures and notes. The Fund's foreign investments can be denominated in U.S. dollars or in foreign currencies.

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

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

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

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

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

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

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

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

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

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

     Swap Transactions. There is no central exchange or market for swap transactions and therefore they are less liquid than exchange-traded instruments.

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

Structured notes are subject to interest rate risk. They are also subject to credit risk with respect both to the issuer and, if applicable, to the underlying security or borrower. If the underlying investment or index does not perform as anticipated, the structured note might pay less interest than the stated coupon payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult to value them or sell them at an acceptable price. In some cases, the Fund may enter into agreements with an issuer of structured notes to purchase a minimum amount of those notes over time.

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

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

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

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

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

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

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

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

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

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

Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation of a borrower. They are typically purchased from banks or dealers that have made the loan, or are members of the loan syndicate, and that act as the servicing agent for the principal and interest payments. The loans may be to U.S. or foreign companies. Participation interests may be collateralized or uncollateralized and are subject to the credit risk of the servicing agent as well as the credit risk of the borrower. If the Fund purchases a participation interest, it may only be able to enforce its rights through the lender. The Fund can also buy interests in trusts and other entities that hold loan obligations. In that case the Fund will be subject to the trust's credit risks as well as the credit risks of the servicing agent and the underlying loans. In some cases, participation interests, whether held directly by the Fund or indirectly through an interest in a trust or other entity, may be partially "unfunded," meaning that the Fund may be required to advance additional money on future dates.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

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

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.60% on the first $1 billion of the Fund's daily net assets, and 0.50% of daily net assets in excess of $1 billion. The Fund's management fee for its fiscal year ended December 31, 2009, was 0.60% of the Fund's average annual net assets for each class of shares.

Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.75% for Non-Service Shares and 1.00% for Service Shares. The Manager has also voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. Each undertaking may be amended or withdrawn after one year from the date of this prospectus. From April 1, 2009 through March 31, 2010, the Manager voluntarily waived the management fee by 0.18% of the Fund's average annual net assets.

After all waivers, reimbursements and other credits, the actual total annual fund operating expenses for the fiscal year ended December 31, 2009 were 0.62% for Non-Service Shares and 0.87% for Service Shares. The Fund's management fee and other annual operating expenses may vary in future years.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

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

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

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

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

MORE ABOUT YOUR INVESTMENT

How to Buy and Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limitations on Frequent Transactions

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

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

Policies on Disruptive Activity

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

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

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

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

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

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

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

Financial Highlights

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

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$6.45	$11.06	$11.16	$11.19	$11.50
Income (loss) from investment operations:
Net investment income1	.48	.66	.55	.53	.51
Net realized and unrealized gain (loss)	.14	(4.82)	(.08)	.03	(.23)
Total from investment operations	.62	(4.16)	.47	.56	.28
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	(.45)	(.57)	(.59)	(.59)
Net asset value, end of period	$7.07	$6.45	$11.06	$11.16	$11.19
Total Return, at Net Asset Value2	9.61%	(39.05)%	4.39%	5.28%	2.59%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$137,597	$156,339	$325,661	$367,106	$430,642
Average net assets (in thousands)	$137,631	$271,355	$345,723	$391,750	$466,033
Ratios to average net assets:3
Net investment income	7.40%	6.76%	5.07%	4.83%	4.56%
Total expenses	0.75%4	0.63%4	0.68%4	0.77%4	0.76%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.61%	0.62%	0.68%	0.77%	0.76%
Portfolio turnover rate5	143%	51%	89%	114%	111%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.76%
             Year Ended December 31, 20080.63%
             Year Ended December 31, 20070.68%
             Year Ended December 31, 20060.77%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2009$ 977,840,247$1,009,549,121
             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

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$6.41	$10.98	$11.10	$11.15	$11.47
Income (loss) from investment operations:
Net investment income1	.46	.63	.52	.49	.47
Net realized and unrealized gain (loss)	.12	(4.77)	(.08)	.03	(.22)
Total from investment operations	.58	(4.14)	.44	.52	.25
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	(.43)	(.56)	(.57)	(.57)
Net asset value, end of period	$6.99	$6.41	$10.98	$11.10	$11.15
Total Return, at Net Asset Value2	9.05%	(39.07)%	4.09%	4.93%	2.33%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$56,717	$ 63,093	$103,542	$41,191	$11,110
Average net assets (in thousands)	$52,648	$101,597	$ 70,116	$21,265	$ 7,213
Ratios to average net assets:3
Net investment income	7.16%	6.55%	4.85%	4.56%	4.29%
Total expenses	1.01%4	0.88%4	0.92%4	1.06%4	1.03%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.86%	0.87%	0.92%	1.06%	1.03%
Portfolio turnover rate5	143%	51%	89%	114%	111%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20091.02%
             Year Ended December 31, 20080.88%
             Year Ended December 31, 20070.92%
             Year Ended December 31, 20061.06%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2009$ 977,840,247$1,009,549,121
             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

INFORMATION AND SERVICES

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

How to Request More Information

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

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

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

The Fund's SEC File No. 811-4108

SP0630.001.0410

Oppenheimer

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

Share Classes:

     Service Shares

     Non-Service Shares

     Class 3 Shares

     Class 4 Shares

Prospectus dated April 30, 2010

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

Oppenheimer Global Securities Fund/VA is a mutual fund that seeks long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities. It invests mainly in common stocks of U.S. and foreign issuers.

 

Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class or classes you are eligible to purchase.

 

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

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	5
The Fund's Past Performance	7
Investment Adviser	8
Portfolio Manager	8
Purchase and Sale of Fund Shares	9
Taxes	9
Payments to Broker-Dealers and Other Financial Intermediaries	9
MORE ABOUT THE FUND
About the Fund's Investments	10
How the Fund is Managed	17
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	18
Dividends, Capital Gains and Taxes	24
Financial Highlights	25

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective. The Fund seeks long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations that are considered to have appreciation possibilities.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares	Class 3 Shares	Class 4 Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None	None	None
Redemption Fee (as % of amount redeemed, if applicable)	None	None	1.00%	1.00%

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares	Class 3 Shares	Class 4 Shares
Management Fees	0.64%	0.64%	0.64%	0.64%
Distribution and/or Service (12b-1) Fees	None	0.25%	None	0.25%
Other Expenses	0.11%	0.11%	0.11%	0.11%
Total Annual Fund Operating Expenses	0.75%	1.00%	0.75%	1.00%

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

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

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 11% of the average value of its portfolio.

Principal Investment Strategies. The Fund invests mainly in common stock of U.S. and foreign companies. The Fund can invest without limit in foreign securities and can invest in any country, including countries with developed or emerging markets. However, the Fund currently has more of its assets invested in developed markets such as the United States, Western European countries and Japan.

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

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

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

• Worldwide growth-oriented companies of any market capitalization;

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

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

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

• Special situations such as mergers, reorganizations, restructurings or other unusual events.

 The Fund does not limit its investments to companies in a particular market capitalization range, but primarily invests in large-cap companies. A company's market capitalization is the value of its outstanding common stock. Relative to other companies, a company may be classified as small-cap, mid-cap or large-cap.

The Fund may sell the stocks of companies that the portfolio manager believes no longer meet the above criteria, but it is not required to do so.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar investment objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Investing in Stock. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience great short-term volatility and may fall sharply at times. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

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

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

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

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

     Special Risks of Developing and Emerging Markets. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. The governments of developing and emerging market countries may also be more unstable than the governments of more developed countries. These countries generally have less developed securities markets or exchanges, and legal and accounting systems. Securities may be more difficult to sell at an acceptable price and may be more volatile than securities in countries with more mature markets. The value of developing or emerging market currencies may fluctuate more than the currencies of countries with more mature markets. Investments in developing or emerging market countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of a company's assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Investments in companies in developing or emerging market countries may be considered speculative.

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

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

Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking capital appreciation over the long term. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund that focuses on stocks and foreign securities. Because of its focus on long-term growth, the Fund may be more appropriate for investors with longer term investment goals. The Fund is not designed for investors needing current income. The Fund is not a complete investment program. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

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

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5 and 10 years compare with those of a broad measure of market performance. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/GlobalSecuritiesFundVA

During the period shown, the highest return before taxes for a calendar quarter was 22.81% (2nd Qtr 09) and the lowest return before taxes for a calendar quarter was -21.51% (4th Qtr 08).

The following table shows the average annual total returns before taxes for each class of the Fund's shares.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 11-12-1990)	39.77%	3.64%	3.91%
Service Shares (inception 07-13-2000)	39.36%	3.38%	2.55%
Class 3 Shares (inception 05-01-2003)	39.70%	3.64%	11.33%
Class 4 Shares (inception 05-03-2004)	39.38%	3.38%	5.78%
Morgan Stanley Capital International World Index	29.99%	2.01%	(0.24%)
(reflects no deductions for fees, expenses or taxes)			0.02%1
			7.62%2
			4.17%3

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

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Manager. Rajeev Bhaman has been portfolio manager and Vice President of the Fund since August 2004.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT THE FUND

About the Fund's Investments

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

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

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

The Fund may also buy debt securities issued by foreign companies and foreign governments or their agencies. 

     While foreign securities may offer special investment opportunities, they are also subject to special risks.

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

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

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

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

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

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

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

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

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

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

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

Rights and Warrants. Rights and warrants provide the option to purchase equity securities at a specific price during a specific period of time.

Risks of Technology Stocks. Technology companies and companies having significant investments in technology are particularly vulnerable to the risks of technology markets and economic events that affect those markets. The technology sector has historically exhibited great fluctuation in valuations. The stock prices of technology companies have been highly volatile, largely due to the rapid pace of product changes and developments within the sector. That price volatility may be expected to continue into the future.

Some technological developments may never become commercially successful or may rapidly become obsolete. Technologies that are dependent on consumer demand may also be more sensitive to changes in consumer spending patterns. Technology companies focusing on the information and telecommunications sectors may be adversely affected by international, federal and state regulations.

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

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

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

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

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

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

     The Fund has percentage limits on its use of hedging instruments.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

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

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2009, was 0.64% of the Fund's average annual net assets for each class of shares.

Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as a percentage of daily net assets, will not exceed the annual rate of 1.00% for Non-Service Shares and Class 3 Shares and 1.25% for Service Shares and Class 4 Shares. This undertaking may be amended or withdrawn at any time. Actual total annual operating expenses for the fiscal year ended December 31, 2009 were those shown in the Annual Fund Operating Expenses table earlier in this prospectus. The Fund's management fee and other operating expenses may vary in future years.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

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

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

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

INVESTING IN THE FUND 

How to Buy and Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limitations on Frequent Transactions

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

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

Policies on Disruptive Activity

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

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

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

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

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

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

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

Financial Highlights

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

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$20.21	$36.60	$36.79	$33.38	$29.51
Income (loss) from investment operations:
Net investment income1	.33	.55	.45	.43	.32
Net realized and unrealized gain (loss)	6.94	(14.46)	1.69	5.20	3.85
Total from investment operations	7.27	(13.91)	2.14	5.63	4.17
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.50)	(.46)	(.50)	(.36)	(.30)
Distributions from net realized gain	(.48)	(2.02)	(1.83)	(1.86)	--
Total dividends and/or distributions to shareholders	(.98)	(2.48)	(2.33)	(2.22)	(.30)
Net asset value, end of period	$26.50	$20.21	$36.60	$36.79	$33.38
Total Return, at Net Asset Value2	39.77%	(40.19)%	6.32%	17.69%	14.31%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$1,364,597	$1,150,113	$2,193,638	$2,297,315	$2,124,413
Average net assets (in thousands)	$1,206,240	$1,679,720	$2,302,726	$2,189,511	$2,123,523
Ratios to average net assets:3
Net investment income	1.51%	1.95%	1.21%	1.27%	1.08%
Total expenses	0.75%4	0.65%4	0.65%4	0.66%4	0.67%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.75%	0.65%	0.65%	0.66%	0.67%
Portfolio turnover rate	11%	19%	18%	21%	35%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.75%
             Year Ended December 31, 20080.65%
             Year Ended December 31, 20070.65%
             Year Ended December 31, 20060.66%

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$20.02	$36.27	$36.49	$33.16	$29.33
Income (loss) from investment operations:
Net investment income1	.27	.47	.33	.33	.24
Net realized and unrealized gain (loss)	6.90	(14.32)	1.72	5.16	3.84
Total from investment operations	7.17	(13.85)	2.05	5.49	4.08
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.43)	(.38)	(.44)	(.30)	(.25)
Distributions from net realized gain	(.48)	(2.02)	(1.83)	(1.86)	--
Total dividends and/or distributions to shareholders	(.91)	(2.40)	(2.27)	(2.16)	(.25)
Net asset value, end of period	$26.28	$20.02	$36.27	$36.49	$33.16
Total Return, at Net Asset Value2	39.36%	(40.33)%	6.08%	17.36%	14.06%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$980,485	$ 772,107	$1,300,989	$983,558	$557,284
Average net assets (in thousands)	$830,887	$1,051,239	$1,180,656	$750,499	$413,849
Ratios to average net assets:3
Net investment income	1.23%	1.70%	0.91%	0.98%	0.79%
Total expenses	1.00%4	0.90%4	0.89%4	0.91%4	0.92%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.00%	0.90%	0.89%	0.91%	0.92%
Portfolio turnover rate	11%	19%	18%	21%	35%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20091.00%
             Year Ended December 31, 20080.90%
             Year Ended December 31, 20070.89%
             Year Ended December 31, 20060.91%

Class 3 Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$20.34	$36.82	$36.99	$33.55	$29.65
Income (loss) from investment operations:
Net investment income1	.33	.56	.45	.43	.32
Net realized and unrealized gain (loss)	6.98	(14.56)	1.71	5.23	3.88
Total from investment operations	7.31	(14.00)	2.16	5.66	4.20
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.50)	(.46)	(.50)	(.36)	(.30)
Distributions from net realized gain	(.48)	(2.02)	(1.83)	(1.86)	--
Total dividends and/or distributions to shareholders	(.98)	(2.48)	(2.33)	(2.22)	(.30)
Net asset value, end of period	$26.67	$20.34	$36.82	$36.99	$33.55
Total Return, at Net Asset Value2	39.70%	(40.19)%	6.34%	17.69%	14.34%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$206,356	$175,971	$361,621	$395,901	$346,064
Average net assets (in thousands)	$182,553	$269,650	$391,270	$369,406	$296,252
Ratios to average net assets:3
Net investment income	1.49%	1.95%	1.22%	1.26%	1.06%
Total expenses	0.75%4	0.65%4	0.65%4	0.66%4	0.67%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.75%	0.65%	0.65%	0.66%	0.67%
Portfolio turnover rate	11%	19%	18%	21%	35%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.75%
             Year Ended December 31, 20080.65%
             Year Ended December 31, 20070.65%
             Year Ended December 31, 20060.66%

Class 4 Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$20.03	$36.28	$36.49	$33.15	$29.35
Income (loss) from investment operations:
Net investment income1	.27	.47	.34	.34	.24
Net realized and unrealized gain (loss)	6.92	(14.34)	1.70	5.16	3.84
Total from investment operations	7.19	(13.87)	2.04	5.50	4.08
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.42)	(.36)	(.42)	(.30)	(.28)
Distributions from net realized gain	(.48)	(2.02)	(1.83)	(1.86)	--
Total dividends and/or distributions to shareholders	(.90)	(2.38)	(2.25)	(2.16)	(.28)
Net asset value, end of period	$26.32	$20.03	$36.28	$36.49	$33.15
Total Return, at Net Asset Value2	39.38%	(40.35)%	6.06%	17.40%	14.05%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$78,043	$63,099	$123,542	$114,232	$90,604
Average net assets (in thousands)	$66,965	$93,909	$122,385	$100,973	$61,380
Ratios to average net assets:3
Net investment income	1.22%	1.69%	0.93%	1.00%	0.79%
Total expenses	1.00%4	0.91%4	0.90%4	0.91%4	0.93%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.00%	0.91%	0.90%	0.91%	0.93%
Portfolio turnover rate	11%	19%	18%	21%	35%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20091.00%
             Year Ended December 31, 20080.91%
             Year Ended December 31, 20070.90%
             Year Ended December 31, 20060.91%

INFORMATION AND SERVICES

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

How to Request More Information

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

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

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

The Fund's SEC File No.: 811.4108

SP0485.001.0410

Oppenheimer

Global Strategic Income Fund/VA
A series of Oppenheimer Variable Account Funds

Share Classes:

     Non-Service Shares

     Service Shares

Prospectus dated April 30, 2010

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

Oppenheimer Global Strategic Income Fund/VA is a mutual fund that seeks a high level of current income principally derived from interest on debt securities.

Prior to April 30, 2010, the Fund's name was Oppenheimer Strategic Bond Fund/VA.


Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class or classes you are eligible to purchase.

 

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

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	5
The Fund's Past Performance	8
Investment Adviser	9
Portfolio Managers	10
Purchase and Sale of Fund Shares	10
Taxes	10
Payments to Broker-Dealers and Other Financial Intermediaries	10
MORE ABOUT THE FUND
About the Fund's Investments	11
How the Fund is Managed	24
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	26
Dividends, Capital Gains and Taxes	32
Financial Highlights	33

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective. The Fund seeks a high level of current income principally derived from interest on debt securities.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares
Management Fees	0.55%	0.55%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses	0.10%	0.10%
Acquired Fund Fees and Expenses	0.03%	0.03%
Total Annual Fund Operating Expenses	0.68%	0.93%
Fee Waiver and Expense Reimbursement*	(0.03%)	(0.03%)
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement	0.65%	0.90%

* The Manager has voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund, Oppenheimer Master Loan Fund, LLC and Oppenheimer Master Event-Linked Bond Fund, LLC. This voluntary indirect management fee waiver and reimbursement may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Non-Service Shares	$	67	$	215	$	377	$	847
Service Shares	$	92	$	295	$	514	$	1,145

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 110% of the average value of its portfolio.

Principal Investment Strategies. Under normal market conditions, the Fund invests at least 80% of its net assets, including any borrowings for investment purposes, in debt securities. A debt security is a security representing money borrowed by the issuer that must be repaid, specifying the amount of principal, the interest rate or discount, and the time or times at which payments are due.

The Fund invests mainly in issuers in three market sectors: (1) foreign governments and companies, (2) U.S. Government securities, and (3) lower-grade, high-yield securities (commonly referred to as "junk bonds") of U.S. and foreign companies. However, the Fund is not required to invest in all three sectors at all times, and the amount of its assets in each of the three sectors will vary over time. The Fund can invest up to 100% of its assets in any one sector at any time, if the Fund's portfolio managers believe that it offers the best investment opportunity.

The portfolio managers analyze the overall investment opportunities and risks among the three market sectors in which the Fund invests and seek to moderate the special risks of investing in lower-grade, high-yield debt instruments and foreign securities by building a broadly diversified portfolio. The Fund's diversification strategies are intended to help reduce share price volatility while seeking current income. The portfolio managers currently focus on securities offering high current income, securities whose market prices tend to move in different directions (to seek overall portfolio diversification), and relative values among the three market sectors in which the Fund invests. These factors may vary in particular cases and may change over time.

The portfolio managers actively manage foreign currency exposure to seek to reduce risk and enhance return.

The Fund's foreign investments may include debt securities issued by foreign governments or companies in both developed markets and emerging markets. The Fund has no requirements regarding the range of maturities of the debt securities it can buy or the market capitalization of the issuers of those securities.

The Fund's debt securities may be "investment grade" or "lower-grade." Investment grade debt securities are rated in one of the top four categories by nationally recognized statistical rating organizations such as Moody's or Standard & Poor's. The Fund may also invest in unrated securities, in which case the portfolio managers may internally assign ratings to certain of those securities, after assessing their credit quality, in categories similar to those of nationally recognized statistical rating organizations. The Fund' debt investments typically include:  U.S. and foreign government bonds and notes, collateralized mortgage obligations (CMOs) and other mortgage-related securities, domestic and foreign corporate debt obligations, "structured" notes, "zero coupon" and "stripped" securities, participation interests in loans, investments in loan pools and asset-backed securities. The Fund normally invests a substantial amount of its assets in lower-grade, high-yield debt securities, and can do so without limit.

The Fund may also use certain types of derivative instruments for investment purposes or for hedging, including: options, futures, forward contracts, swaps, certain mortgage-related securities, "structured"notes, and event-linked bonds.

The Fund may sell securities that the portfolio managers believe are no longer favorable based on these factors.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar investment objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Debt Securities. Debt securities may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or repay principal, the Fund's income or share value might be reduced. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can also reduce the market value of the issuer's securities. Interest rate risk is the risk that when prevailing interest rates fall, the values of already-issued debt securities generally rise; and when prevailing interest rates rise, the values of already-issued debt securities generally fall, and may be worth less than the amount the Fund paid for them. When interest rates change, the values of longer-term debt securities usually change more than the values of shorter-term debt securities. When interest rates fall, debt securities may be repaid more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes normally have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

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

     Special Risks of Lower-Grade Securities. Lower-grade securities, whether rated or unrated, may be subject to wider market fluctuation, greater credit risk and greater risk of loss of income and principal than investment-grade securities. The market for lower-grade securities may be less liquid and therefore they may be harder to sell at an acceptable price, especially during times of market volatility or decline.

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

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

     Special Risks of Developing and Emerging Markets. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. The governments of developing and emerging market countries may also be more unstable than the governments of more developed countries. These countries generally have less developed securities markets or exchanges, and legal and accounting systems. Securities may be more difficult to sell at an acceptable price and may be more volatile than securities in countries with more mature markets. The value of developing or emerging market currencies may fluctuate more than the currencies of countries with more mature markets. Investments in developing or emerging market countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of a company's assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Investments in companies in developing or emerging market countries may be considered speculative.

Sector Allocation Risk. In allocating investments among its three principal market sectors, the Fund seeks to take advantage of the potential lack of performance correlation between those sectors. There is the risk that the evaluations regarding the sectors' relative performance may be incorrect and those sectors may all perform in a similar manner under certain market conditions.

Main Risks of Derivative Investments. Derivatives may be volatile and may require the payment of premiums, can increase portfolio turnover, may be illiquid, may not perform as expected and the Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and other investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking high current income from a fund that invests in a variety of domestic and foreign debt securities, including government and lower-grade debt securities. Those investors should be willing to assume the greater risks of short-term share price fluctuations and the special credit risks that are typical for a fund that invests mainly in lower-grade fixed-income securities and foreign securities. The Fund does not seek capital appreciation. The Fund is not designed for investors needing an assured level of current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

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

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5, and 10 years compare with those of two broad measures of market performance that reflect the markets in which the Fund typically invests. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were.  The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/GlobalStrategicIncomeFundVA.

During the period shown, the highest return before taxes for a calendar quarter was 10.00% (2nd Qtr 09) and the lowest return before taxes for a calendar quarter was -9.84% (4th Qtr 08).

The following table shows the average annual total returns before taxes for each class of the Fund's shares.

The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index of U.S. dollar denominated, investment-grade, U.S. corporate, government and mortgage-backed securities. The Citigroup World Government Bond Index is an unmanaged index of debt securities of major foreign governments.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 05-03-93)	18.83%	4.30%	6.23%
Service Shares (inception 03-19-01)	18.41%	4.04%	6.15%
Barclays Capital U.S. Aggregate Bond Index	5.93%	4.97%	6.33%
(reflects no deductions for fees, expenses or taxes)			5.57%*
Citigroup World Government Bond Index	2.55%	4.51%	6.63%
(reflects no deductions for fees, expenses or taxes)			7.80%*

* From 3-31-01.

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Managers. Arthur P. Steinmetz, the lead portfolio manager, has been a Vice President and portfolio manager of the Fund since May 1993. Krishna Memani, Joseph Welsh and Caleb Wong have been Vice Presidents and portfolio managers of the Fund since April 2009.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT THE FUND

About the Fund's Investments

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

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

Debt Securities. The Fund may invest in debt securities, including: U.S. and foreign government bonds and notes, collateralized mortgage obligations and other mortgage-related securities, asset-backed securities, participation interests in loans, investments in loan pools, "structured" notes, corporate debt obligations including lower-grade, high-yield domestic and foreign corporate debt obligations, and "zero-coupon" and "stripped" securities.

Debt securities may be subject to the following risks:

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

       "Zero-coupon" or "stripped" securities may be particularly sensitive to interest rate changes.  Interest rate changes may have different effects on the values of mortgage-related securities because of prepayment and extension risks.

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

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

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

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

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

     Because the Fund may purchase securities that are not rated by any nationally recognized statistical rating organization, the Manager may internally assign ratings to certain of those securities, after assessing their credit quality, in categories similar to those of nationally recognized statistical rating organizations. However, the Manager's rating does not constitute a guarantee of the credit quality. In evaluating the credit quality of a particular security, whether rated or unrated, the Manager will normally take into consideration a number of factors. Unrated securities also are considered investment-grade or below-investment grade if judged by the Manager to be comparable to rated investment-grade or below-investment grade securities. Some unrated securities may not have an active trading market, which means that the Fund might have difficulty selling them promptly at an acceptable price. 

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

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

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

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

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

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

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

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

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

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

A substantial portion of the Fund's assets may be subject to forward roll transactions at any given time.

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

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

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

Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation of a borrower. They are typically purchased from banks or dealers that have made the loan, or are members of the loan syndicate, and that act as the servicing agent for the principal and interest payments. The loans may be to U.S. or foreign companies. Participation interests may be collateralized or uncollateralized and are subject to the credit risk of the servicing agent as well as the credit risk of the borrower. If the Fund purchases a participation interest, it may only be able to enforce its rights through the lender. The Fund can also buy interests in trusts and other entities that hold loan obligations. In that case the Fund will be subject to the trust's credit risks as well as the credit risks of the servicing agent and the underlying loans. In some cases, participation interests, whether held directly by the Fund or indirectly through an interest in a trust or other entity, may be partially "unfunded," meaning that the Fund may be required to advance additional money on future dates.

Investments in Loan Investment Pools. The Fund can also buy interests in trusts and other pooled entities that invest primarily or exclusively in loan obligations, including entities sponsored or advised by the Manager or an affiliate. The Fund will be subject to the pooled entity's credit risks as well as the credit risks of the underlying loans. The loans underlying these investments may include loans to foreign or U.S. borrowers, may be collateralized or uncollateralized and may be rated above or below investment grade or may be unrated. The Manager expects that from time to time investments in loan investment pools may exceed 15% of the Fund's net assets.

These investments are subject to the risk of default by the borrower, interest rate and prepayment risk, as well as credit risks of the pooled entity that holds the loan obligations.

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

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

Investing in Foreign Securities. The Fund can buy debt securities issued by foreign governments and companies, as well as "supra-national" entities, such as the World Bank. The Fund's foreign debt investments can be denominated in U.S. dollars or in foreign currencies.

     While foreign securities may offer special investment opportunities, they are also subject to special risks.

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

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

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

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

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

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

These risks may be greater for investments in emerging or developing market countries.

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

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

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

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

Structured notes are subject to interest rate risk. They are also subject to credit risk with respect both to the issuer and, if applicable, to the underlying security or borrower. If the underlying investment or index does not perform as anticipated, the structured note might pay less interest than the stated coupon payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult to value them or sell them at an acceptable price. In some cases, the Fund may enter into agreements with an issuer of structured notes to purchase a minimum amount of those notes over time.

In some cases, the Fund may invest in structured notes that pay an amount based on a multiple of the relative change in value of the asset or reference. This type of note increases the potential for income but at a greater risk of loss than a typical debt security of the same maturity and credit quality.

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

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

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

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

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

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

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

     Swap Transactions. There is no central exchange or market for swap transactions and therefore they are less liquid than exchange-traded instruments.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Investments in Other Investment Companies. The Fund can also invest in the securities of other investment companies, which can include open-end funds, closed-end funds, unit investment trusts and business development companies. One reason the Fund might do so is to gain exposure to segments of the markets represented by another fund, at times when the Fund might not be able to buy the particular type of securities directly. As a shareholder of an investment company, the Fund would be subject to its ratable share of that investment company's expenses, including its advisory and administration expenses. The Fund does not intend to invest in other investment companies unless the Manager believes that the potential benefits of the investment justify the payment of any premiums or sales charges.

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

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

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

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

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

How the Fund is Managed

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

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for its fiscal year ended December 31, 2009, was 0.55% of the Fund's average annual net assets for each class of shares.

The Manager has voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund, Oppenheimer Master Loan Fund, LLC and Oppenheimer Master Event-Linked Bond Fund, LLC. This undertaking may be amended or withdrawn after one year from the date of this prospectus. Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.75% for Non-Service Shares and 1.00% for Service Shares. This undertaking may be amended or withdrawn at any time. After all waivers, reimbursements, and other credits, the actual total annual fund operating expenses for the fiscal year ended December 31, 2009 were those shown in the Annual Fund Operating Expenses table earlier in this prospectus. The Fund's management fee and other annual operating expenses may vary in future years.

In February 2009, the Fund was advised by an insurance company holding Fund shares that it would redeem a large portion of its holdings, approximately $2.1 billion of Service Shares, in a series of structured redemptions beginning in May 2010 and ending in June 2010. The insurance company requested that the redemptions be paid in cash (rather than in-kind). As a result, the management fee and other Fund expenses, as a percentage of the Fund's net assets, are expected to increase following completion of the redemptions.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

Portfolio Managers. The Fund's portfolio is managed by Arthur P. Steinmetz, the lead portfolio manager, Krishna Memani, Joseph Welsh and Caleb Wong, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Steinmetz has been the portfolio manager and Vice President of the Fund since May 1993. Messrs. Memani, Welsh and Wong have been portfolio managers and Vice Presidents of the Fund since April 2009.

     Mr. Steinmetz has been the Chief Investment Officer of Fixed-Income Investments of the Manager since April 2009; Executive Vice President of the Manager since October 2009; Director of Fixed Income of the Manager from January 2009 to April 2009 and a Senior Vice President of the Manager from March 1993 to September 2009.  He is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

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

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

    Mr. Wong has been a Vice President of the Manager since June 1999 and has worked in fixed-income quantitative research and risk management for the Manager since July 1996. He has been a member of the Manager's Asset Allocation Committee since April 2005. Mr. Wong is a portfolio manager and an officer of other portfolios in the OppenheimerFunds complex.

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

INVESTING IN THE FUND 

How to Buy and Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limitations on Frequent Transactions

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

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

Policies on Disruptive Activity

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

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

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

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

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

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

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

Financial Highlights

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

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$4.49	$5.56	$5.26	$5.11	$5.21
Income (loss) from investment operations:
Net investment income1	.30	.30	.28	.26	.25
Net realized and unrealized gain (loss)	.53	(1.04)	.21	.11	(.12)
Total from investment operations	.83	(.74)	.49	.37	.13
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.02)	(.27)	(.19)	(.22)	(.23)
Distributions from net realized gain	-- 2	(.06)	--	--	--
Total dividends and distributions to shareholders	(.02)	(.33)	(.19)	(.22)	(.23)
Net asset value, end of period	$5.30	$4.49	$5.56	$5.26	$5.11
Total Return, at Net Asset Value3	18.83%	(14.21)%	9.69%	7.49%	2.67%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$757,772	$648,570	$734,611	$606,632	$538,141
Average net assets (in thousands)	$681,926	$753,062	$664,668	$564,248	$550,201
Ratios to average net assets:4,5
Net investment income	6.20%	5.78%	5.34%	5.05%	4.91%
Total expenses	0.67%6	0.59%6	0.59%6	0.64%6	0.71%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.64%	0.57%	0.57%	0.63%	0.71%
Portfolio turnover rate7	110%	86%	76%	93%	98%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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. Includes the Fund's share of the allocated expenses and/or net investment income from the master funds.
6. Total expenses including indirect expenses from affiliated funds, excluding investments in master funds, were as follows:
             Year Ended December 31, 20090.68%
             Year Ended December 31, 20080.60%
             Year Ended December 31, 20070.61%
             Year Ended December 31, 20060.64%
7. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2009$1,909,574,925$1,836,038,328
             Year Ended December 31, 2008$ 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

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$4.56	$5.65	$5.34	$5.19	$5.29
Income (loss) from investment operations:
Net investment income1	.29	.29	.28	.25	.21
Net realized and unrealized gain (loss)	.54	(1.06)	.22	.11	(.08)
Total from investment operations	.83	(.77)	.50	.36	.13
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.01)	(.26)	(.19)	(.21)	(.23)
Distributions from net realized gain	-- 2	(.06)	--	--	--
Total dividends and distributions to shareholders	(.01)	(.32)	(.19)	(.21)	(.23)
Net asset value, end of period	$5.38	$4.56	$5.65	$5.34	$5.19
Total Return, at Net Asset Value3	18.41%	(14.49)%	9.55%	7.23%	2.48%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$3,656,726	$2,810,315	$2,876,016	$1,396,188	$658,107
Average net assets (in thousands)	$3,143,836	$3,152,967	$2,075,028	$1,016,582	$408,515
Ratios to average net assets:4,5
Net investment income	5.95%	5.54%	5.08%	4.83%	4.20%
Total expenses	0.92%6	0.84%6	0.84%6	0.89%6	0.96%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.89%	0.82%	0.82%	0.88%	0.96%
Portfolio turnover rate7	110%	86%	76%	93%	98%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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. Includes the Fund's share of the allocated expenses and/or net investment income from the master funds.
6. Total expenses including indirect expenses from affiliated funds, excluding investments in master funds, were as follows:
             Year Ended December 31, 20090.93%
             Year Ended December 31, 20080.85%
             Year Ended December 31, 20070.86%
             Year Ended December 31, 20060.89%
7. The portfolio turnover rate excludes purchases and sales of To Be Announced (TBA) mortgage-related securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2009$1,909,574,925$1,836,038,328
             Year Ended December 31, 2008$ 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

INFORMATION AND SERVICES

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

How to Request More Information

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

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

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

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

SP0265.001.0410

Oppenheimer

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

Share Classes:

     Service Shares

     Non-Service Shares

     Class 3 Shares

     Class 4 Shares

Prospectus dated April 30, 2010 

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

Oppenheimer High Income Fund/VA is a mutual fund that seeks a high level of current income from investment in high-yield, fixed-income securities.

 

Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus and explains how to select shares of the Fund as an investment under that insurance product, and which share class or classes you are eligible to purchase.

 

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

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	5
Principal Risks	6
The Fund's Past Performance	8
Investment Adviser	9
Portfolio Manager	9
Purchase and Sale of Fund Shares	9
Taxes	10
Payments to Broker-Dealer and Other Financial Intermediaries	10
MORE ABOUT THE FUND
About the Fund's Investments	11
How the Fund is Managed	21
INVESTING IN THE FUND
How to Buy and Sell Shares	23
Dividends, Capital Gains and Taxes	29
Financial Highlights	29

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective. The Fund seeks a high level of current income from investment in high-yield, fixed-income securities.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares	Class 3 Shares	Class 4 Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None	None	None
Redemption Fee (as % of amount redeemed, if applicable)	None	None	1.00%	1.00%

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares	Class 3 Shares	Class 4 Shares
Management Fees	0.75%	0.75%	0.75%	0.75%
Distribution and/or Service (12b-1) Fees	None	0.25%	None	0.25%
Acquired Fund Fees and Expenses	0.02%	0.02%	0.02%	0.02%
Other Expenses	0.19%	0.21%	0.22%	0.19%
Total Annual Fund Operating Expenses	0.96%	1.23%	0.99%	1.21%
Fee Waiver and Expense Reimbursement*	(0.11%)	(0.15%)	(0.18%)	(0.13%)
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement	0.85%	1.08%	0.81%	1.08%

* Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.75% for Non-Service and Class 3 shares and 1.00% for Service and Class 4 shares. The Manager has also voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. This voluntary expense limitation and indirect management fee waiver and reimbursement may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Service Shares	$	111	$	378	$	665	$	1,484
Non-Service Shares	$	87	$	296	$	523	$	1,173
Class 3 Shares	$	83	$	299	$	532	$	1,202
Class 4 Shares	$	111	$	373	$	656	$	1,463

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 128% of the average value of its portfolio.

Principal Investment Strategies. The Fund invests in a variety of high-yield debt securities and related instruments. Those investments primarily include lower-grade corporate bonds. To a lesser extent, the Fund's investments include foreign corporate and government bonds, as well as swaps, including single name and index-linked credit default swaps.

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

     The Fund's debt securities may be rated by nationally recognized statistical rating organizations such as Moody's Investors Service or Standard & Poor's or may be unrated.

     Lower-grade debt securities are those rated below "BBB" by Standard & Poor's or below "Baa" by Moody's Investors Service, or that have comparable ratings from other nationally-recognized rating organizations. Additionally, the portfolio managers may internally assign ratings to certain of the Fund's unrated securities, after assessing their credit quality, in categories equivalent to those of nationally recognized statistical rating organizations. The Fund may also invest in unrated securities, in which case the Manager may internally assign ratings to certain of those securities, after assessing their credit quality, in categories similar to those of nationally recognized statistical rating organizations. The Fund may also invest in unrated securities, in which case the Manager may internally assign ratings to certain of thos securities, after assessing their credit quality, in categories similar to those of nationally recognized statistical rating organizations.

     The Fund may invest in securities of U.S. or foreign issuers. When it does so, the Fund will tend to focus on securities of foreign issuers in developing markets. The Fund also uses certain types of derivative investments to try to enhance income or to try to manage ("hedge") investment risks, including: options, futures contracts, swaps, "structured" notes, and certain mortgage-related securities.

     In selecting securities, the portfolio manager seeks to build a broadly diversified portfolio to try to moderate the special risks of investing in high-yield debt instruments. The portfolio manager currently uses a "bottom up" approach, focusing on the performance of individual securities while considering industry trends. He evaluates an issuer's liquidity, financial strength and earnings power. The Fund's portfolio manager also analyzes the overall investment opportunities and risks in different market sectors, industries and countries. The portfolio manager currently focuses on the following factors, which may vary in particular cases and may change over time:

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

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

• Corporate sectors that in the portfolio manager's view are undervalued in the marketplace,

• changes in the business cycle that might affect corporate profits, and Securities or sectors that will help the overall diversification of the portfolio.

The Fund may sell securities that the portfolio manager believes no longer meet the above criteria.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar investment objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Debt Securities. Debt securities may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or repay principal, the Fund's income or share value might be reduced. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can also reduce the market value of the issuer's securities. Interest rate risk is the risk that when prevailing interest rates fall, the values of already-issued debt securities generally rise; and when prevailing interest rates rise, the values of already-issued debt securities generally fall, and may be worth less than the amount the Fund paid for them. When interest rates change, the values of longer-term debt securities usually change more than the values of shorter-term debt securities. When interest rates fall, debt securities may be repaid more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes normally have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

     Special Risks of Lower-Grade Securities. Lower-grade securities, whether rated or unrated, may be subject to wider market fluctuation, greater credit risk and greater risk of loss of income and principal than investment-grade securities. The market for lower-grade securities may be less liquid and therefore they may be harder to sell at an acceptable price, especially during times of market volatility or decline.

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

      Fixed-Income Market Risks. Developments relating to subprime mortgages have adversely affected fixed-income securities markets in the United States, Europe and elsewhere. The values of many types of debt securities have been reduced, including debt securities that are not related to mortgage loans. These developments have reduced the willingness of some lenders to extend credit and have made it more difficult for borrowers to obtain financing on attractive terms or at all. These developments also have had a negative effect on the broader economy. There is a risk that a lack of liquidity or other adverse credit market conditions may hamper the Fund's ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

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

     Special Risks of Developing and Emerging Markets. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. The governments of developing and emerging market countries may also be more unstable than the governments of more developed countries. These countries generally have less developed securities markets or exchanges, and legal and accounting systems. Securities may be more difficult to sell at an acceptable price and may be more volatile than securities in countries with more mature markets. The value of developing or emerging market currencies may fluctuate more than the currencies of countries with more mature markets. Investments in developing or emerging market countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of a company's assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Investments in companies in developing or emerging market countries may be considered speculative.

Main Risks of Derivative Investments. Derivatives may be volatile and may require the payment of premiums, can increase portfolio turnover, may be illiquid, may not perform as expected and the Fund may also lose money on a derivative investment if the issuer fails to pay the amount due.

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

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

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5 and 10 years compare with those of a broad measure of market performance. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/HighIncomeFundVA

During the period shown, the highest return before taxes for a calendar quarter was 16.67% (2nd qtr 09) and the lowest return before taxes for a calendar quarter was -71.27% (4th qtr 08).

The following table shows the average annual total returns of each class of the Fund's shares before taxes. 

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 04-30-1986)	25.32%	(21.46%)	(9.06%)
Service Shares (inception 09-18-2001)	25.95%	(21.44%)	(10.51%)
Class 3 Shares (inception 05-01-2007)	26.75%	(39.79%)	N/A
Class 4 Shares (inception 05-01-2007)	26.42%	(39.60%)	N/A
Merrill Lynch High Yield Master Index	56.28%	6.23%	6.77%
(reflects no deductions for fees, expenses or taxes)		4.78%1	8.70%2

1.  From 4-30-07
2.  From 9-30-01

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Manager. Joseph Welsh who has been a Vice President and portfolio manager of the Fund since April 2009. 

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT YOUR INVESTMENT

About the Fund's Investments

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

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

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

Debt securities may be subject to the following risks:

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

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

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

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

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

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

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

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

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

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

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

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

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

Structured notes are subject to interest rate risk. They are also subject to credit risk with respect both to the issuer and, if applicable, to the underlying security or borrower. If the underlying investment or index does not perform as anticipated, the structured note might pay less interest than the stated coupon payment or repay less principal upon maturity. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult to value them or sell them at an acceptable price. In some cases, the Fund may enter into agreements with an issuer of structured notes to purchase a minimum amount of those notes over time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Zero-Coupon Securities. The Fund may invest in "zero-coupon" securities, which pay no interest prior to their maturity date or another specified date in the future but are issued at a discount from their face value. Interest rate changes generally cause greater fluctuations in the prices of zero-coupon securities than in interest-paying securities of the same or similar maturities. The Fund may be required to pay a dividend of the imputed income on a zero-coupon security at a time when it has not actually received the income.

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

Stripped Securities. "Stripped" securities are the separate income or principal components of a debt security, such as Treasury securities whose coupons have been stripped by a Federal Reserve Bank. Some mortgage-related securities may be stripped, with each component having a different proportion of principal or interest payments. One class might receive all the interest payments, all the principal payments or some proportional amount of interest and principal. Interest rate changes may cause greater fluctuations in the prices of stripped securities than in other debt securities of the same or similar maturities. The market for these securities may be limited, making it difficult for the Fund to sell its holdings at an acceptable price. The Fund may be required to pay out the imputed income on a stripped security as a dividend, at a time when it has not actually received the income.

Participation Interests in Loans. These securities represent an undivided fractional interest in a loan obligation of a borrower. They are typically purchased from banks or dealers that have made the loan, or are members of the loan syndicate, and that act as the servicing agent for the principal and interest payments. The loans may be to U.S. or foreign companies. Participation interests may be collateralized or uncollateralized and are subject to the credit risk of the servicing agent as well as the credit risk of the borrower. If the Fund purchases a participation interest, it may only be able to enforce its rights through the lender. The Fund can also buy interests in trusts and other entities that hold loan obligations. In that case the Fund will be subject to the trust's credit risks as well as the credit risks of the servicing agent and the underlying loans. In some cases, participation interests, whether held directly by the Fund or indirectly through an interest in a trust or other entity, may be partially "unfunded," meaning that the Fund may be required to advance additional money on future dates.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

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

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% on the next $200 million and 0.50% of average annual net assets over $1 billion. The Fund's management fee for its fiscal year ended December 31, 2009 was 0.75% of the Fund's average annual net assets for each class of shares.

From September 1, 2008 through August 31, 2009, the Manager voluntarily reduced its advisory fee rate by 0.10% of the Fund's average annual net assets if the Fund's trailing one-year total return performance was in the fifth quintile of the Fund's Lipper peer group. From April 1, 2009 through March 31, 2010, the Manager voluntarily waived its advisory fee by 0.26% of the Fund's average annual net assets. This voluntary waiver was applied after all other waivers and/or reimbursements.

Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.75% for Non-Service and Class 3 Shares and 1.00% for Service and Class 4 Shares. The Manager has also voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. Each of these undertakings may be amended or withdrawn after one year from the date of this prospectus. After all waivers and reimbursements, actual total annual fund operating expenses for the fiscal year ended December 31, 2009 were 0.59% for Non-Service Shares, 0.82% for Service Shares, 0.55% for Class 3 Shares and 0.82% for Class 4 Shares. The Fund's management fee and other annual operating expenses may vary in future years. 

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

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

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

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

INVESTING IN THE FUND 

How to Buy and Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limitations on Frequent Transactions

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

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

Policies on Disruptive Activity

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

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

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

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

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

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

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

Financial Highlights

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

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$1.58	$7.95	$8.55	$8.44	$8.80
Income (loss) from investment operations:
Net investment income1	.17	.54	.57	.58	.57
Net realized and unrealized gain (loss)	.23	(6.44)	(.56)	.17	(.37)
Total from investment operations	.40	(5.90)	.01	.75	.20
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	(.47)	(.61)	(.64)	(.56)
Net asset value, end of period	$1.98	$1.58	$7.95	$8.55	$8.44
Total Return, at Net Asset Value2	25.32%	(78.67)%	(0.10)%	9.42%	2.31%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$67,385	$111,040	$294,819	$361,445	$384,726
Average net assets (in thousands)	$71,782	$211,186	$335,702	$365,154	$444,477
Ratios to average net assets:3
Net investment income	9.78%	9.30%	6.96%	7.05%	6.79%
Total expenses	0.94%4	0.80%4	0.75%4	0.74%4	0.75%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.57%	0.78%	0.74%	0.74%	0.75%
Portfolio turnover rate	128%	53%5	67%5	57%	64%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.96%
             Year Ended December 31, 20080.80%
             Year Ended December 31, 20070.76%
             Year Ended December 31, 20060.74%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2008$40,240,084$41,196,921
             Year Ended December 31, 2007$30,798,147$24,096,458

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$1.58	$7.89	$8.50	$8.39	$8.76
Income (loss) from investment operations:
Net investment income1	.16	.54	.55	.56	.55
Net realized and unrealized gain (loss)	.25	(6.40)	(.57)	.17	(.38)
Total from investment operations	.41	(5.86)	(.02)	.73	.17
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	(.45)	(.59)	(.62)	(.54)
Net asset value, end of period	$1.99	$1.58	$7.89	$8.50	$8.39
Total Return, at Net Asset Value2	25.95%	(78.57)%	(0.47)%	9.23%	2.01%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$64,440	$ 43,375	$157,333	$173,299	$155,617
Average net assets (in thousands)	$54,202	$116,236	$169,569	$160,703	$141,287
Ratios to average net assets:3
Net investment income	9.60%	9.13%	6.71%	6.80%	6.54%
Total expenses	1.21%4	1.05%4	1.01%4	1.00%4	1.00%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.80%	1.03%	1.00%	1.00%	1.00%
Portfolio turnover rate	128%	53%5	67%5	57%	64%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20091.23%
             Year Ended December 31, 20081.05%
             Year Ended December 31, 20071.02%
             Year Ended December 31, 20061.00%
5. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase TransactionsSale Transactions
             Year Ended December 31, 2008$40,240,084$41,196,921
             Year Ended December 31, 2007$30,798,147$24,096,458

Class 3 Shares      Year Ended December 31,	2009	2008	20071
Per Share Operating Data
Net asset value, beginning of period	$1.57	$7.98	$8.26
Income (loss) from investment operations:
Net investment income2	.17	.56	.37
Net realized and unrealized gain (loss)	.25	(6.50)	(.65)
Total from investment operations	.42	(5.94)	(.28)
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	(.47)	--
Net asset value, end of period	$1.99	$1.57	$7.98
Total Return, at Net Asset Value3	26.75%	(78.89)%	(3.39)%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$4,684	$1,582	$4,921
Average net assets (in thousands)	$3,568	$5,292	$3,750
Ratios to average net assets:4
Net investment income	9.86%	9.29%	6.90%
Total expenses5	0.97%	0.80%	0.76%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.53%	0.78%	0.75%
Portfolio turnover rate	128%	53%6	67%6

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 initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.99%
Year Ended December 31, 20080.80%
Period Ended December 31, 20070.77%
6. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase TransactionsSale Transactions
Year Ended December 31, 2008$40,240,084$41,196,921
Period Ended December 31, 2007$30,798,147$24,096,458

Class 4 Shares      Year Ended December 31,	2009	2008	20071
Per Share Operating Data
Net asset value, beginning of period	$1.59	$7.97	$8.26
Income (loss) from investment operations:
Net investment income2	.16	.54	.36
Net realized and unrealized gain (loss)	.26	(6.46)	(.65)
Total from investment operations	.42	(5.92)	(.29)
Dividends and/or distributions to shareholders:
Dividends from net investment income	--	(.46)	--
Net asset value, end of period	$2.01	$1.59	$7.97
Total Return, at Net Asset Value3	26.42%	(78.63)%	(3.51)%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$7,107	$ 4,167	$9,476
Average net assets (in thousands)	$6,285	$10,658	$7,201
Ratios to average net assets:4
Net investment income	9.62%	9.00%	6.61%
Total expenses5	1.19%	1.07%	1.05%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.80%	1.05%	1.04%
Portfolio turnover rate	128%	53%6	67%6

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 initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20091.21%
Year Ended December 31, 20081.07%
Period Ended December 31, 20071.06%
6. The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities as follows:
Purchase TransactionsSale Transactions
Year Ended December 31, 2008$40,240,084$41,196,921
Period Ended December 31, 2007$30,798,147$24,096,458

INFORMATION AND SERVICES

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

How to Request More Information

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

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

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

The Fund's SEC File No. 811-4108

SP0640.001.0410

Oppenheimer

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

Share Classes:

     Service Shares

     Non-Service Shares

Prospectus dated April 30, 2010 

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

Oppenheimer Main Street Fund/VA is a mutual fund that seeks high total return. It emphasizes investments in common stocks based on analyses using fundamental research and quantitative models.

 

Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class you are eligible to purchase.

 

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

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	4
The Fund's Past Performance	6
Investment Adviser	7
Portfolio Managers	7
Purchase and Sale Fund Shares	7
Taxes	7
Payments to Broker-Dealers and Other Financial Intermediaries	7
MORE ABOUT THE FUND
About the Fund's Investments	9
How the Fund is Managed	15
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	17
Dividends, Capital Gains and Taxes	23
Financial Highlights	24

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective. The Fund seeks high total return.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares
Management Fees	0.66%	0.66%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses	0.12%	0.12%
Total Annual Fund Operating Expenses	0.78%	1.03%

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Service Shares	$	80	$	250	$	435	$	970
Non-Service Shares	$	106	$	329	$	571	$	1,266

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 128% of the average value of its portfolio.

Principal Investment Strategies. The Fund mainly invests in common stocks of U.S. companies. The portfolio managers use both fundamental research and quantitative models to identify investment opportunities. While the process may change over time or vary in particular cases, in general the selection process currently:

• aims to maintain broad diversification across all major economic sectors;

• uses quantitative models, including sector-specific factors, to rank securities within each economic sector;

• uses a fundamental approach to analyze issuers based on factors such as a company's financial performance, competitive strength, industry position, business practices and management; and

• considers market trends, current industry outlooks and general economic conditions.

     In constructing the portfolio, the Fund seeks to limit idiosyncratic company-specific risks. The portfolio managers consider stock rankings, benchmark weightings and capitalization outlooks in determining security weightings for individual issuers. The Fund may invest in companies of any capitalization. To seek to maintain liquidity, the Fund currently focuses on larger capitalization issuers, which it considers to be companies with market capitalizations equal to the range of companies in the Russell 1000 Index.
The Fund can invest without limit in securities issued by companies or governments in any country, including in developing or emerging market countries.
The portfolio managers might sell a security if the stock price is approaching their price target, if the company's competitive position has deteriorated or the company's management has performed poorly, or if they have identified more attractive investment prospects.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Investing in Stock. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience great short-term volatility and may fall sharply at times. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

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

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

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

 Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking high total return. Those investors should be willing to assume the risks of short-term share price fluctuations that are typical for a fund that focuses on stocks. The Fund is not designed for investors needing current income. The Fund is not a complete investment program. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

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

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5 and 10 years compare with those of a broad measure of market performance. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/MainStreetFundVA

During the period shown, the highest return before taxes for a calendar quarter was 18.50% (2nd Qtr 09) and the lowest return before taxes for a calendar quarter was -22.18% (4th Qtr 08).

The following table shows the average annual total returns before taxes for each class of the Fund's shares.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years
Non-Service Shares (inception 7-5-95)	28.29%	0.10%	(0.75%)
Service Shares (inception 7-13-00)	27.99%	(0.14%)	(1.34%)
S&P 500 Index	26.47%	0.42%	(0.95%)
(reflects no deduction for fees, expenses or taxes)			(0.95%)*

*  From 6-30-00.

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Managers. Manind ("Mani") Govil has been lead portfolio manager of the Fund and Benjamin Ram has been co-portfolio manager of the Fund since May 2009.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT THE FUND

About the Fund's Investments

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

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

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

Quantitative Models. The portfolio managers use quantitative stock selection models that are based upon many factors that measure individual securities relative to each other.

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

     The Fund may purchase American Depository Shares ("ADS") as part of American Depository Receipt ("ADR") issuances, which are negotiable certificates issued by a U.S. bank representing a specified number of shares in a foreign stock traded on a U.S. exchange. They are subject to some of the special considerations and risks, discussed above, that apply to foreign securities traded and held abroad.

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

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

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

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

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

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

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

Main Risks of Debt Securities. Debt securities may be subject to credit risk, interest rate risk, prepayment risk and extension risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. If an issuer fails to pay interest or repay principal, the Fund's income or share value might be reduced. Adverse news about an issuer or a downgrade in an issuer's credit rating, for any reason, can also reduce the market value of the issuer's securities. Interest rate risk is the risk that when prevailing interest rates fall, the values of already-issued debt securities generally rise; and when prevailing interest rates rise, the values of already-issued debt securities generally fall, and may be worth less than the amount the Fund paid for them. When interest rates change, the values of longer-term debt securities usually change more than the values of shorter-term debt securities. When interest rates fall, debt securities may be repaid more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as "prepayment risk." When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund's holdings may fall sharply. This is referred to as "extension risk." Interest rate changes normally have different effects on variable or floating rate securities than they do on securities with fixed interest rates.

   The Fund may invest in debt securities for liquidity, to seek income or for hedging purposes, however it does not focus on debt securities as a principal investment strategy.

Master Limited Partnerships. The Fund may invest in publicly traded limited partnerships known as "master limited partnerships" or MLPs. MLPs issue units that are registered with the Securities and Exchange Commission and are freely tradable on a securities exchange or in the over-the-counter market. An MLP consists of one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. The Fund, as a limited partner, normally would not be liable for the debts of the MLP beyond the amounts the Fund has contributed, but would not be shielded to the same extent that a shareholder of a corporation would be. In certain circumstances creditors of an MLP would have the right to seek return of capital distributed to a limited partner. This right of an MLP's creditors would continue after the Fund sold its investment in the MLP. MLPs are typically real estate, oil and gas and equipment leasing vehicles, but they also finance movies, research and development, and other projects.

Investments in Other Investment Companies. The Fund can also invest in the securities of other investment companies, which can include open-end funds, closed-end funds, unit investment trusts and business development companies. One reason the Fund might do so is to gain exposure to segments of the markets represented by another fund, at times when the Fund might not be able to buy the particular type of securities directly. As a shareholder of an investment company, the Fund would be subject to its ratable share of that investment company's expenses, including its advisory and administration expenses. The Fund does not intend to invest in other investment companies unless the Manager believes that the potential benefits of the investment justify the payment of any premiums or sales charges.

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

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

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

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

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

     Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. Derivative transactions may require the payment of premiums and can increase portfolio turnover. For example, if a call option sold by the Fund were exercised on an investment that had increased in value above the call price, the Fund would be required to sell the investment at the call price and would not be able to realize any additional profit.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Manager expects it to. As a result, the Fund could realize little or no income or lose principal from the investment, or a hedge might be unsuccessful. Derivatives are also subject to credit risk, since the Fund may also lose money on a derivative investment if the issuer of the security fails to pay the amount due.

For some derivatives, it is possible for the Fund to lose more than the amount invested in the derivative instrument.

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

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

The Manager has been an investment adviser since 1960. The Manager and a subsidiary managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2009 was 0.66% of the Fund's average annual net assets for each class of shares.

Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. This undertaking may be amended or withdrawn after one year from the date of this prospectus. After all waivers, reimbursements and other credits, the actual total annual fund operating expenses for the fiscal year ended December 31, 2009, were those shown in the Annual Fund Operating Expenses table earlier in this prospectus. The Fund's management fee and other annual operating expenses may vary in future years.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

Portfolio Managers. The Fund's portfolio is managed by Manind ("Mani") Govil and Benjamin Ram, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Govil has been lead portfolio manager of the Fund and Mr. Ram has been co-portfolio manager of the Fund since May 2009.

     Mr. Govil, CFA, has been a Senior Vice President, the Main Street Team Leader and a portfolio manager of the Manager since May 2009. Prior to joining the Manager, Mr. Govil was a portfolio manager with RS Investment Management Co. LLC from October 2006 until March 2009. He served as the head of equity investments at The Guardian Life Insurance Company of America from August 2005 to October 2006 when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. He served as the lead portfolio manager - large cap blend/core equity, co-head of equities and head of equity research, from 2001 to July 2005, and was lead portfolio manager - core equity, from April 1996 to July 2005, at Mercantile Capital Advisers, Inc. Mr. Govil is a portfolio manager of other portfolios in the OppenheimerFunds complex.

     Mr. Ram has been a Vice President and portfolio manager of the Manager since May 2009. Prior to joining the Manager, Mr. Ram was sector manager for financial investments and a co-portfolio manager for mid-cap portfolios with the RS Core Equity Team of RS Investment Management Co. LLC from October 2006 to May 2009. He served as Portfolio Manager Mid Cap Strategies, Sector Manager Financials at The Guardian Life Insurance Company of America from January 2006 to October 2006 when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. He was a financials analyst, from 2003 to 2005, and co-portfolio manager, from 2005 to 2006, at Mercantile Capital Advisers, Inc. Mr. Ram was a bank analyst at Legg Mason Securities from 2000 to 2003 and was a senior financial analyst at the CitiFinancial division of Citigroup, Inc. from 1997 to 2000. Mr. Ram is a portfolio manager of other portfolios in the OppenheimerFunds complex. .

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

INVESTING IN THE FUND 

How to Buy and Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limitations on Frequent Transactions

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

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

Policies on Disruptive Activity

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

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

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

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

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

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

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

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

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

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

Dividends, Capital Gains and Taxes

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

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

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

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

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

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

Financial Highlights

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

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$14.56	$25.61	$24.78	$21.79	$20.84
Income (loss) from investment operations:
Net investment income1	.21	.29	.33	.27	.26
Net realized and unrealized gain (loss)	3.71	(9.64)	.75	2.98	.97
Total from investment operations	3.92	(9.35)	1.08	3.25	1.23
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.30)	(.32)	(.25)	(.26)	(.28)
Distributions from net realized gain	--	(1.38)	--	--	--
Total dividends and/or distributions to shareholders	(.30)	(1.70)	(.25)	(.26)	(.28)
Net asset value, end of period	$18.18	$14.56	$25.61	$24.78	$21.79
Total Return, at Net Asset Value2	28.29%	(38.47)%	4.43%	15.03%	5.98%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$474,637	$432,360	$ 907,727	$1,046,146	$1,121,476
Average net assets (in thousands)	$430,517	$670,994	$1,006,655	$1,054,522	$1,156,299
Ratios to average net assets:3
Net investment income	1.35%	1.42%	1.28%	1.19%	1.26%
Total expenses	0.78%4	0.66%4	0.65%4	0.66%4	0.67%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.78%	0.66%	0.65%	0.66%	0.67%
Portfolio turnover rate	128%	132%	111%	100%	88%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.78%
             Year Ended December 31, 20080.66%
             Year Ended December 31, 20070.65%
             Year Ended December 31, 20060.66%

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$14.42	$25.38	$24.58	$21.63	$20.70
Income (loss) from investment operations:
Net investment income11	.17	.24	.26	.22	.21
Net realized and unrealized gain (loss)	3.70	(9.56)	.75	2.95	.96
Total from investment operations	3.87	(9.32)	1.01	3.17	1.17
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.25)	(.26)	(.21)	(.22)	(.24)
Distributions from net realized gain	--	(1.38)	--	--	--
Total dividends and/or distributions to shareholders	(.25)	(1.64)	(.21)	(.22)	(.24)
Net asset value, end of period	$18.04	$14.42	$25.38	$24.58	$21.63
Total Return, at Net Asset Value2	27.99%	(38.63)%	4.15%	14.76%	5.74%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$1,154,210	$1,020,103	$1,464,690	$1,099,293	$598,348
Average net assets (in thousands)	$1,029,909	$1,268,430	$1,315,488	$ 810,181	$462,272
Ratios to average net assets:3
Net investment income	1.10%	1.20%	1.03%	0.95%	1.02%
Total expenses	1.03%4	0.91%4	0.90%4	0.91%4	0.91%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.03%	0.91%	0.90%	0.91%	0.91%
Portfolio turnover rate	128%	132%	111%	100%	88%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20091.03%
             Year Ended December 31, 20080.91%
             Year Ended December 31, 20070.90%
             Year Ended December 31, 20060.91%

INFORMATION AND SERVICES

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

How to Request More Information

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

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

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

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

SP0650.001.0410

Oppenheimer

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

Share Classes:

     Service Shares

     Non-Service Shares

Prospectus dated April 30, 2010

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

Oppenheimer Main Street Small Cap Fund/VA is a mutual fund that seeks capital appreciation. The Fund invests mainly in common stocks of "small-cap" companies.

Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class you are eligible to purchase.


 

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

Table of contents
Inside Front Cover	3
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	4
Principal Investment Strategies	5
Principal Risks	7
The Fund's Past Performance	8
Investment Adviser	8
Portfolio Managers	8
Purchase and Sale of Fund Shares	8
Taxes	8
Payments to Broker-Dealers and Other Financial Intermediaries	10
MORE ABOUT THE FUND
About the Fund's Investments	16
How the Fund is Managed	18
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	24
Dividends, Capital Gains and Taxes	25
Financial Highlights	TOC_PAGENUMBER

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective

Investment Objective. The Fund seeks capital appreciation.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares
Management Fees	0.71%	0.71%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses	0.20%	0.19%
Total Annual Fund Operating Expenses	0.91%	1.15%
Fee Waiver and Expense Reimbursement*	(0.09%)	(0.08%)
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement	0.82%	1.07%

*Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares.  This voluntary expense limitation may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Non-Service Shares	$	84	$	282	$	497	$	1,116
Service Shares	$	110	$	359	$	629	$	1,398

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 140% of the average value of its portfolio.

Principal Investment Strategies. The Fund mainly invests in common stocks of small-capitalization U.S. companies. A company's "market capitalization" is the value of its outstanding common stock. Under normal market conditions, the Fund will invest at least 80% of its net assets, including any borrowings for investment purposes, in securities of companies having a small market capitalization. The Fund defines small capitalization (or "small cap") issuers as companies with market capitalizations less than or equal to the largest company in the Russell 2000 or the S&P Small Cap 600 indices. That capitalization amount is subject to change due to market activity or changes in the composition of the indices. The Fund measures a company's capitalization at the time the Fund buys a security and is not required to sell a security if the company's capitalization exceeds the Fund's definition of a small cap issuer.

   The portfolio managers use both fundamental research and quantitative models to identify investment opportunities. While the process may change over time or vary in particular cases, in general the selection process currently:

• aims to maintain broad diversification across all major economic sectors;

• uses quantitative models, including sector-specific factors, to rank securities within each economic sector;

• uses a fundamental approach to analyze issuers based on factors such as a company's financial performance, competitive strength, industry position, business practices and management; and

• considers market trends, current industry outlooks and general economic conditions.

    In constructing the portfolio, the Fund seeks to limit idiosyncratic company-specific risks. The portfolio managers consider stock rankings, benchmark weightings and capitalization outlooks in determining security weightings for individual issuers.
   The Fund can invest without limit in securities issued by companies or governments in any country, including in developing or emerging market countries.
   The portfolio managers might sell a security if the stock price is approaching their price target, if the company's competitive position has deteriorated or the company's management has performed poorly, or if they have identified more attractive investment prospects.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Investing in Stock. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience great short-term volatility and may fall sharply at times. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

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

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

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

Investing In Small, Unseasoned Companies. The Fund can invest in the securities of small, unseasoned companies. These are companies that have been in operation for less than three years, including the operations of any predecessors. In addition to the other risks of small and mid-sized issuers, these securities may have a very limited trading market, making it harder for the Fund to sell them at an acceptable price. The price of these securities may be very volatile, especially in the short term.

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

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

Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking capital appreciation over the long term. Those investors should be willing to assume the greater risks of short-term share price fluctuations that are typical for a fund focusing on small-cap stocks. The Fund is not designed for investors needing current income. The Fund is not a complete investment program. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

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

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5 and 10 years compare with those of a broad measure of market performance. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/MainStreetSmallCapFundVA

During the period shown, the highest return before taxes for a calendar quarter was 31.71% (2nd Qtr 09) and the lowest return before taxes for a calendar quarter was -27.25% (4th Qtr 08).

The following table shows the average annual total returns before taxes for each class of the Fund's shares.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 5-1-98)	37.20%	1.27%	2.33%
Service Shares (inception 7-16-01)	36.88%	1.03%	5.59%
Russell 2000 Index (reflects no deduction for fees, expenses or taxes)	27.17%	0.51%	3.51%
			4.44%*

* From 7-31-01

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Managers. Matthew P. Ziehl has been lead portfolio manager of the Fund and Raman Vardharaj has been co-portfolio manager of the Fund since May 2009.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT THE FUND

About the Fund's Investments

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

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

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

Small-Cap Companies. The Fund invests mainly in the common stock of small-cap companies. The small-cap companies in which the Fund invests may include companies that are developing new products or services with relatively favorable prospects, or that are expanding into new and growing markets. That may enable them to capture a dominant or important market position. Some small-cap companies may have a special area of expertise or the ability to take advantage of changes in market or demographic factors in a more profitable way than larger, more established companies.

Quantitative Models. The portfolio managers use quantitative stock selection models that are based upon many factors that measure individual securities relative to each other.

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

     The Fund may purchase American Depository Shares ("ADS") as part of American Depository Receipt ("ADR") issuances, which are negotiable certificates issued by a U.S. bank representing a specified number of shares in a foreign stock traded on a U.S. exchange. They are subject to some of the special considerations and risks, discussed above, that apply to foreign securities traded and held abroad.

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

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

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

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

Other Capitalization Ranges. If the Manager believes they offer opportunities for growth, up to 20% of the Fund's assets may be invested in securities of mid-cap and large-cap companies.

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

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

Special Risks of Initial Public Offerings (IPOs). The Fund has no limit on the amount of its assets that can be invested in IPOs. By definition, securities issued in IPOs have not traded publicly until the time of their offerings. Special risks associated with IPOs may include, among others, the fact that there may be only a limited number of shares available for trading. The market for those securities may be unseasoned. The issuer may have a limited operating history. These factors may contribute to price volatility. The limited number of shares available for trading in some IPOs may also make it more difficult for the Fund to buy or sell significant amounts of shares without an unfavorable impact on prevailing prices. In addition, some companies initially offering their shares publicly are involved in relatively new industries or lines of business, which may not be widely understood by investors. Some of the companies involved in new industries may be regarded as developmental stage companies, without revenues or operating income, or the near-term prospects of them. Many IPOs are by small- or micro-cap companies that are undercapitalized.

Typically the Fund invests less than 5% of its assets in unseasoned companies.

Master Limited Partnerships. The Fund may invest in publicly traded limited partnerships known as "master limited partnerships" or MLPs. MLPs issue units that are registered with the Securities and Exchange Commission and are freely tradable on a securities exchange or in the over-the-counter market. An MLP consists of one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. The Fund, as a limited partner, normally would not be liable for the debts of the MLP beyond the amounts the Fund has contributed, but would not be shielded to the same extent that a shareholder of a corporation would be. In certain circumstances creditors of an MLP would have the right to seek return of capital distributed to a limited partner. This right of an MLP's creditors would continue after the Fund sold its investment in the MLP. MLPs are typically real estate, oil and gas and equipment leasing vehicles, but they also finance movies, research and development, and other projects.

Investments in Other Investment Companies. The Fund can also invest in the securities of other investment companies, which can include open-end funds, closed-end funds, unit investment trusts and business development companies. One reason the Fund might do so is to gain exposure to segments of the markets represented by another fund, at times when the Fund might not be able to buy the particular type of securities directly. As a shareholder of an investment company, the Fund would be subject to its ratable share of that investment company's expenses, including its advisory and administration expenses. The Fund does not intend to invest in other investment companies unless the Manager believes that the potential benefits of the investment justify the payment of any premiums or sales charges.

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

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

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

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

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

     Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. Derivative transactions may require the payment of premiums and can increase portfolio turnover. For example, if a call option sold by the Fund were exercised on an investment that had increased in value above the call price, the Fund would be required to sell the investment at the call price and would not be able to realize any additional profit.

Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Manager expects it to. As a result, the Fund could realize little or no income or lose principal from the investment, or a hedge might be unsuccessful. Derivatives are also subject to credit risk, since the Fund may also lose money on a derivative investment if the issuer of the security fails to pay the amount due.

For some derivatives, it is possible for the Fund to lose more than the amount invested in the derivative instrument.

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

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

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fee. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million. The Fund's management fee for its fiscal year ended December 31, 2009, was 0.71% of the Fund's average annual net assets for each class of shares.
Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. This undertaking may be amended or withdrawn after one year from the date of this prospectus.  Actual total annual fund operating expenses for the fiscal year ended December 31, 2009 were those shown in the Annual Fund Operating Expenses table earlier in this prospectus.  Prior to May 1, 2009, the Fund's expenses were not subject to the voluntary limitation, therefore the "Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement," reflected in the table, are slightly higher than the limits in the voluntary undertaking.  The Fund's management fee and other annual operating expenses may vary in future years.
A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

Portfolio Managers. The Fund's portfolio is managed by Matthew P. Ziehl and Raman Vardharaj, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Ziehl has been lead portfolio manager of the Fund and Mr. Vardharaj has been co-portfolio manager of the Fund since May 2009.

     Mr. Ziehl has been a Vice President and portfolio manager of the Manager since May 2009. Prior to joining the Manager, Mr. Ziehl was a portfolio manager with RS Investment Management Co. LLC from October 2006 to May 2009 and served as a managing director at The Guardian Life Insurance Company of America from December 2001 to October 2006 when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. Mr. Ziehl is a portfolio manager of other portfolios in the OppenheimerFunds complex.

     Mr. Vardharaj, CFA, has been a Vice President and portfolio manager of the Manager since May 2009. Prior to joining the Manager, Mr. Vardharaj was sector manager and a senior quantitative analyst creating stock selection models, monitoring portfolio risks and analyzing portfolio performance across the RS Core Equity Team of RS Investment Management Co. LLC from October 2006 to May 2009. He served as quantitative analyst at The Guardian Life Insurance Company of America from 1998 to October 2006 when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. Mr. Vardharaj is a portfolio manager of other portfolios in the OppenheimerFunds complex.

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

INVESTING IN THE FUND 

How to Buy and Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limitations on Frequent Transactions

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

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

Policies on Disruptive Activity

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

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

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

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

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

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

DISTRIBUTION AND SERVICE (12b-1) PLANS

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

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

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

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

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

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

Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include insurance companies that offer variable annuity or variable life insurance products and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying variable contract prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, the Fund's independent registered public accounting firm for the most recent fiscal year end.  The financial highlights for the prior years were audited by another independent registered public accounting firm.  KPMG's report, along with the Fund's financial statements, are included in the Statement of Additional Information, which is available upon request.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$ 10.65	$ 18.20	$ 19.15	$ 17.18	$ 16.05
Income (loss) from investment operations:
Net investment income1	.08	.12	.09	.08	.04
Net realized and unrealized gain (loss)	3.78	(6.73)	(.30)	2.46	1.51
Total from investment operations	3.86	(6.61)	(.21)	2.54	1.55
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.11)	(.08)	(.06)	(.03)	--
Distributions from net realized gain	--	(.86)	(.68)	(.54)	(.42)
Total dividends and/or distributions to shareholders	(.11)	(.94)	(.74)	(.57)	(.42)
Net asset value, end of period	$14.40	$10.65	$18.20	$19.15	$17.18
Total Return, at Net Asset Value2	37.20%	(37.83)%	(1.21)%	15.00%	9.92%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$81,814	$58,478	$93,939	$81,405	$44,820
Average net assets (in thousands)	$69,585	$80,406	$94,815	$62,659	$39,708
Ratios to average net assets:3
Net investment income	0.71%	0.80%	0.48%	0.46%	0.23%
Total expenses	0.91%4	0.75%4	0.73%4	0.77%4	0.81%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.82%	0.75%	0.73%	0.77%	0.81%
Portfolio turnover rate	140%	130%	115%	110%	110%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.91%
             Year Ended December 31, 20080.75%
             Year Ended December 31, 20070.73%
             Year Ended December 31, 20060.77%

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$10.54	$18.03	$18.98	$17.06	$15.97
Income (loss) from investment operations:
Net investment income1	.05	.08	.05	.04	-- 2
Net realized and unrealized gain (loss)	3.76	(6.67)	(.29)	2.42	1.51
Total from investment operations	3.81	(6.59)	(.24)	2.46	1.51
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.07)	(.04)	(.03)	-- 2	--
Distributions from net realized gain	--	(.86)	(.68)	(.54)	(.42)
Total dividends and/or distributions to shareholders	(.07)	(.90)	(.71)	(.54)	(.42)
Net asset value, end of period	$14.28	$10.54	$18.03	$18.98	$17.06
Total Return, at Net Asset Value3	36.88%	(38.00)%	(1.39)%	14.66%	9.71%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$662,347	$551,644	$821,642	$636,430	$314,868
Average net assets (in thousands)	$612,651	$769,150	$766,102	$479,456	$221,324
Ratios to average net assets:4
Net investment income	0.47%	0.52%	0.23%	0.23%	0.02%
Total expenses	1.15%5	0.99%5	0.97%5	1.00%5	1.04%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.07%	0.99%	0.97%	1.00%	1.04%
Portfolio turnover rate	140%	130%	115%	110%	110%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20091.15%
             Year Ended December 31, 20080.99%
             Year Ended December 31, 20070.97%
             Year Ended December 31, 20061.00%

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No.: 811-4108

SP0297.001.0410

Oppenheimer

Money Fund/VA
A series of Oppenheimer Variable Account Funds

Share Class:

    Non-Service Shares

Prospectus dated April 30, 2010 

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Money Fund/VA is a money market mutual fund. Its goal is to seek the maximum current income from investments in money market securities that is consistent with low capital risk and maintenance of liquidity.

 

Shares of the Fund are sold only as an underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under the insurance product, and which share class you are eligible to purchase.

 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	4
The Fund's Past Performance	6
Investment Adviser	7
Portfolio Manager	7
Purchase and Sale of Fund Shares	7
Taxes	8
Payments to Broker-Dealers and Other Financial Intermediaries	8
MORE ABOUT THE FUND
About the Fund's Investments	9
How the Fund is Managed	14
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	15
Dividends, Capital Gains and Taxes	19
Financial Highlights	21

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective. The Fund seeks maximum current income from investments in "money market" securities consistent with low capital risk and the maintenance of liquidity. The Fund is a money market fund.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None

Annual Fund Operating Expenses (expenses you pay each year as a percentage of the value of your investment)
Management Fees	0.45%
Distribution and/or Service (12b-1) Fees	None
Other Expenses	0.12%
Total Annual Fund Operating Expenses	0.57%
Fee Waiver and Expense Reimbursement*	(0.09%)
Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement	0.48%

*Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as a percentage of daily net assets, will not exceed the annual rate of 0.50%. The Manager has also voluntarily undertaken to waive fees and/or reimburse expenses to the extent necessary to assist the Fund in attempting to maintain a positive yield. There is no guarantee that the Fund will maintain a positive yield. This voluntary expense limitation and voluntary fee waiver and expense reimbursement may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in shares of the Fund for the time periods indicated and reinvest your dividends and distributions. The expenses for your variable life insurance policy, variable annuity or other investment product are not included and if they were included, overall expenses would be higher. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Non-Service Shares	$	49	$	174	$	310	$	707

Principal Investment Strategies. The Fund is a money market fund that invests in a variety of money market instruments to seek current income. Money market instruments are short-term, high-quality, dollar-denominated debt instruments issued by the U.S. government, domestic and foreign corporations and financial institutions, and other entities. Money market instruments include bank obligations, repurchase agreements, commercial paper, and other short-term corporate and governmental debt obligations.

     To be considered "high-quality," a debt instrument must be rated in one of the two highest credit-quality categories for short-term securities by a nationally-recognized rating services or, if a security is unrated, it must be determined by the Fund's investment manager, OppenheimerFunds, Inc. (the "Manager"), under the supervision of the Fund's Board, to be of comparable quality to rated securities in one of those two categories.

Principal Risks.  All investments carry risks to some degree. The Fund's investments are subject to changes in their value from a number of factors. However, the Fund's investments must meet strict standards set by its Board of Trustees and special rules under Federal law for money market funds. Those requirements include maintaining high credit quality, a short average maturity and diversification of the Fund's investments among issuers. Those provisions are designed to help minimize credit risks, to reduce the effects of changes in prevailing interest rates and to reduce the effect on the Fund's portfolio of a default by any one issuer. Since income on short-term securities tends to be lower than income on longer-term debt securities, the Fund's yield will likely be lower than the yield on longer-term fixed-income funds.

Even so, there are risks that an issuer of an obligation that the Fund holds might have its credit rating downgraded or might default on its obligations, or that interest rates might rise sharply, causing the value of the Fund's investments to fall. Also, there is the risk that the value of your investment could be eroded over time by the effects of inflation, or that poor security selection could cause the Fund to underperform other funds that have a similar objective. If there is an unexpectedly high demand for the redemption of Fund shares, the Fund might need to sell portfolio securities prior to their maturity, possibly at a loss. As a result, there is a risk that the Fund's shares could fall below $1.00 per share.

Interest Rate Risk. The values of debt securities usually change when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall. The values of longer-term debt securities usually change more when interest rates change than the values of shorter-term debt securities.

Credit Risk. Debt securities are also subject to credit risk, which is the risk that the issuer of a security might not make principal or interest payments on the security when they are due. If the issuer fails to pay interest, the Fund's income might be reduced, and if the issuer fails to pay interest or repay principal, the value of the security might fall.

     Fixed Income Market Risks. Developments relating to subprime mortgages have adversely affected fixed-income securities markets in the United States, Europe and elsewhere. The values of many types of debt securities have been reduced, including debt securities that are not related to mortgage loans. These developments have reduced the willingness of some lenders to extend credit and have made it more difficult for borrowers to obtain financing on attractive terms or at all. In addition, broker-dealers and other market participants have been less willing to make a market in some types of debt instruments, which has impacted the liquidity of those instruments. These developments also have had a negative effect on the broader economy. There is a risk that a lack of liquidity or other adverse credit market conditions may hamper the Fund's ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

Main Risks of Foreign Investing. Although the risks of investing in foreign money market securities are significantly lower than the risks of certain other types of foreign securities, to the extent that the Fund invests in foreign securities, those investments may be subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult for the Fund to evaluate a foreign company's operations or financial condition. The value of foreign investments may be affected by exchange control regulations, foreign taxes, higher transaction and other costs, delays in the settlement of transactions, changes in economic or monetary policy in the United States or abroad, expropriation or nationalization of a company's assets, or other political and economic factors.

               ____________________________________________

The rate of the Fund's income will vary from day to day, generally reflecting changes in short-term interest rates and in the fixed-income securities market. There is no assurance that the Fund will achieve its investment objective.

Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed for investors who want to earn income at money market rates while maintaining easy access to their investment and seeking to preserve its value. The Fund will invest in a variety of money market instruments to seek current income and stability of principal and to try to maintain a stable share price of $1.00. Since income on short-term securities tends to be lower than income on longer term debt securities, the Fund's yield will likely be lower than the yield on longer-term fixed income funds. The Fund does not invest for the purpose of seeking capital appreciation or gains and is not a complete investment program.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

The Fund's Past Performance.  The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's performance from year to year. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/MoneyFundVA.

During the period shown, the highest return before taxes for a calendar quarter was 1.59% (2qtr00) and the lowest return before taxes for a calendar quarter was 0.00% (4qtr09).

The following table shows the average annual total returns for the Fund's shares.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years
Non-Service Shares (inception 4-3-85)	0.32%	3.11%	2.88%

The average annual total returns measure the performance of a hypothetical account, without deducting charges imposed by the separate accounts that invest in the Fund, and assume that all dividends and capital gains distributions have been reinvested in additional shares.

The Fund's total returns should not be expected to be the same as the returns of other Oppenheimer funds, even if both funds have the same portfolio managers and/or similar names.

The total returns are not the Fund's current yield. The Fund's yield more closely reflects the Fund's current earnings. To obtain the Fund's current 7-day yield information, please call the Transfer Agent toll-free at 1.800.CALL OPP (225.5677).

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Manager. Carol E. Wolf has been a portfolio manager and Vice President of the Fund since July 1998.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT STRATEGIES AND RISKS. The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

MONEY MARKET INSTRUMENTS. The Fund invests in securities meeting the quality, maturity, diversification and other standards that apply to money market funds under the Investment Company Act of 1940, as amended (the "Investment Company Act"). Money market instruments are high-quality, short-term, dollar-denominated debt instruments. They may have fixed, variable or floating interest rates. All of the Fund's money market investments must meet the requirements of the Investment Company Act and the special standards set by the Fund's Board. The following is a brief description of the types of money market instruments the Fund may invest in.

• U.S. Government Securities. These include obligations issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. Some are direct obligations of the U.S. Treasury and are supported by the full faith and credit of the United States. Securities issued by some agencies and instrumentalities of the Government are also supported by the full faith and credit of the U.S. Government. Securities issued by certain other U.S. Government agencies or instrumentalities are supported only by the right of the issuer to borrow from the U.S. Treasury and some are supported only by the credit of the particular instrumentality.

• Bank Obligations. The Fund can buy bank obligations including time deposits, certificates of deposit and bankers' acceptances, including dollar-denominated obligations of foreign banks, U.S. branches of foreign banks or foreign branches of U.S. banks. These obligations must be denominated in U.S. dollars, even if issued by a foreign bank or branch.

• Obligations of Foreign Banks and Foreign Branches of U.S. Banks. These securities have investment risks different from obligations of domestic branches of U.S. banks. Risks that may affect a foreign bank's or branch's ability to pay its debt include:
  
  • political and economic developments in the country in which the bank or
    branch is located,
  • imposition of withholding taxes on interest income payable on the securities,
  • seizure or nationalization of foreign deposits,
  • the establishment of exchange control regulations, or
  • the adoption of other governmental restrictions that might affect the payment of principal and interest on those securities.

Additionally, not all of the U.S. and state banking laws and regulations that apply to domestic banks and branches apply to foreign branches of U.S. banks. Those U.S. and state regulations also generally do not apply to foreign banks.

• Commercial Paper. Commercial paper is a short-term, unsecured promissory note of a domestic or foreign company or other financial firm. The Fund may buy commercial paper.

• Corporate Debt Obligations. The Fund can invest in other short-term corporate debt obligations, besides commercial paper.

• Floating Rate and Variable Rate Notes. The Fund can purchase notes with floating or variable interest rates. Variable interest rates are adjustable at stated periodic intervals. Floating interest rates are adjusted automatically according to a specified market rate or benchmark, such as the prime rate of a bank. If the maturity of a note is greater than 397 days, it may be purchased only if it has a demand feature. That feature must permit the Fund to recover the principal amount of the note on not more than thirty days' notice at any time, or at specified times not exceeding 397 days from purchase.

• Asset-Backed Securities. The Fund can invest in asset-backed investments. These are fractional interests in pools of consumer loans and other trade receivables, which are the obligations of a number of different parties. The income from the underlying pool is passed through to investors, such as the Fund. These investments might be supported by a credit enhancement, such as a letter of credit, a guarantee or a preference right. However, the credit enhancement typically applies only to a fraction of the security's value. If the issuer of the security has no security interest in the related collateral, there is the risk that the Fund could lose money if the issuer defaults.

• Guaranteed Obligations. The Fund may invest in obligations other than those listed above if they are guaranteed as to their principal and interest by a corporation whose commercial paper may be purchased by the Fund or by a domestic bank. The bank must meet credit criteria set by the Fund's Board.

• Other Money Market Instruments. The Fund may also buy other money market instruments that its Board approves from time to time. They must be U.S. dollar-denominated short-term investments that the Manager must determine to have minimal credit risks.

CREDIT QUALITY, MATURITY AND DIVERSIFICATION STANDARDS. The Fund's investments must meet standards set by the Board and the standards prescribed for money market funds under the Investment Company Act.

     Credit Quality. In general, the Fund buys only "high-quality" investments that the Manager believes present minimal credit risk at the time of purchase. Those investments must be:

• rated in one of the two highest short-term rating categories by two nationally-recognized rating organizations, or

• if only one rating organization has rated the investment, rated in one of that rating organization's two highest rating categories, or

• unrated investments that the Manager, subject to the supervision of the Fund's Board, determines are comparable in quality to instruments rated in the two highest rating categories. The Manager may consider certain guarantees, letters of credit or other credit enhancements when making this determination.

Instruments rated in the second highest rating category may not represent more than 5% of the Fund's total assets. Effective May 28, 2010, these securities will be limited to no more than 3%.

     Maturity. A security's maturity must not exceed 397 days (13 months) at the time of purchase, unless if they are subject to repurchase agreements or demand features that permit the Fund to recover the principal amount of the security on not more than thirty days' notice at any time, or at specified times not exceeding 397 days from purchase. The remaining maturity of a security rated in the second highest rating category must not exceed 45 days at the time of purchase. The Fund must maintain a dollar-weighted average portfolio maturity of not more than 90 days. As a non-fundamental policy, the Fund will seek to maintain a dollar-weighted average portfolio maturity of not more than 75 days and a weighted average life to maturity of portfolio securities of not more than 120 days. Effective June 30, 2010, the Fund will maintain a dollar weighted average portfolio maturity of not more than 60 days.

     Diversification. The Fund generally may not invest more than 5% of its total assets in the securities of any one issuer in the highest short-term credit rating category or more than 1% of its total assets in the securities of any one issuer in the second highest short-term credit rating category. Effective May 28, 2010, no more than one half of one percent of the Fund's total assets may be invested in the securities of any single issuer. This limitation does not apply to securities issued by the U.S. government or its agencies or instrumentalities.

     Liquidity. As a non-fundamental policy, the Fund will seek to maintain at least 5% of its net assets measured on a daily basis, and 20% of its net assets measured on a weekly basis, in cash or securities that can be sold and settled for cash within either one business day or five business days, respectively. Effective May 28, 2010, these limits will change to 10% of the Fund's assets on a daily basis and 30% on a weekly basis.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Repurchase Agreements. The Fund may also enter into repurchase agreements. In a repurchase transaction, the Fund buys a security and simultaneously sells it back to the vendor for delivery at a future date. Repurchase agreements must be fully collateralized. However, if the vendor fails to pay the repurchase price on the delivery date, the Fund may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so.

The Fund will not enter into a repurchase agreement that will cause more than 10% of its net assets to be subject to repurchase agreements maturing in more than 7 days. Effective May 28, 2010, the Fund will not enter into a repurchase agreement that will cause more than 5% of its net assets to be subject to repurchase agreements. There is no limit on the amount of the Fund's net assets that may be subject to repurchase agreements of 7 days or less.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940 that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Obligations Subject to Guarantees.  The Fund may invest in money market obligations other than those listed above if they are guaranteed as to their principal and interest by a domestic bank or a corporation whose commercial paper may be pruchased by the Fund. A bank whose money market instruments the Fund buys must meet credit criteria set by the Fund's Board of Trustees.

Illiquid Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

     The Fund will not invest more than 10% of its net assets in illiquid or restricted securities. Effective May 28, 2010, the Fund will not invest more than 5% of its total assets in illquid or restricted securities. The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other funds and accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares; however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

PORTFOLIO HOLDINGS

The Fund's portfolio holdings, as of the most recent prior close of the New York Stock Exchange (the "NYSE"), are posted on the Fund's website at www.oppenheimerfunds.com on each business day. Therefore, the Fund's portfolio holdings are made publicly available no later than one business day after the close of trading on the NYSE on each day on which the NYSE is open.

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees. Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: the Fund pays 0.450% of the first $500 million of average annual net assets, 0.425% of the next $500 million, 0.400% of the next $500 million, and 0.375% of average annual net assets in excess of $1.5 billion. The Fund's management fee for its fiscal year ended December 31, 2009, was 0.45% of the Fund's average annual net assets.
Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as a percentage of daily net assets, will not exceed the annual rate of 0.50%. The Manager has also voluntarily undertaken to waive fees and/or reimburse expenses to the extent necessary to assist the Fund in attempting to maintain a positive yield. There is no guarantee that the Fund will maintain a positive yield. These voluntary undertakings may be amended or withdrawn after one year from the date of this prospectus. After all waivers, reimbursements, and other credits, actual total annual operating expenses for the fiscal year ended December 31, 2009, were those shown in the Annual Fund Operating Expenses table earlier in this prospectus. The Fund's management fee and other annual fund operating expenses may vary in future years.
    A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

Portfolio Manager. The Fund's portfolio is managed by Carol E. Wolf who is primarily responsible for the day-to-day management of the Fund's investments. She has been a Vice President and a portfolio manager of the Fund since July 1998.

Ms. Wolf has been a Senior Vice President of the Manager since September 2000 and of HarbourView Asset Management Corporation since June 2003. She was Vice President of the Manager from June 1990 through June 2000. Ms. Wolf is an officer and portfolio manager of other funds for which the Manager or an affiliate serves as investment adviser.

The Statement of Additional Information provides additional information about the portfolio manager's compensation, other accounts she manages and her ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER?  The Fund currently offers only one class of shares. That class of shares has no class "name" designation, but is referred to in this prospectus as "Non-Service" shares. The Fund has three additional classes of shares authorized which are not currently offered for sale. There are no outstanding shares of any of those share classes.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value per share will normally remain fixed at $1.00 per share. However, there is no guarantee that the Fund will maintain a stable net asset value of $1.00 per share. Shares are also redeemed at their net asset value per share. The net asset value that applies to a purchase or redemption order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

Net Asset Value. The Fund calculates the net asset value per share as of the close of the New York Stock Exchange (NYSE), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern time, but may close earlier on some days.

Under a policy adopted by the Fund's Board of Trustees, the Fund uses the amortized cost method to value its securities to determine net asset value, subject to the Board's review. A security's valuation may differ depending on the method used for determining value.

The net asset value per share is determined by dividing the Fund's net assets by the number of outstanding shares.

Foreign Securities. Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Redemption of Fund shares may be suspended by the Board if it determines that it is in the best interest of shareholders to liquidate the Fund. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan. The Fund has not adopted a Distribution and Service Plan for the Non-Service shares offered in this prospectus.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments for distribution and/or shareholder servicing activities to brokers, dealers and other financial intermediaries, including the insurance companies that offer the Fund as an investment option, or to service providers. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to those entities. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA")) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include insurance companies that offer variable annuity or variable life insurance products and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare dividends from net investment income each regular business day and to pay those dividends monthly. To maintain a net asset value of $1.00 per share, the Fund might withhold dividends or make distributions from capital or capital gains. Daily dividends will not be declared or paid on newly purchased shares until Federal Funds are available to the Fund from the purchase payment for such shares.
The Fund normally holds its securities to maturity and therefore will not usually pay capital gains distributions. The Fund may realize capital gains on the sale of portfolio securities, however, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying variable contract prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, the Fund's independent registered public accounting firm for the most recent fiscal year end.  The financial highlights for the prior years were audited by another independent registered public accounting firm.  KPMG's report, along with the Fund's financial statements, are included in the Statement of Additional Information, which is available upon request.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
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	-- 2	.03	.05	.05	.03
Dividends and/or distributions to shareholders:
Dividends from net investment income	-- 2	(.03)	(.05)	(.05)	(.03)
Distributions from net realized gain	--	--	-- 2	-- 2	--
Total dividends and/or distributions to shareholders	-- 2	(.03)	(.05)	(.05)	(.03)
Net asset value, end of period	$1.00	$1.00	$1.00	$1.00	$1.00
Total Return3	0.32%	2.78%	4.98%	4.71%	2.86%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$180,955	$243,356	$189,749	$171,521	$173,162
Average net assets (in thousands)	$218,079	$212,564	$181,271	$171,118	$186,453
Ratios to average net assets:4
Net investment income	0.35%	2.72%	4.86%	4.61%	2.80%
Total expenses	0.57%	0.50%	0.50%	0.49%	0.48%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.48%	0.50%	0.50%	0.49%	0.48%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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.

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No.: 811-4108

SP0660.001.0410

Oppenheimer

Small- & Mid-Cap Growth Fund/VA
A series of Oppenheimer Variable Account Funds

Share Classes:

     Service Shares

     Non-Service Shares

Prospectus dated April 30, 2010

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Small- & Mid-Cap Growth Fund/VA is a mutual fund that seeks capital appreciation by investing in "growth type" companies. It currently emphasizes investments in common stocks of companies, at the time of purchase, are within the range of the market capitalization of the smallest company included in the Russell 2000^(R) Growth Index and the largest company included in the Russell Midcap^(R) Growth Index. Prior to April  30, 2010, the Fund's name was Oppenheimer MidCap Fund/VA.
Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus and explains how to select shares of the Fund as an investment under that insurance product, and whether you are eligible to purchase Service Shares of the Fund.

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	5
The Fund's Past Performance	7
Investment Adviser	9
Portfolio Manager	9
Purchase and Sale of Fund Shares	9
Taxes	9
Payments to Broker-Dealers and Other Financial Intermediaries	9
MORE ABOUT THE FUND
About the Fund's Investments	10
How the Fund is Managed	16
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	18
Dividends, Capital Gains and Taxes	24
Financial Highlights	25

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective

Investment Objective. The Fund seeks capital appreciation by investing in "growth type" companies.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares
Management Fees	0.73%	0.73%
Distribution and/or Service (12b-1) Fees	None	0.25%
Other Expenses	0.13%	0.14%
Total Annual Fund Operating Expenses	0.86%	1.12%
Fee Waiver and Expense Reimbursement*	(0.02%)	(0.02%)
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement	0.84%	1.10%

* Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. This voluntary expense limitation may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Non-Service Shares	$	86	$	274	$	477	$	1,063
Service Shares	$	113	$	356	$	618	$	1,369

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 102% of the average value of its portfolio.

Principal Investment Strategies. The Fund mainly invests in equity securities, such as common stocks of U.S. companies that the portfolio manager expects to have above-average growth rates. Under normal market conditions, the Fund invests at least 80% of its net assets, plus borrowings for investment purposes, in equity securities of "small-cap" and "mid-cap" companies. A company's "market capitalization" is the total value of its outstanding common stock. Relative to other companies, a company may be classified as small-cap, mid-cap or large-cap. The Fund defines small-cap and mid-cap companies as those companies that are within the range of market capitalizations of the Russell 2000® Growth Index and the Russell Midcap® Growth Index, respectively. This range is subject to change daily due to market activity and changes in the composition of those indices. The Fund measures a company's capitalization at the time the Fund buys a security, and it is not required to sell a security if the issuer's capitalization moves outside of the Fund's definition of small- and mid-cap issuers.

Under normal market conditions, the Fund can invest up to 20% of its net assets, plus borrowings for investment purposes, in stocks of companies in other market capitalizations, if the Manager believes they offer opportunities for growth.

The Fund invests primarily in U.S. companies but may also purchase securities of issuers in any country, including developed countries and emerging markets. The Fund has no limits on the amount of its assets that can be invested in foreign securities.

In selecting securities, the Fund's portfolio manager looks for companies with high growth potential using a "bottom-up" stock selection process. The "bottom-up" approach focuses on fundamental analysis of individual issuers before considering the impact of overall economic, market or industry trends. This approach includes analysis of a company's financial statements and management structure and consideration of the company's operations and product development, as well as its position in its industry. The portfolio manager looks for companies with revenues growing at above-average rates that might support and sustain above-average earnings. The portfolio manager also evaluates other business and economic factors, including cyclical factors, that might contribute to the company's stock appreciation. The Fund's portfolio manager currently focuses on companies with the following characteristics, which may vary in particular cases and may change over time:

• An above-average rate of high quality growth that the portfolio manager believes is sustainable;

• Experienced management teams with proven records;

• Industry leaders with competitive advantages;

• Companies with strong financials including low debt.
  

The Fund may not invest more than 25% of its assets in any one industry, but in selecting securities it may, at times, invest more of its assets in issuers within a particular industry or economic or market sector. If so, its shares will be more sensitive to factors affecting that industry or sector.

The portfolio manager monitors individual issuers for changes in business fundamentals and valuation. If the portfolio manager notes a slowdown in the company's internal revenue growth or earnings growth or a negative movement in the company's fundamental economic condition, and if there are other investment alternatives that offer what he believes to be better appreciation possibilities, he may consider selling that stock.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar investment objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Investing in Stock. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience great short-term volatility and may fall sharply at times. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

The prices of individual stocks generally do not all move in the same direction at the same time and a variety of factors can affect the price of a particular company's stock. These factors may include, but are not limited to: poor earnings reports, a loss of customers, litigation against the company, general unfavorable performance of the company's sector or industry, or changes in government regulations affecting the company or its industry.

Main Risks of Small- and Mid-Sized Companies. Small- and mid-sized companies may be either established or newer companies, including companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain, they also involve greater risk of loss. They may be more sensitive to changes in earnings expectations and may experience more abrupt and erratic price movements. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-sized companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since small- and mid-sized companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Smaller companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. It may take a substantial period of time to realize a gain on an investment in a small- or mid-sized company, if any gain is realized at all.

Risks of Growth Investing. If a growth company's earnings or stock price fails to increase as anticipated, or if its business plans do not produce the expected results, its securities may decline sharply. Growth companies may be newer or smaller companies that may experience greater stock price fluctuations and risks of loss than larger, more established companies. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Therefore, they may not pay any dividends for some time. Growth investing has gone in and out of favor during past market cycles and is likely to continue to do so. During periods when growth investing is out of favor or when markets are unstable, it may be more difficult to sell growth company securities at an acceptable price. Growth stocks may also be more volatile than other securities because of investor speculation.

Sector Focus. Although the Fund will not invest more than 25% of its total assets in any one industry, it may from time to time invest a greater share of its assets in securities of companies in a particular economic or market sector. Some of those sectors, such as technology-related or healthcare-related securities, have historically experienced greater volatility than other sectors. To the extent that the Fund invests in companies in a particular market sector, it will be more vulnerable to the risks affecting that sector.

Who Is The Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. The Fund is designed primarily for investors seeking capital appreciation over the long term. Those investors should be willing to assume the risks of short-term share price fluctuations and losses that are typical for a growth fund focusing on small- and mid-cap stock investments. Because of its focus on long-term growth, the Fund may be appropriate for investors with longer term investment goals. The Fund is not designed for investors needing current income. The Fund is not a complete investment program and may not be appropriate for all investors. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5, and 10 years compare with those of broad measures of market performance that reflect the markets in which the Fund typically invests. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/SmallMidCapGrowthFundVA.

During the period shown, the highest return before taxes for a calendar quarter was 25.65% (1qtr00) and the lowest return before taxes for a calendar quarter was -32.43% (4qtr08).

The following table shows the average annual total returns before taxes for each class of the Fund's shares. On April 30, 2010, the Fund expanded its investment strategy to include investments in companies that are within the range of market capitalizations of the Russell 2000® Growth Index and the Russell MidCap® Growth Index. Accordingly, the Fund also changed one of its indices from the S&P 500 Index to the Russell 2500® Growth Index and added the Russell 2000® Growth Index. These changes are being made to provide a more meaningful comparison of the Fund's performance in light of the change to the Fund's investment strategy. The S&P 500 Index will also be included for a one year period.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years	10 Years (or life of class, if less)
Non-Service Shares (inception 08-15-1986)	32.61%	(3.64%)	(5.80%)
Service Shares (inception 10-16-2000)	32.26%	(3.91%)	(8.55%)
Russell 2500® Growth Index	41.66%	2.00%	(0.18%)
(reflects no deduction for fees, expenses or taxes)			0.06%1
Russell 2000® Growth Index	34.47%	0.87%	(1.37%)
(reflects no deduction for fees, expenses or taxes)			(0.28%)1
Russell MidCap® Growth Index	46.29%	2.40%	(0.52%)
(reflects no deduction for fees, expenses or taxes)			(1.31%)1
S&P 500 Index	26.47%	0.42%	(0.95%)
(reflects no deduction for fees, expenses or taxes)			(0.84%)1

1.  As of 10/31/00

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Manager. Ronald J. Zibelli, Jr., CFA, has been Vice President and portfolio manager of the Fund since November 2008.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT THE FUND

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT STRATEGIES AND RISKS. The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

Common Stock.  Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy. Common stocks may be exchange-traded or over-the-counter securities. Over-the-counter securities may be less liquid than exchange-traded securities.

Small-Cap Investments. The Fund may invest in small-cap companies, including "unseasoned" companies that have been in operation for less than three years (including the operations of any predecessors). Small-cap companies may be developing new products or services that the Fund believes have relatively favorable prospects. They may be expanding into new and growing markets that might enable them to achieve a favorable market position. In many instances, the securities of smaller companies are traded over-the-counter or on a regional securities exchange, where the frequency and volume of trading is substantially less than is typical for securities of larger companies traded on national securities exchanges. Therefore, the securities of smaller companies may be subject to wider price fluctuations and may be less liquid.

Mid-Cap Investments. Mid-cap companies are generally companies that have completed their initial start-up cycle, and in many cases have established markets and developed seasoned management teams. The portfolio manager searches for stocks of mid-cap companies that have the financial stability approximating that of larger companies and the high growth potential associated with smaller companies. The portfolio manager will not normally invest in stocks of companies in "turnaround" situations until the company's operating characteristics have improved.

Capitalization Ranges. The Fund measures the market capitalization of an issuer at the time of investment. Because the relative sizes of companies change over time as the stock market changes, the Fund's definition of what is a "small-cap," "mid-cap" or "large-cap" company may change over time as well. After the Fund buys the stock of an individual company, that company may expand or contract and no longer fall within the designated capitalization range. Although the Fund is not required to sell the stock of companies whose market capitalizations have grown or decreased beyond the Fund's capitalization-range definition, it might sell some of those holdings to try to adjust the dollar-weighted median capitalization of its portfolio. That might cause the Fund to realize capital gains on an investment and could increase taxable distributions to shareholders.

Investing in Growth Companies. Growth companies are companies whose earnings and stock prices are expected to grow at a faster rate than the overall market. Growth companies can be new companies or established companies that may be entering a growth cycle in their business. Their anticipated growth may come from developing new products or services or from expanding into new or growing markets. Growth companies may be applying new technologies, new or improved distribution methods or new business models that could enable them to capture an important or dominant market position. They may have a special area of expertise or the ability to take advantage of changes in demographic or other factors in a more profitable way. Newer growth companies tend to retain a large part of their earnings for research, development or investments in capital assets. Although newer growth companies may not pay any dividends for some time, their stocks may be valued because of their potential for price increases. Current examples include companies in the fields of telecommunications, computer software, and new consumer products.

Cyclical Opportunities. At times, the Fund might seek to take advantage of short-term market movements or changes in the business cycle by investing in companies or industries that are sensitive to those changes. For example, when the economy is expanding, companies in consumer durables and the technology sector might benefit. There is a risk that if a cyclical event does not have the anticipated effect, or when the issuer or industry is out of phase in the business cycle, the value of the Fund's investment could fall.

Industry and Sector Focus.  At times the Fund may increase the relative emphasis of its investments in a particular industry or sector. The prices of securities of issuers in a particular industry or sector may go up and down in response to changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry or sector more than others. To the extent that the Fund increases the relative emphasis of its investments in a particular industry or sector, its share values may fluctuate in response to events affecting that industry or sector. To some extent that risk may be limited by the Fund's policy of not concentrating 25% or more of its total assets in investments in any one industry.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940 that apply to publicly-sold mutual funds.

Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Other Equity Securities. In addition to common stocks, the Fund can invest in other equity or "equity equivalents" securities such as preferred stocks or convertible securities. Preferred stocks have a set dividend rate and rank ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. A convertible security is one that can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible securities offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. The Fund considers some convertible securities to be "equity equivalents" because they are convertible into common stock. The credit ratings of those convertible securities generally have less impact on the investment decision, although they are still subject to credit and interest rate risk.

The Fund will not invest more than 5% of its net assets in convertible securities that are rated below investment-grade by a nationally recognized rating organization.

Investing In Small, Unseasoned Companies. The Fund can invest in the securities of small, unseasoned companies. These are companies that have been in operation for less than three years, including the operations of any predecessors. In addition to the other risks of small and mid-sized issuers, these securities may have a very limited trading market, making it harder for the Fund to sell them at an acceptable price. The price of these securities may be very volatile, especially in the short term.

     Price Arbitrage. Because the Fund may invest in smaller company stocks that might trade infrequently, investors might seek to trade fund shares based on their knowledge or understanding of the value of those securities (this is sometimes referred to as "price arbitrage"). If such price arbitrage were successful, it might interfere with the efficient management of the Fund's portfolio and the Fund may be required to sell securities at disadvantageous times or prices to satisfy the liquidity requirements created by that activity. Successful price arbitrage might also dilute the value of fund shares held by other shareholders.

Investing in Special Situations. At times, the Fund may seek to benefit from what it considers to be "special situations," such as mergers, reorganizations, restructurings or other unusual events that are expected to affect a particular issuer. There is a risk that the expected change or event might not occur, which could cause the price of the security to fall, perhaps sharply. In that case, the investment might not produce the expected gains or might cause a loss. This is an aggressive investment technique that may be considered speculative.

Risks of Foreign Investing. While foreign securities may offer special investment opportunities, they are also subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements as U.S. companies are subject to, which may make it difficult to evaluate a foreign company's operations or financial condition. A change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and of any income or distributions the Fund may receive on those securities. Additionally, the value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, higher transaction and other costs, delays in settlement of transactions, changes in economic or monetary policy in the U.S. or abroad, or other political and economic factors.

Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Manager and the Board believe to be their fair value, may help deter those activities.

Derivative Investments. The Fund can invest in a number of different types of "derivative" instruments. A derivative is an instrument whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency.  Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.  

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

Options, futures and forward contracts are some of the types of derivatives the Fund can use. The Fund may also use other types of derivatives that are consistent with its investment strategies or for hedging purposes.

     The Fund has percentage limits on its use of hedging instruments.

     Hedging.  Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, however, the hedge might be unsuccessful or could reduce the Fund's return or create a loss.

     Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Manager expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or a hedge might be unsuccessful.  Derivatives are also subject to credit risk, since the Fund may also lose money on a derivative investment if the issuer of the derivative fails to pay the amount due.   

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 15% of its net assets in illiquid securities.  The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other funds and accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer family of funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover.  A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares, however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. Shareholders will receive 60 days advance notice of any change in the 80% investment policy described in "Principal Investment Strategies." The Fund's investment objective is a fundamental policy. Other investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

Portfolio Holdings  
The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $700 million, and 0.58% of average annual net assets over $1.5 billion. The Fund's management fee for its fiscal year ended December 31, 2009, was 0.73% of the Fund's average annual net assets for each class of shares.

Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.80% of Non-Service Shares and 1.05% for Service Shares. This undertaking may be amended or withdrawn after one year from the date of this prospectus.

From September 1, 2008 through August 31, 2009, the Manager voluntarily reduced 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 was in the fourth or fifth quintile of the Fund's Lipper peer group. From April 1, 2009 through March 31, 2010, the Manager voluntarily waived its advisory fee by 0.09% of the Fund's average annual net assets. The latter of these two waivers was applied after all other waivers and/or reimbursements.

After all waivers and reimbursements, actual total annual operating expenses for the fiscal year ended December 31, 2009 were 0.71% for Non-Service Shares and 0.97% for Service Shares. The Fund's management fee and other annual operating expenses may vary in future years.

Effective April 1, 2010 through August 31, 2010, the Manager has voluntarily agreed to waive its advisory fee by 0.05% of the Fund's average daily net assets. This voluntary undertaking will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

Portfolio Manager. The Fund's portfolio is managed by Ronald J. Zibelli, Jr. who is primarily responsible for the day-to-day management of the Fund's investments. Mr. Zibelli has been a portfolio manager and Vice President of the Fund since November 2008. 

Mr. Zibelli has been a Vice President of the Manager since May 2006. Prior to joining the Manager, he spent six years at Merrill Lynch Investment Managers, during which time he was a Managing Director and Small Cap Growth Team Leader, responsible for managing 11 portfolios. Prior to joining Merrill Lynch Investment Managers, Mr. Zibelli spent 12 years with Chase Manhattan Bank, including two years as Senior Portfolio Manager (U.S. Small Cap Equity) at Chase Asset Management. Mr. Zibelli is a portfolio manager and officer of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio manager's compensation, other accounts he manages and his ownership of Fund shares.

MORE ABOUT YOUR INVESTMENT

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (NYSE), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments for distribution and/or shareholder servicing activities to brokers, dealers and other financial intermediaries, including the insurance companies that offer the Fund as an investment option, or to service providers. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to those entities. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA")) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include insurance companies that offer variable annuity or variable life insurance products and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying variable contract prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, the Fund's independent registered public accounting firm for the most recent fiscal year end.  The financial highlights for the prior years were audited by another independent registered public accounting firm.  KPMG's report, along with the Fund's financial statements, are included in the Statement of Additional Information, which is available upon request.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$27.54	$54.07	$50.85	$49.39	$43.97
Income (loss) from investment operations:
Net investment loss1	(.05)	(.13)	(.02)	(.02)	(.12)
Net realized and unrealized gain (loss)	9.03	(26.40)	3.24	1.48	5.54
Total from investment operations	8.98	(26.53)	3.22	1.46	5.42
Net asset value, end of period	$36.52	$27.54	$54.07	$50.85	$49.39
Total Return, at Net Asset Value2	32.61%	(49.07)%	6.33%	2.96%	12.33%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$547,683	$461,684	$1,002,442	$1,054,809	$1,227,881
Average net assets (in thousands)	$478,968	$754,170	$1,045,592	$1,135,831	$1,177,979
Ratios to average net assets:3
Net investment loss	(0.17)%	(0.30)%	(0.04)%	(0.04)%	(0.26)%
Total expenses	0.86%4	0.71%4	0.69%4	0.69%4	0.69%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.71%	0.68%	0.69%	0.69%	0.69%
Portfolio turnover rate	102%	78%	112%	56%	32%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20090.86%
             Year Ended December 31, 20080.71%
             Year Ended December 31, 20070.69%
             Year Ended December 31, 20060.69%

Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$27.03	$53.22	$50.19	$48.87	$43.64
Income (loss) from investment operations:
Net investment loss1	(.13)	(.24)	(.17)	(.16)	(.25)
Net realized and unrealized gain (loss)	8.85	(25.95)	3.20	1.48	5.48
Total from investment operations	8.72	(26.19)	3.03	1.32	5.23
Net asset value, end of period	$35.75	$27.03	$53.22	$50.19	$48.87
Total Return, at Net Asset Value2	32.26%	(49.21)%	6.04%	2.70%	11.99%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$26,098	$21,952	$47,270	$47,131	$36,551
Average net assets (in thousands)	$22,605	$35,815	$49,421	$44,273	$28,798
Ratios to average net assets:3
Net investment loss	(0.44)%	(0.57)%	(0.31)%	(0.33)%	(0.54)%
Total expenses	1.12%4	0.98%4	0.96%4	0.97%4	0.97%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.97%	0.95%	0.96%	0.97%	0.97%
Portfolio turnover rate	102%	78%	112%	56%	32%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20091.12%
             Year Ended December 31, 20080.98%
             Year Ended December 31, 20070.96%
             Year Ended December 31, 20060.97%

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No.: 811-4108

SP0620.001.0410

Oppenheimer

Value Fund/VA
A series of Oppenheimer Variable Account Funds

Share Classes:

     Service Shares

     Non-Service Shares

Prospectus dated April 30, 2010

As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's securities nor has it determined that this prospectus is accurate or complete. It is a criminal offense to represent otherwise.

Oppenheimer Value Fund/VA is a mutual fund. It seeks long-term growth of capital by investing primarily in common stocks with low price-earnings ratios and better-than-anticipated earnings. Realization of current income is a secondary consideration.

 

Shares of the Fund are sold only as the underlying investment for variable life insurance policies, variable annuity contracts and other insurance company separate accounts. A prospectus for the insurance product you have selected accompanies this prospectus. It explains how to select shares of the Fund as an investment under that insurance product and which share class or classes you are eligible to purchase.

 

This prospectus contains important information about the Fund's objective, investment policies, strategies and risks. Please read this prospectus (and your insurance product prospectus) carefully before you invest and keep them for future reference about your account.

Table of contents
THE FUND SUMMARY
Investment Objective	3
Fees and Expenses of the Fund	3
Principal Investment Strategies	4
Principal Risks	5
The Fund's Past Performance	7
Investment Adviser	8
Portfolio Managers	8
Purchase and Sale of Fund Shares	8
Taxes	8
Payments to Broker-Dealers and Other Financial Intermediaries	9
MORE ABOUT THE FUND
About the Fund's Investments	10
How the Fund is Managed	18
MORE ABOUT YOUR INVESTMENT
How to Buy and Sell Shares	20
Dividends, Capital Gains and Taxes	26
Financial Highlights	27

Inside Front Cover

To Summary Prospectus

THE FUND SUMMARY

Investment Objective. The Fund seeks long-term growth of capital by investing primarily in common stocks with low price-earnings ratios and better-than-anticipated earnings. Realization of current income is a secondary consideration.

Fees and Expenses of the Fund. The table below describes the fees and expenses that you may pay if you buy and hold or redeem shares of the Fund. The accompanying prospectus of the participating insurance company provides information on initial or contingent deferred sales charges, exchange fees or redemption fees for that variable life insurance policy, variable annuity or other investment product. The fees and expenses of those products are not charged by the Fund and are not reflected in this table. Expenses would be higher if those fees were included.

Shareholder Fees (fees paid directly from your investment)
	Non-Service Shares	Service Shares
Maximum Sales Charge (Load) imposed on purchases (as % of offering price)	None	None
Maximum Deferred Sales Charge (Load) (as % of the lower of original offering price or redemption proceeds)	None	None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
	Non-Service Shares	Service Shares
Management Fees	0.75%	0.75%
Distribution and/or Service (12b-1) Fees	None	0.22%
Acquired Fund Fees and Expenses	0.01%	0.01%
Other Expenses	1.55%	1.20%
Total Annual Fund Operating Expenses	2.31%	2.18%
Fee Waiver and Expense Reimbursement*	(0.76%)	(0.73%)
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement	1.55%	1.45%

* Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. The Manager has also voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. This voluntary expense limitation and indirect management fee waiver and reimbursement may not be amended or withdrawn until one year after the date of this prospectus.

Example. The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a class of shares of the Fund for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your expenses would be as follows, whether or not you redeemed your shares:

	1 Year		3 Years		5 Years		10 Years
Service Shares	$	149	$	618	$	1,114	$	2,482
Non-Service Shares	$	159	$	655	$	1,179	$	2,616

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in the annual fund operating expenses or in the examples, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 122% of the average value of its portfolio.

Principal Investment Strategies. The Fund mainly invests in common stocks of companies that the portfolio managers believe are undervalued in the marketplace. They use fundamental analysis to seek companies whose intrinsic value is greater than the current price of their securities. A company's security may be undervalued because the market is not aware of the issuer's intrinsic value, does not yet recognize its future potential, or the issuer may be temporarily out of favor. The Fund may realize gains in the prices of those securities when other investors recognize their real or prospective worth. The portfolio managers' "bottom up" approach uses fundamental analysis to select securities one at a time, based on factors such as a company's long-term earnings and growth potential, before considering industry trends. The portfolio managers currently focus on companies with the following characteristics, which may vary in particular cases and may change over time:

• Future supply and demand conditions for its key products,

• Product cycles,

• Quality of management,

• Competitive position in the market place,

• Reinvestment plans for cash generated, and

• Better-than-expected earnings reports.

The Fund may buy securities issued by companies of any size or market capitalization range and at times might increase its emphasis on securities of issuers in a particular capitalization range, including small- and mid-sized companies. While the Fund does not limit its investments to issuers in a particular capitalization range, the portfolio managers currently focus on securities of larger-size companies.

The Fund may invest up to 25% of its total assets in securities of companies or governments in any foreign country, including both developed and emerging market countries. The Fund may also invest in other equity securities, such as preferred stock, rights, warrants and securities convertible into common stock and may invest up to 10% of its net assets in debt securities.

The portfolio managers may consider selling a stock, but are not required to, for one or more of the following reasons:

• the stock price is approaching its price target,

• the company's fundamentals are deteriorating, or

• alternative investment ideas have been developed.

Principal Risks. The price of the Fund's shares can go up and down substantially. The value of the Fund's investments may change because of broad changes in the markets in which the Fund invests or from poor security selection, which could cause the Fund to underperform other funds with similar objectives. There is no assurance that the Fund will achieve its investment objective. When you redeem your shares, they may be worth more or less than what you paid for them. These risks mean that you can lose money by investing in the Fund.

Main Risks of Investing in Stock. The value of the Fund's portfolio may be affected by changes in the stock markets. Stock markets may experience great short-term volatility and may fall sharply at times. Different stock markets may behave differently from each other and U.S. stock markets may move in the opposite direction from one or more foreign stock markets.

The prices of individual stocks generally do not all move in the same direction at the same time and a variety of factors can affect the price of a particular company's stock. These factors may include, but are not limited to: poor earnings reports, a loss of customers, litigation against the company, general unfavorable performance of the company's sector or industry, or changes in government regulations affecting the company or its industry.

At times, the Fund may emphasize investments in a particular industry or economic or market sector. To the extent that the Fund increases its emphasis on investments in a particular industry or sector, the value of its investments may fluctuate more in response to events affecting that industry or sector, such as changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry more than others.

Main Risks of Value Investing. Value investing entails the risk that if the market does not recognize that the Fund's securities are undervalued, the prices of those securities might not appreciate as anticipated. A value approach could also result in fewer investments that increase rapidly during times of market gains and could cause the Fund to underperform funds that use a growth or non-value approach to investing. Value investing has gone in and out of favor during past market cycles and when value investing is out of favor or when markets are unstable, the securities of "value" companies may underperform the securities of "growth" companies.

Main Risks of Foreign Investing. Foreign securities are subject to special risks. Foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to, which may make it difficult for the Fund to evaluate a foreign company's operations or financial condition. A change in the value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency and in the value of any income or distributions the Fund may receive on those securities. The value of foreign investments may be affected by exchange control regulations, foreign taxes, higher transaction and other costs, delays in the settlement of transactions, changes in economic or monetary policy in the United States or abroad, expropriation or nationalization of a company's assets, or other political and economic factors. These risks may be greater for investments in developing or emerging market countries.

Main Risks of Small- and Mid-Sized Companies. Small- and mid-sized companies may be either established or newer companies, including companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain, they also involve greater risk of loss. They may be more sensitive to changes in earnings expectations and may experience more abrupt and erratic price movements. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-sized companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since small- and mid-sized companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Smaller companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. It may take a substantial period of time to realize a gain on an investment in a small- or mid-sized company, if any gain is realized at all.

Who Is the Fund Designed For? The Fund's shares are available only as an investment option under certain variable annuity contracts, variable life insurance policies and investment plans offered through insurance company separate accounts of participating insurance companies. Those investors should be willing to assume the risks of short-term share price fluctuations and losses that are typical for a fund emphasizing investments in stocks. Since the Fund's income level will fluctuate and will likely be small, it is not designed for investors needing an assured level of current income. The Fund is not a complete investment program. You should carefully consider your own investment goals and risk tolerance before investing in the Fund.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance. The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's Non-Service Shares performance from year to year and by showing how the Fund's average annual returns for 1, 5 and 10 years compare with those of a broad measure of market performance. Charges imposed by the insurance accounts that invest in the Fund are not included and the returns would be lower if they were. The Fund's past investment performance is not necessarily an indication of how the Fund will perform in the future. More recent performance information is available by calling the toll-free number on the back of this prospectus and on the Fund's website at:
https://www.oppenheimerfunds.com/fund/investors/overview/OppenheimerValueFundVA

During the period shown, the highest return before taxes for a calendar quarter was 19.00% (2nd qtr 09) and the lowest return before taxes for a calendar quarter was -24.60% (4th qtr 08).

The following table shows the average annual total returns before taxes for each class of the Fund's shares.

Average Annual Total Returns for the periods ended December 31, 2009	1 Year	5 Years (or life of class, if less)	10 Years (or life of class, if less)
Non-Service Shares (inception 1-2-03)	45.08%	3.35%	8.25%
Service Shares (inception 9-18-06)	32.57%	(4.02%)	N/A
Russell 1000 Value Index	19.69%	(0.25%)	5.92%2
(reflects no deduction for fees, expenses or taxes)		(5.08%)1

1.  From 8-31-06
2.  From 12-31-02

Investment Adviser. OppenheimerFunds, Inc. is the Fund's investment adviser (the "Manager").

Portfolio Managers. Mitch Williams and John Damian have been portfolio managers and Vice Presidents of the Fund since January 2009.

Purchase and Sale of Fund Shares. Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. The accompanying prospectus of the participating insurance company provides information about how to select the Fund as an investment option.

Taxes. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends and capital gains distributions will be taxable to the participating insurance company, if at all. However, those payments may affect the tax basis of certain types of distributions from those accounts. Special tax rules apply to life insurance companies, variable annuity contracts and variable life insurance contracts. For information on federal income taxation of a life insurance company with respect to its receipt of distributions from the Fund and federal income taxation of owners of variable annuity or variable life insurance contracts, see the accompanying prospectus for the applicable contract.

Payments to Broker-Dealers and Other Financial Intermediaries. The Fund, the Manager, or their related companies may make payments to financial intermediaries, including to insurance companies that offer shares of the Fund as an investment option. These payments for the sale of Fund shares and related services may create a conflict of interest by influencing the intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

MORE ABOUT THE FUND

About the Fund's Investments

The allocation of the Fund's portfolio among different types of investments will vary over time and the Fund's portfolio might not always include all of the different types of investments described below. The Statement of Additional Information contains more detailed information about the Fund's investment policies and risks.

THE FUND'S PRINCIPAL INVESTMENT STRATEGIES AND RISKS. The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

Common Stock and Other Equity Investments. Equity securities include common stock, preferred stock, rights, warrants and certain debt securities that are convertible into common stock. Equity investments may be exchange-traded or over-the-counter securities. Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy.

Preferred stock has a set dividend rate and ranks ahead of common stocks and behind debt securities in claims for dividends and for assets of the issuer in a liquidation or bankruptcy. The dividends on preferred stock may be cumulative (they remain a liability of the company until paid) or non-cumulative. The fixed dividend rate of preferred stocks may cause their prices to behave more like those of debt securities. When interest rates rise, the value of preferred stock having a fixed dividend rate tends to fall.

A convertible security can be converted into or exchanged for a set amount of common stock of an issuer within a particular period of time at a specified price or according to a price formula. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. Some convertible debt securities may be considered "equity equivalents" because of the feature that makes them convertible into common stock. Convertible securities may offer the Fund the ability to participate in stock market movements while also seeking some current income. Convertible securities may provide more income than common stock but they generally provide less income than comparable non-convertible debt securities. Convertible securities are subject to credit and interest rate risk, however credit ratings of convertible securities generally have less impact on the value of the securities than they do for non-convertible debt securities.

The Fund's convertible debt securities are subject to the same credit rating limits as the Fund's other debt securities and to the Fund's policy of not investing more than 10% of its net assets in all debt securities.

Foreign Investing. The Fund can buy foreign securities that are listed on a domestic or foreign stock exchange, traded in domestic or foreign over-the-counter markets, or that are represented by American Depository Receipts (ADRs). The Fund also can invest in emerging markets, which have greater risks than developed markets. The Fund will hold foreign currency only in connection with buying and selling foreign securities.

     Special Risks of Developing and Emerging Markets.  Developing or emerging market countries generally have less developed securities markets or exchanges. Securities of companies in developing or emerging market countries may be more difficult to sell at an acceptable price and their prices may be more volatile than securities of companies in countries with more mature markets. Settlements of trades may be subject to greater delays so that the proceeds of a sale of a security may not be received on a timely basis. The economies of developing or emerging market countries may be more dependent on relatively few industries that may be highly vulnerable to local and global changes. Developing or emerging market countries may have less developed legal and accounting systems, and investments in those countries may be subject to greater risks of government restrictions, including confiscatory taxation, expropriation or nationalization of company assets, restrictions on foreign ownership of local companies and restrictions on withdrawing assets from the country. Their governments may also be more unstable than the governments of more developed countries. The value of the currency of a developing or emerging market country may fluctuate more than the currencies of countries with more mature markets. Investments in companies in developing or emerging market countries may be considered speculative.

Risks of Small- and Mid-Sized Companies. Small- and mid-sized companies may be either established or newer companies, including "unseasoned" companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain than larger companies, they also may involve greater risk of loss. They may be more sensitive to changes in a company's earnings expectations and may experience more abrupt and erratic price movements. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-sized companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since small- and mid-sized companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Smaller companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. Securities of small, unseasoned companies may be particularly volatile, especially in the short term, and may have very limited liquidity. It may take a substantial period of time to realize a gain on an investment in a small- or mid-sized company, if any gain is realized at all.

OTHER INVESTMENT STRATEGIES AND RISKS.  The Fund can also use the investment techniques and strategies described below. The Fund might not use all of these techniques or strategies or might only use them from time to time.

Special Portfolio Diversification Requirements. To enable a variable annuity or variable life insurance contract based on an insurance company separate account to qualify for favorable tax treatment under the Internal Revenue Code, the underlying investments must follow special diversification requirements that limit the percentage of assets that can be invested in securities of particular issuers. The Fund's investment program is managed to meet those requirements, in addition to other diversification requirements under the Internal Revenue Code and the Investment Company Act of 1940, as amended, that apply to publicly-sold mutual funds.

     Failure by the Fund to meet those special requirements could cause earnings on a contract owner's interest in an insurance company separate account to be taxable income. Those diversification requirements might also limit, to some degree, the Fund's investment decisions in a way that could reduce its performance.

Industry and Sector Focus.  At times the Fund may increase the relative emphasis of its investments in a particular industry or sector. The prices of securities of issuers in a particular industry or sector may go up and down in response to changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry or sector more than others. To the extent that the Fund increases the relative emphasis of its investments in a particular industry or sector, its share values may fluctuate in response to events affecting that industry or sector. To some extent that risk may be limited by the Fund's policy of not concentrating 25% or more of its total assets in investments in any one industry.

Time-Zone Arbitrage. The Fund may invest in securities of foreign issuers that are traded in U.S. or foreign markets. If the Fund invests a significant amount of its assets in securities traded in foreign markets, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Manager and the Board believe to be their fair value, may help deter those activities.

Debt Securities.  The Fund may invest in debt securities, including: securities issued or guaranteed by the U.S. government or its agencies and instrumentalities, foreign government securities, and foreign and domestic corporate bonds and debentures. Debt securities are securities representing money borrowed by the issuer that must be repaid, specifying the amount of principal, the interest or discount rate, and the time or times at which payments are due. Normally the Fund's investments in debt securities, including convertible debt securities, are limited to not more than 10% of the Fund's net assets.

Debt securities may be subject to the following risks:

• Interest Rate Risk. The values of debt securities usually change when prevailing interest rates change. When interest rates rise, the values of outstanding debt securities generally fall, and those securities may sell at a discount from their face amount. When interest rates fall, the values of already-issued debt securities generally rise. However, when interest rates fall, the Fund's investments in new securities may be at lower yields and may reduce the Fund's income. The values of longer-term debt securities usually change more than the values of shorter-term debt securities when interest rates change.

The Fund may also buy zero-coupon or "stripped" securities, which may be particularly sensitive to interest rate changes. Interest rate changes may have different effects on the values of mortgage-related securities because of prepayment and extension risks.

• Prepayment Risk. Certain fixed-income securities are subject to the risk of unanticipated prepayment. That is the risk that when interest rates fall, borrowers will repay the loans that underlie these securities more quickly than expected, causing the issuer of the security to repay the principal prior to the security's expected maturity. The Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If the Fund buys those securities at a premium, accelerated prepayments on those securities could cause the Fund to lose a portion of its principal investment. The impact of prepayments on the price of a security may be difficult to predict and may increase the security's price volatility. Interest-only and principal-only securities are especially sensitive to interest rate changes, which can affect not only their prices but can also change the income flows and repayment assumptions about those investments.

• Extension Risk. If interest rates rise rapidly, repayments of principal on certain debt securities may occur at a slower rate than expected and the expected maturity of those securities could lengthen as a result. Securities that are subject to extension risk generally have a greater potential for loss when prevailing interest rates rise, which could cause their values to fall sharply.

• Credit Risk. Debt securities are also subject to credit risk. Credit risk is the risk that the issuer of a security might not make interest and principal payments on the security as they become due. U.S. Government securities generally have low credit risks, while securities issued by private issuers or certain foreign governments generally have greater credit risks. If an issuer fails to pay interest, the Fund's income might be reduced, and if an issuer fails to repay principal, the value of the security might fall and the Fund could lose the amount of its investment in the security. The extent of this risk varies based on the terms of the particular security and the financial condition of the issuer. A downgrade in an issuer's credit rating or other adverse news about an issuer can reduce the market value of that issuer's securities.

Credit Quality.  The Fund may invest in securities that are rated or unrated. "Investment-grade" securities are rated in one of the top four rating categories by nationally recognized statistical rating organizations such as Moody's or Standard & Poor's. "Lower-grade" securities are those that are rated below those categories. While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's are considered "investment-grade," they may also have some speculative characteristics. 

        Credit ratings evaluate the expectation that scheduled interest and principal payments will be made in a timely manner. They do not reflect any judgment of market risk. Rating agencies might not always change their credit rating of an issuer in a timely manner to reflect events that could affect the issuer's ability to make timely payments on its obligations. In selecting securities for its portfolio and evaluating their income potential and credit risk, the Fund does not rely solely on ratings by rating organizations but evaluates business and economic factors affecting issuers as well. The ratings definitions of the principal ratings organizations are included in Appendix B to the Statement of Additional Information.

The Fund can invest in debt securities with credit ratings as low as "B," or in equivalent unrated securities. Below investment-grade debt securities are commonly known as "junk bonds."

Fixed-Income Market Risks. Recent developments relating to subprime mortgages have adversely affected fixed-income securities markets in the United States, Europe and elsewhere. The values of many types of debt securities have been reduced, including debt securities that are not related to mortgage loans. These developments have reduced the willingness of some lenders to extend credit and have made it more difficult for borrowers to obtain financing on attractive terms or at all. In addition, broker-dealers and other market participants have been less willing to make a market in some types of debt instruments, which has impacted the liquidity of those instruments. These developments may also have a negative effect on the broader economy. There is a risk that the lack of liquidity or other adverse credit market conditions may hamper the Fund's ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

     Special Risks of Lower-Grade Securities. Lower-grade debt securities, whether rated or unrated, have greater risks than investment-grade securities. They may be subject to greater price fluctuations and have a greater risk that the issuer might not be able to pay interest and principal when due. The market for lower-grade securities may be less liquid and therefore they may be harder to value or to sell at an acceptable price, especially during times of market volatility or decline.

The Fund can invest in debt securities with credit ratings as low as "B," or in equivalent unrated securities. Below investment grade debt securities are commonly known as "junk bonds."

Derivative Investments. The Fund can invest in a number of different types of "derivative" instruments. A derivative is an instrument whose value depends on (or is derived from) the value of an underlying security, asset, interest rate, index or currency.  Derivatives may allow the Fund to increase or decrease its exposure to certain markets or risks.  

The Fund may use derivatives to seek to increase its investment return or for hedging purposes. The Fund is not required to use derivatives in seeking its investment objective or for hedging and might not do so.

Options, futures, forward contracts, swaps, mortgage-related securities and "stripped" securities are some of the types of derivatives the Fund can use. The Fund may also use other types of derivatives that are consistent with its investment strategies or for hedging purposes.

     The Fund has percentage limits on its use of hedging instruments.

     Hedging. Hedging transactions are intended to reduce the risks of securities in the Fund's portfolio. At times, however, a hedging instrument's value might not be correlated with the investment it is intended to hedge, and the hedge might be unsuccessful. If the Fund uses a hedging instrument at the wrong time or judges market conditions incorrectly, the strategy could reduce its return or create a loss.

     Risks of Derivative Investments. Derivatives may be volatile and may involve significant risks. The underlying security or other instrument on which a derivative is based, or the derivative itself, may not perform the way the Manager expects it to. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund's initial investment. Certain derivative investments held by the Fund may be illiquid, making it difficult to close out an unfavorable position. Derivative transactions may require the payment of premiums and can increase portfolio turnover. As a result of these risks, the Fund could realize little or no income or lose money from its investment, or a hedge might be unsuccessful.  Derivatives are also subject to credit risk, since the Fund may also lose money on a derivative investment if the issuer of the derivative fails to pay the amount due.   

Asset-Backed Securities. The Fund may invest in asset-backed securities, which are fractional interests in pools of loans, other assets or receivables. They are issued by trusts or other special purpose vehicles and are collateralized by the loans, other assets or receivables that make up the pool. The trust or other issuer passes the income from the underlying pool to the investor. Neither the Fund nor the Manager selects the loans or other assets that are included in the pools or the collateral backing those pools. Asset-backed securities are subject to interest rate risk and credit risk. These securities are subject to the risk of default by the issuer as well as by the borrowers of the underlying loans in the pool. Certain asset-backed securities are subject to prepayment and extension risks.

Illiquid and Restricted Securities. Investments that do not have an active trading market, or that have legal or contractual limitations on their resale, are generally referred to as "illiquid" securities. Illiquid securities may be difficult to value or to sell promptly at an acceptable price or may require registration under applicable securities laws before they can be sold publicly. Securities that have limitations on their resale are referred to as "restricted securities." Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be regarded as illiquid.

The Fund will not invest more than 10% of its net assets in illiquid or restricted securities.  The Board can increase that limit to 15%. The Manager monitors the Fund's holdings of illiquid securities on an ongoing basis to determine whether to sell any of those securities to maintain adequate liquidity.

Loans of Portfolio Securities. The Fund may loan its portfolio securities to brokers, dealers and financial institutions to seek income. The Fund has entered into a securities lending agreement with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs") for that purpose. Under the agreement, Goldman Sachs will generally bear the risk that a borrower may default on its obligation to return loaned securities. The Fund, however, will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. The Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet its obligations to the borrower. The Fund's portfolio loans must comply with the collateralization and other requirements of the Fund's securities lending agreement, its securities lending procedures and applicable government regulations.

    The Fund limits loans of portfolio securities to not more than 25% of its net assets.

Conflicts of Interest. The investment activities of the Manager and its affiliates in regard to other funds and accounts they manage may present conflicts of interest that could disadvantage the Fund and its shareholders. The Manager or its affiliates may provide investment advisory services to other funds and accounts that have investment objectives or strategies that differ from, or are contrary to, those of the Fund. That may result in another fund or account holding investment positions that are adverse to the Fund's investment strategies or activities. Other funds or accounts advised by the Manager or its affiliates may have conflicting interests arising from investment objectives that are similar to those of the Fund. Those funds and accounts may engage in, and compete for, the same types of securities or other investments as the Fund or invest in securities of the same issuers that have different, and possibly conflicting, characteristics. The trading and other investment activities of those other funds or accounts may be carried out without regard to the investment activities of the Fund and, as a result, the value of securities held by the Fund or the Fund's investment strategies may be adversely affected. The Fund's investment performance will usually differ from the performance of other accounts advised by the Manager or its affiliates and the Fund may experience losses during periods in which other accounts advised by the Manager or its affiliates achieve gains. The Manager has adopted policies and procedures designed to address potential conflicts of interest identified by the Manager; however, such policies and procedures may also limit the Fund's investment activities and affect its performance.

The Fund offers its shares to separate accounts of different insurance companies, as an investment for their variable annuity, variable life and other investment product contracts. While the Fund does not foresee any disadvantages to contract owners from these arrangements, it is possible that the interests of owners of different contracts participating in the Fund through different separate accounts might conflict. For example, a conflict could arise because of differences in tax treatment.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can invest its free cash balances in Class E shares of Oppenheimer Institutional Money Market Fund, to provide liquidity or for defensive purposes. The Fund invests in Oppenheimer Institutional Money Market Fund, rather than purchasing individual short-term investments, to seek a higher yield than it could obtain on its own. Oppenheimer Institutional Money Market Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, and is part of the Oppenheimer family of funds. It invests in a variety of short-term, high-quality, dollar-denominated money market instruments issued by the U.S. Government, domestic and foreign corporations, other financial institutions, and other entities. Those investments may have a higher rate of return than the investments that would be available to the Fund directly. At the time of an investment, the Fund cannot always predict what the yield of the Oppenheimer Institutional Money Market Fund will be because of the wide variety of instruments that fund holds in its portfolio. The return on those investments may, in some cases, be lower than the return that would have been derived from other types of investments that would provide liquidity. As a shareholder, the Fund will be subject to its proportional share of the expenses of Oppenheimer Institutional Money Market Fund's Class E shares, including its advisory fee. However, the Manager will waive a portion of the Fund's advisory fee to the extent of the Fund's share of the advisory fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Cash and Cash Equivalents. Under normal market conditions the Fund can invest up to 15% of its net assets in cash and cash equivalents, including shares of Oppenheimer Institutional Money Market Fund. This strategy would be used primarily for cash management or liquidity purposes. To the extent that the Fund uses this strategy, it might reduce its opportunities to seek its objective of long-term growth of capital.

Temporary Defensive and Interim Investments. For temporary defensive purposes in times of adverse or unstable market, economic or political conditions, the Fund can invest up to 100% of its assets in investments that may be inconsistent with the Fund's principal investment strategies. Generally, the Fund would invest in shares of Oppenheimer Institutional Money Market Fund or in the types of money market instruments in which Oppenheimer Institutional Money Market Fund invests or in other short-term U.S. Government securities. The Fund might also hold these types of securities as interim investments pending the investment of proceeds from the sale of Fund shares or the sale of Fund portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Fund invests in these securities, it might not achieve its investment objective.

Portfolio Turnover.  A change in the securities held by the Fund is known as "portfolio turnover." The Fund may engage in active and frequent trading to try to achieve its investment objective and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs, which can reduce performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, increasing its taxable distributions. The Financial Highlights table at the end of this prospectus shows the Fund's portfolio turnover rates during past fiscal years.

CHANGES TO THE FUND'S INVESTMENT POLICIES. The Fund's fundamental investment policies cannot be changed without the approval of a majority of the Fund's outstanding voting shares, however, the Fund's Board can change non-fundamental policies without a shareholder vote. Significant policy changes will be described in supplements to this prospectus. The Fund's investment objective is not a fundamental policy but will not be changed by the Board without advance notice to shareholders. Investment restrictions that are fundamental policies are listed in the Fund's Statement of Additional Information. An investment policy is not fundamental unless this prospectus or the Statement of Additional Information states that it is.

Portfolio Holdings  
The Fund's portfolio holdings are included in semi-annual and annual reports that are distributed to its shareholders within 60 days after the close of the applicable reporting period. The Fund also discloses its portfolio holdings in its Statements of Investments on Form N-Q, which are public filings that are required to be made with the Securities and Exchange Commission within 60 days after the end of the Fund's first and third fiscal quarters. Therefore, the Fund's portfolio holdings are made publicly available no later than 60 days after the end of each of its fiscal quarters. 

A description of the Fund's policies and procedures with respect to the disclosure of its portfolio holdings is available in the Fund's Statement of Additional Information.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and handles its day-to-day business. The Manager carries out its duties, subject to the policies established by the Fund's Board of Trustees, under an investment advisory agreement that states the Manager's responsibilities. The agreement sets the fees the Fund pays to the Manager and describes the expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment adviser since 1960. The Manager managed funds with nearly 6 million shareholder accounts as of March 31, 2010. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees.  Under the investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows: 0.75% of the first $200 million of average annual net assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of average annual net assets over $800 million.  The Fund's management fee for its fiscal year ended December 31, 2009, was 0.75% of the Fund's average annual net assets for each class of shares.

From January 1, 2007 through April 30, 2009, the Manager voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, would not exceed the annual rate of 1.25% for Non-Service Shares and 1.50% for Service Shares.  Since May 1, 2009, the Manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as percentages of daily net assets, will not exceed the annual rate of 0.80% for Non-Service Shares and 1.05% for Service Shares. The Manager has also voluntarily agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. Each undertaking may be amended or withdrawn after one year from the date of this prospectus.

After all waivers, reimbursements and other credits, actual total annual fund operating expenses for the fiscal year ended December 31, 2009 were 0.86% for Non-Service Shares and 1.16% for Service Shares.  Prior to May 1, 2009, the Fund's expenses were not subject to the voluntary limitation currently in place, therefore the Fund's expenses after all waivers, reimbursements and other credits are slightly higher than the limits in the current voluntary undertaking. The Fund's management fee and other annual operating expenses may vary in future years.

A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory contract is available in the Fund's Annual Report to shareholders for the year ended December 31, 2009.

Portfolio Managers. The Fund's portfolio is managed by Mitch Williams and John Damian, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Williams and Mr. Damian have been portfolio managers and Vice Presidents of the Fund since January 2009.

Mr. Williams, CFA, has been a Vice President of the Manager since July 2006 and a Senior Research Analyst of the Manager since April 2002. He was a Vice President and Research Analyst for Evergreen Funds from October 2000 to January 2002. Mr. Williams is a portfolio manager of other portfolios in the OppenheimerFunds complex.

     Mr. Damian has been Director of Value Equities and Senior Vice President of the Manager since February 2007. He was a Vice President of the Manager from September 2001 to February 2007. He was a Senior Analyst/Director for Citigroup Asset Management from November 1999 to September 2001. Mr. Damian is a portfolio manager and officer of other portfolios in the OppenheimerFunds complex.

     The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts they manage and their ownership of Fund shares.

INVESTING IN THE FUND 

How to Buy and Sell Shares

You may only submit instructions for buying or selling shares of the Fund to your insurance company or its servicing agent, not directly to the Fund or its Transfer Agent. Information about your investment in the Fund can only be obtained from your participating insurance company or its servicing agent. The Fund's Transfer Agent does not hold or have access to those records.

WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund currently offers two different classes of shares. The different classes of shares represent investments in the same portfolio of securities, but the classes are subject to different expenses and will usually have different share prices. The Service Shares are subject to a distribution and service plan. The expenses of that plan are described below. The Non-Service Shares are not subject to a service and distribution plan.

THE PRICE OF FUND SHARES. Fund shares are sold to participating insurance companies at their net asset value per share. The net asset value that applies to a purchase order is the next one calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. Fund shares are redeemed at the next net asset value calculated after the insurance company (as the Fund's designated agent to receive purchase orders) receives the order from its contract owner, in proper form. The Fund's Transfer Agent generally must receive the purchase or redemption order from the insurance company by 9:30 a.m. Eastern Time on the next regular business day.

 The Fund does not impose any sales charge on purchases of its shares. If there are any charges imposed under the variable annuity, variable life or other contract through which Fund shares are purchased, they are described in the accompanying prospectus of the participating insurance company. The participating insurance company's prospectus may also include information regarding the time you must submit your purchase and redemption orders.

The sale and redemption price for Fund shares will change from day to day because the value of the securities in its portfolio and its expenses fluctuate. The redemption price will normally differ for different classes of shares. The redemption price of your shares may be more or less than their original cost.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the close of the New York Stock Exchange (NYSE), on each day the NYSE is open for trading (referred to in this prospectus as a "regular business day"). The NYSE normally closes at 4:00 p.m., Eastern Time, but may close earlier on some days.

The Fund determines the net assets of each class of shares by subtracting the class-specific expenses and the amount of the Fund's liabilities attributable to the share class from the market value of the Fund's securities and other assets attributable to the share class. The Fund's "other assets" might include, for example, cash and interest or dividends from its portfolio securities that have been accrued but not yet collected. The Fund's securities are valued primarily on the basis of current market quotations.

The net asset value per share for each share class is determined by dividing the net assets of the class by the number of outstanding shares of that class.

Fair Value Pricing. If market quotations are not readily available or (in the Manager's judgment) do not accurately reflect the fair value of a security, or if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security from the closing price of the security on the principal market on which it is traded, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value.

In determining whether current market prices are readily available and reliable, the Manager monitors the information it receives in the ordinary course of its investment management responsibilities. It seeks to identify significant events that it believes, in good faith, will affect the market prices of the securities held by the Fund. Those may include events affecting specific issuers (for example, a halt in trading of the securities of an issuer on an exchange during the trading day) or events affecting securities markets (for example, a foreign securities market closes early because of a natural disaster). The Board has adopted valuation procedures for the Fund and has delegated the day-to-day responsibility for fair value determinations to the Manager's "Valuation Committee." Those determinations may include consideration of recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

The Fund's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Accordingly, there can be no assurance that the Fund could obtain the fair value assigned to a security if it were to sell the security at approximately the same time at which the Fund determines its net asset value per share.

  Pricing Foreign Securities. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund values its foreign portfolio holdings, significant events, including broad market movements, may occur during that time that could potentially affect the values of foreign securities held by the Fund.

The Manager believes that foreign securities values may be affected by volatility that occurs in U.S. markets after the close of foreign securities markets. The Manager's fair valuation procedures therefore include a procedure whereby foreign securities prices may be "fair valued" to take those factors into account.

Because some foreign securities trade in markets and on exchanges that operate on weekends and U.S. holidays, the values of some of the Fund's foreign investments may change on days when investors cannot buy or redeem Fund shares.

HOW CAN YOU BUY FUND SHARES? Shares of the Fund may be purchased only by separate investment accounts of participating insurance companies as an underlying investment for variable life insurance policies, variable annuity contracts or other investment products. Individual investors cannot buy shares of the Fund directly. Please refer to the accompanying prospectus of the participating insurance company for information on how to select the Fund as an investment option. That prospectus will indicate which share class you may be eligible to purchase.

Suspension of Share Offering. The offering of Fund shares may be suspended during any period in which the determination of net asset value is suspended, and may be suspended by the Board at any time the Board believes it is in the Fund's best interest to do so.

HOW CAN YOU REDEEM FUND SHARES? Only the participating insurance companies that hold Fund shares in their separate accounts can place orders to redeem shares. Contract holders and policy holders should not directly contact the Fund or its transfer agent to request a redemption of Fund shares. The Fund normally sends payment by Federal Funds wire to the insurance company's account on the next business day after the Fund receives the order (and no later than seven days after the Fund's receipt of the order). Under unusual circumstances determined by the Securities and Exchange Commission, payment may be delayed or suspended. Contract owners should refer to the withdrawal or surrender instructions in the accompanying prospectus of the participating insurance company.

Limitations on Frequent Transactions

Frequent purchases and redemptions of Fund shares may interfere with the Manager's ability to manage the Fund's investments efficiently, may increase its transaction and administrative costs and may affect its performance, depending on various factors, such as the size of the Fund, the nature of its investments, the amount of Fund assets the portfolio manager maintains in cash or cash equivalents, and the aggregate dollar amount, the number and the frequency of trades.

If large dollar amounts are involved in frequent redemption transactions, the Fund might be required to sell portfolio securities at unfavorable times to meet those transaction requests, and the Fund's brokerage or administrative expenses might be increased. Therefore, the Manager and the Fund's Board have adopted the following policies and procedures to detect and prevent frequent and/or excessive purchase and redemption activity, while addressing the needs of investors who seek liquidity in their investment. There is no guarantee that those policies and procedures, described below, will be sufficient to identify and deter all excessive short-term trading. If the Transfer Agent is not able to detect and curtail such activity, frequent trading could occur in the Fund.

Policies on Disruptive Activity

The Transfer Agent and the Distributor, on behalf of the Fund, have entered into agreements with participating insurance companies designed to detect and restrict excessive short-term trading activity by contract or policy owners or their financial advisers in their accounts. The Transfer Agent generally does not consider periodic asset allocation or re-balancing that affects a portion of the Fund shares held in the account of a policy or contract owner to be "excessive trading." However, the Transfer Agent has advised participating insurance companies that it generally considers certain other types of trading activity to be "excessive," such as making a "transfer" out of the Fund within 30 days after buying Fund shares (by the sale of the recently purchased Fund shares and the purchase of shares of another fund) or making more than six "round-trip transfers" between funds during one year. The agreements require participating insurance companies to provide transaction information to the Fund and to execute Fund instructions to restrict trading in Fund shares.

 A participating insurance company may also have its own policies and procedures and may impose its own restrictions or limitations to discourage short-term and/or excessive trading by its policy or contract owners. Those policies and procedures may be different from the Fund's in certain respects. You should refer to the prospectus for your insurance company variable annuity contract for specific information about the insurance company's policies. Under certain circumstances, policy or contract owners may be required to transmit purchase or redemption orders only by first class U.S. mail.

Monitoring the Policies. The Fund's policies and procedures for detecting and deterring frequent or excessive trading are administered by the Fund's Transfer Agent. However, the Transfer Agent presently does not have the ability to directly monitor trading activity in the accounts of policy or contract owners within the participating insurance companies' accounts. The Transfer Agent's ability to monitor and deter excessive short-term trading in such insurance company accounts ultimately depends on the capability and diligence of each participating insurance company, under their agreements with the Transfer Agent, the Distributor and the Fund, in monitoring and controlling the trading activity of the policy or contract owners in the insurance company's accounts.

The Transfer Agent will attempt to monitor the net effect on the Fund's assets from the purchase and redemption activity in the accounts of participating insurance companies and will seek to identify patterns that may suggest excessive trading by the contract or policy owners who invest in the insurance company's accounts. If the Transfer Agent believes it has observed evidence of possible excessive trading activity, it will ask the participating insurance companies or other registered owners to provide information about the transaction activity of the contract or policy holders in their respective accounts, and to take appropriate action. In that case, the insurance company must confirm to the Transfer Agent that appropriate action has been taken to curtail the excessive trading activity.

The Transfer Agent will, subject to the limitations described in this section, limit or terminate the trading activity of any person, group or account that it believes would be excessive or disruptive. However, the Transfer Agent may not be able to detect or curtail all such trading activity in the Fund. The Transfer Agent will evaluate trading activity on a case by case basis and the limitations placed on trading may vary between accounts.

Right to Refuse Purchase Orders. The Fund's Distributor or Transfer Agent may, in their discretion, refuse any purchase order and are not obligated to provide notice before rejecting an order.

DISTRIBUTION AND SERVICE (12b-1) PLANS

Distribution and Service Plan for Service Shares. The Fund has adopted a Distribution and Service Plan for Service Shares to pay the Distributor for distribution related services, personal services and account maintenance for those shares. Under the Plan, the Fund pays the Distributor quarterly at an annual rate of up to 0.25% of the daily net assets of the Fund's Service Shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time they will increase the operating expenses of the Service Shares and may cost you more than other types of fees or sales charges. As a result, the Service Shares may have lower performance compared to the Fund's shares that are not subject to a service fee.

     Use of Plan Fees: The Distributor currently uses all of those fees to compensate sponsor(s) of the insurance product for providing personal services and account maintenance for variable contract owners that hold Service Shares.

PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager and the Distributor, in their discretion, may also make payments for distribution and/or shareholder servicing activities to brokers, dealers and other financial intermediaries, including the insurance companies that offer the Fund as an investment option, or to service providers. Those payments are made out of the Manager's and/or the Distributor's own resources and/or assets, including from the revenues or profits derived from the advisory fees the Manager receives from the Fund. Those cash payments, which may be substantial, are paid to many firms having business relationships with the Manager and Distributor and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Fund to those entities. Payments by the Manager or Distributor from their own resources are not reflected in the tables in the "Fees and Expenses of the Fund" section of this prospectus because they are not paid by the Fund.

The financial intermediaries that may receive those payments include firms that offer and sell Fund shares to their clients, or provide shareholder services to the Fund, or both, and receive compensation for those activities. The financial intermediaries that may receive payments include securities brokers, dealers, financial advisers, insurance companies that offer variable annuity or variable life insurance products and other intermediaries.

In general, these payments to financial intermediaries can be categorized as "distribution-related" or "servicing" payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as "revenue sharing." Revenue sharing payments may be made on the basis of the sales of shares attributable to that intermediary, the average net assets of the Fund and other Oppenheimer funds attributable to the accounts of that intermediary and its clients, negotiated lump sum payments for distribution services provided, or similar fees. In some circumstances, revenue sharing payments may create an incentive for a financial intermediary or its representatives to recommend or offer shares of the Fund or other Oppenheimer funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Distributor's marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Distributor with access to representatives of the intermediary's sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Manager or Distributor may reimburse expenses related to educational seminars and "due diligence" or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority ("FINRA")) designed to increase sales representatives' awareness about Oppenheimer funds, including travel and lodging expenditures. However, the Manager does not consider a financial intermediary's sale of shares of the Fund or other Oppenheimer funds when selecting brokers or dealers to effect portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of clients of the intermediary or overall asset levels of Oppenheimer funds held for or by clients of the intermediary, the willingness of the intermediary to allow the Distributor to provide educational and training support for the intermediary's sales personnel relating to the Oppenheimer funds, the availability of the Oppenheimer funds on the intermediary's sales system, as well as the overall quality of the services provided by the intermediary and the Manager or Distributor's relationship with the intermediary. The Manager and Distributor have adopted guidelines for assessing and implementing each prospective revenue sharing arrangement. To the extent that financial intermediaries receiving distribution-related payments from the Manager or Distributor sell more shares of the Oppenheimer funds or retain more shares of the funds in their client accounts, the Manager and Distributor benefit from the incremental management and other fees they receive with respect to those assets.

Payments may also be made by the Manager, the Distributor or the Transfer Agent to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as sub-transfer agency services for shareholders, omnibus accounting or sub-accounting, participation in networking arrangements, account set-up, recordkeeping and other shareholder services. Payments may also be made for administrative services related to the distribution of Fund shares through the intermediary. Firms that may receive servicing fees include insurance companies that offer variable annuity or variable life insurance products and others. These fees may be used by the service provider to offset or reduce fees that would otherwise be paid directly to them by certain account holders. The Statement of Additional Information contains more information about revenue sharing and service payments made by the Manager or the Distributor. Your broker, dealer or other financial intermediary may charge you fees or commissions in addition to those disclosed in this prospectus. You should ask your financial intermediary for details about any such payments it receives from the Manager or the Distributor and their affiliates, or any other fees or expenses it charges.

Dividends, Capital Gains and Taxes

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay dividends annually from any net investment income. The Fund may also realize capital gains on the sale of portfolio securities, in which case it may make distributions out of any net short-term or long-term capital gains annually. The Fund may also make supplemental distributions of dividends and capital gains following the end of its fiscal year. The Fund has no fixed dividend rate and cannot guarantee that it will pay any dividends or capital gains distributions in a particular year.

Dividends and distributions are paid separately for each share class. Because of the higher expenses on Service Shares, the dividends and capital gains distributions paid on those shares will generally be lower than for other Fund shares.

Receiving Dividends and Distributions. Any dividends and capital gains distributions will be automatically reinvested in additional Fund shares for the account of the participating insurance company, unless the insurance company elects to have dividends or distributions paid in cash.

TAXES. For a discussion of the tax status of a variable annuity contract, a variable life insurance policy or other investment product of a participating insurance company, please refer to the accompanying variable contract prospectus of your participating insurance company. Because shares of the Fund may be purchased only through insurance company separate accounts for variable annuity contracts, variable life insurance policies or other investment products, any dividends from net investment income and distributions of net realized short-term and long-term capital gains will be taxable, if at all, to the participating insurance company. Those payments may affect the tax basis of certain types of distributions from those accounts, however.

The Fund has qualified and intends to qualify each year to be taxed as a regulated investment company under the Internal Revenue Code by satisfying certain income, asset diversification and income distribution requirements, but reserves the right not to so qualify. In each year that it qualifies as a regulated investment company, the Fund will not be subject to federal income taxes on its income that it distributes to shareholders.

This information is only a summary of certain Federal income tax information about your investment. You are encouraged to consult your tax adviser about the effect of an investment in the Fund on your particular tax situation and about any changes to the Internal Revenue Code that may occur from time to time. Additional information about the tax effects of investing in the Fund is contained in the Statement of Additional Information.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial performance for the past five fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, the Fund's independent registered public accounting firm for the most recent fiscal year end.  The financial highlights for the prior years were audited by another independent registered public accounting firm.  KPMG's report, along with the Fund's financial statements, are included in the Statement of Additional Information, which is available upon request.

FINANCIAL HIGHLIGHTS

Non-Service Shares Year Ended December 31,	2009	2008	2007	2006	2005
Per Share Operating Data
Net asset value, beginning of period	$4.99	$11.73	$11.58	$11.16	$12.26
Income (loss) from investment operations:
Net investment income (loss)1	.11	.12	.10	(.03)	.02
Net realized and unrealized gain (loss)	2.14	(4.44)	.59	1.61	.71
Total from investment operations	2.25	(4.32)	.69	1.58	.73
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.02)	(2.42)	(.10)	(.01)	(.02)
Distributions from net realized gain	--	--	(.44)	(1.15)	(1.81)
Total dividends and/or distributions to shareholders	(.02)	(2.42)	(.54)	(1.16)	(1.83)
Net asset value, end of period	$7.22	$4.99	$11.73	$11.58	$11.16
Total Return, at Net Asset Value2	45.08%	(36.43)%	5.89%	14.03%	5.88%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$38	$ 6	$1,728	$2,657	$2,562
Average net assets (in thousands)	$20	$857	$2,753	$2,695	$2,878
Ratios to average net assets:3
Net investment income (loss)	1.75%	1.07%	0.80%	(0.29)%	0.15%
Total expenses	2.30%4	1.48%4	1.49%4	2.14%4	1.78%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	0.85%	1.25%	1.25%	2.14%	1.78%
Portfolio turnover rate	122%	175%	142%	124%	86%

1. Per share amounts calculated based on the average shares outstanding during the period.
2. Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009            2.31%
             Year Ended December 31, 2008            1.48%
             Year Ended December 31, 2007            1.49%
             Year Ended December 31, 2006            2.14%

Service Shares Year Ended December 31,	2009	2008	2007	20061
Per Share Operating Data
Net asset value, beginning of period	$6.79	$11.75	$11.57	$11.89
Income (loss) from investment operations:
Net investment income (loss)2	.09	.08	.06	(.05)
Net realized and unrealized gain (loss)	2.12	(4.97)	.60	.88
Total from investment operations	2.21	(4.89)	.66	.83
Dividends and/or distributions to shareholders:
Dividends from net investment income	(.01)	(.07)	(.04)	--
Distributions from net realized gain	--	--	(.44)	(1.15)
Total dividends and/or distributions to shareholders	(.01)	(.07)	(.48)	(1.15)
Net asset value, end of period	$8.99	$6.79	$11.75	$11.57
Total Return, at Net Asset Value3	32.57%	(41.62)%	5.70%	6.81%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$7,505	$4,690	$6,481	$455
Average net assets (in thousands)	$5,501	$5,561	$3,527	$268
Ratios to average net assets:4
Net investment income (loss)	1.10%	0.84%	0.49%	(1.30)%
Total expenses5	2.17%	2.13%	1.63%	2.89%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses	1.15%	1.50%	1.50%	2.88%
Portfolio turnover rate	122%	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 initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 20092.18%
Year Ended December 31, 20082.13%
Year Ended December 31, 20071.63%
Period Ended December 31, 20062.89%

INFORMATION AND SERVICES

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about the Fund's investment policies, risks, and operations. It is incorporated by reference into this prospectus (it is legally part of this prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS. The Fund's Annual and Semi-Annual Reports provide additional information about the Fund's investments and performance. The Annual Report includes a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

How to Request More Information

You can request the above documents, the notice explaining the Fund's privacy policy, and other information about the Fund, without charge, by:

Telephone:	Call OppenheimerFunds Services toll-free: 1-800-988-8287
Mail:	Use the following address for regular mail: OppenheimerFunds Services P.O. Box 5270 Denver, Colorado 80217-5270
	Use the following address for courier or express mail: OppenheimerFunds Services 12100 East Iliff Avenue Suite 300 Aurora, Colorado 80014
Internet:	You can read or download the Fund's Statement of Additional Information, Annual and Semi-Annual Reports on the OppenheimerFunds website at: www.oppenheimerfunds.com

Information about the Fund including the Statement of Additional Information can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1.202.551.8090. Reports and other information about the Fund are available on the EDGAR database on the SEC's website at www.sec.gov. Copies may be obtained after payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

No one has been authorized to provide any information about the Fund or to make any representations about the Fund other than what is contained in this prospectus. This prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to buy shares of the Fund, to any person in any state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-4108

SP0642.001.0410

Oppenheimer Variable Account Funds

Share Classes:

Service Shares

Non-Service Shares

Class 3 Shares

Class 4 Shares

April 30, 2010

Statement of Additional Information

OPPENHEIMER VARIABLE ACCOUNT FUNDS (the "Trust") is an investment company consisting of 11 separate Series (the "Funds"):

• Oppenheimer Balanced Fund/VA

• Oppenheimer Capital Appreciation Fund/VA

• Oppenheimer Core Bond Fund/VA

• Oppenheimer Global Securities Fund/VA

• Oppenheimer Global Strategic Income Fund/VA

• Oppenheimer High Income Fund/VA

• Oppenheimer Main Street Fund®/VA

• Oppenheimer Main Street Small Cap Fund®/VA

• Oppenheimer Money Fund/VA

• Oppenheimer Small- & Mid-Cap Growth Fund/VA

• Oppenheimer Value Fund/VA

This document contains additional information about the Funds and the Trust, and supplements information in the Funds' Prospectuses dated April 30, 2010.

This Statement of Additional Information is not a prospectus. It should be read together with the Funds' Prospectuses and the Prospectus for the insurance products you have selected.

Shares of the Funds are sold to provide benefits under variable life insurance policies and variable annuity contracts and other insurance company separate accounts, as described in the Prospectuses for the Funds and for the insurance products you have selected.

This Statement of Additional Information consists of two separate documents. This text comprises the first document. The second document contains the Report of the Independent Registered Public Accounting Firm and Financial Statements for each Fund.

This Statement of Additional Information and the Fund's Prospectuses can also be viewed or downloaded online at the OppenheimerFunds internet website at www.oppenheimerfunds.com. They may also be obtained by writing to the Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free number shown below.

6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800.988.8287

Table of contents
ABOUT THE FUND
Additional Information About the Funds Investment Policies and Risks	3
The Funds Main Investment Policies	3
Other Investments and Investment Strategies	12
Investment Restrictions	26
Disclosure of Portfolio Holdings	28
Organization and History	32
Board of Trustees and Oversight Committees	33
Trustees and Officers of the Fund	34
The Manager	45
Brokerage Policies of the Fund	50
Distribution and Service Arrangements	53
Payments to Fund Intermediaries	54
Performance of the Fund	57
ABOUT YOUR ACCOUNT
How to Buy Shares	62
Distributions and Taxes	65
Additional Information About the Fund	66
APPENDIX A: MAJOR SHAREHOLDERS
Appendix A	67
APPENDIX B: RATINGS DEFINITIONS
Appendix B	72
FINANCIAL INFORMATION ABOUT THE FUND
Report of Independent Registered Public Accounting Firm	77
FINANCIAL STATEMENTS
Financial Statements	78

Inside Front Cover

To Summary Prospectus

Additional Information About the Funds Investment Policies and Risks

The investment objective, the principal investment policies and the main risks of the Funds are described in their Prospectuses. This SAI contains supplemental information about those policies and risks and the types of securities that the Funds' investment adviser, OppenheimerFunds, Inc. (the "Manager"), can select for the Funds. Additional information is also provided about the strategies that the Funds may use to try to achieve their objectives.

The composition of the Funds' portfolios and the techniques and strategies that the Funds use in selecting portfolio securities will vary over time. The Funds are not required to use all of the investment techniques and strategies described below in seeking their objectives. They may use some of the investment techniques and strategies only at some times or they may not use them at all.

The Funds Main Investment Policies

In selecting securities for the Funds' portfolios, the Manager evaluates the merits of particular securities primarily through the exercise of its own investment analysis. That process may include, among other things:

• evaluation of the issuer's historical operations,

• prospects for the industry of which the issuer is part,

• the issuer's financial condition,

• its pending product developments and business (and those of competitors),

• the effect of general market and economic conditions on the issuer's business, and

• legislative proposals that might affect the issuer.

The Funds are categorized by the types of investment they make. Capital Appreciation Fund/VA, Global Securities Fund/VA, Main Street Small Cap Fund®/VA, Small- & Mid-Cap Growth Fund/VA, Main Street Fund®/VA and Value Fund/VA can be categorized as "Equity Funds." High Income Fund/VA, Core Bond Fund/VA, and Global Strategic Income Fund/VA can be categorized as "Fixed Income Funds." Balanced Fund/VA shares the investment characteristics (and certain of the investment policies) of both the Equity Funds and the Fixed Income Funds, depending upon the allocations determined from time to time by their respective portfolio managers. However, if a Fund is referred to in general, the discussion below of particular investments and strategies indicates which Funds can use that investment or technique as part of their investment program. For example, some investments can be held by only some of the Funds and some can be held by all. Please refer to the prospectus of a particular Fund for an explanation of its principal investment policies and risks. The allocation of Main Street Fund®/VA's portfolio to equity securities is generally substantially larger than its allocation to fixed-income securities. Money Fund/VA's investment policies are explained separately; however, discussion below about investment restrictions, repurchase agreements and illiquid securities also apply to Money Fund/VA.

Some investments can only be held by some of the Funds and some can be held by all of the Funds. The Funds' general investment categories are indicated in the chart below. Please refer to the Prospectus of the particular Fund for an explanation of its principal investment policies and risks.

Fund	Investment Category
Oppenheimer Capital Appreciation Fund/VA	Equity
Oppenheimer Global Securities Fund/VA	Equity
Oppenheimer Main Street Small Cap Fund/VA	Equity
Oppenheimer Small- & Mid-Cap Growth Fund/VA	Equity
Oppenheimer Value Fund/VA	Equity
Oppenheimer Main Street Fund/VA	Equity
Oppenheimer High Income Fund/VA	Fixed-Income
Oppenheimer Core Bond Fund/VA	Fixed-Income
Oppenheimer Global Strategic Income Fund/VA	Fixed-Income
Oppenheimer Money Fund/VA	Money Market
Oppenheimer Balanced Fund/VA	Other

The full name of each Fund is shown above and on the cover page. The word "Oppenheimer" is omitted from these names in the rest of this document to conserve space.

Investments in Equity Securities. The Equity Funds focus their investments in equity securities, which include common stocks, preferred stocks, rights and warrants, and securities convertible into common stock. Certain equity securities may be selected not only for their appreciation possibilities but because they may provide dividend income. At times, a Fund may have substantial amounts of its assets invested in securities of issuers in one or more capitalization ranges, based upon the Manager's use of its investment strategies and its judgment of where the best market opportunities are to seek a Fund's objective.

Small-cap growth companies may offer greater opportunities for capital appreciation than securities of large, more established companies. However, these securities also involve greater risks than securities of larger companies. Securities of small- and mid- cap issuers may be subject to greater price volatility in general than securities of large-cap companies. Therefore, to the degree that a Fund has investments in smaller capitalization companies at times of market volatility, that Fund's share prices may fluctuate more. Main Street Small Cap Fund®/VA will invest primarily in securities of small-cap issuers, but, for the other Equity Funds those investments may be limited to the extent the Manager believes that such investments would be inconsistent with the goal of preservation of principal.

Growth Investing. In selecting equity investments, the portfolio managers for the Equity Funds may from time to time use a growth investing style, a value investing style, or a combination of both. In using a growth approach, the portfolio managers seek securities of "growth" companies. Growth companies are those companies that the Manager believes are entering into a growth cycle in their business, with the expectation that their stock will increase in value. They may be established companies, as well as, newer companies in the development stage. Growth companies may have a variety of characteristics that in the Manager's view define them as "growth" issuers.

Growth companies may be generating or applying new technologies, new or improved distribution techniques or new services. They may own or develop natural resources. They may be companies that can benefit from changing consumer demands or lifestyles, or companies that have projected earnings in excess of the average for their sector or industry. In each case, they have prospects that the Manager believes are favorable for the long term. The portfolio managers of the Funds look for growth companies with strong, capable management, sound financial and accounting policies, successful product development and marketing and other factors.

Value Investing. In selecting equity investments, the portfolio managers for the Equity Funds in particular may from time to time use a value investing style. In using a value approach, the portfolio managers seek stock and other equity securities that appear to be temporarily undervalued, by various measures, such as price/earnings ratios, rather than seeking stocks of "growth" issuers. This approach is subject to change and might not necessarily be used in all cases. Value investing seeks stocks having prices that are low in relation to their real worth or future prospects, in the hope that a Fund will realize appreciation in the value of its holdings when other investors realize the intrinsic value of the stock.

Using value investing requires research as to the issuer's underlying financial condition and prospects. Some of the measures that can be used to identify these securities include, among others:

• Price/Earnings ratio, which is the stock's price divided by its earnings per share. A stock having a price/earnings ratio lower than its historical range, or the market as a whole or that of similar companies may offer attractive investment opportunities.

• Price/book value ratio, which is the stock price divided by the book value of the company per share, which measures the company's stock price in relation to its asset value.

• Dividend Yield is measured by dividing the annual dividend by the stock price per share.

• Valuation of Assets, which compares the stock price to the value of the company's underlying assets, including their projected value in the marketplace and liquidation value.

Convertible Securities. Convertible securities are debt securities that are convertible into an issuer's common stock. Convertible securities rank senior to common stock in a corporation's capital structure and therefore are subject to less risk than common stock in case of the issuer's bankruptcy or liquidation.

The value of a convertible security is a function of its "investment value" and its "conversion value." If the investment value exceeds the conversion value, the security will behave more like a debt security, and the security's price will likely increase when interest rates fall and decrease when interest rates rise. If the conversion value exceeds the investment value, the security will behave more like an equity security: it will likely sell at a premium over its conversion value, and its price will tend to fluctuate directly with the price of the underlying security.

While many convertible securities are a form of debt security, in some cases their conversion feature (allowing conversion into equity securities) causes the Manager to regard them more as "equity equivalents." In those cases, the credit rating assigned to the security has less impact on the Manager's investment decision than in the case of non-convertible fixed income securities. Convertible securities are subject to the credit risks and interest rate risks described below in "Investments in Bonds and Other Debt Securities."

To determine whether convertible securities should be regarded as "equity equivalents," the Manager may examine the following factors:

1. whether, at the option of the investor, the convertible security can be exchanged for a fixed number of shares of common stock of the issuer,
2. whether the issuer of the convertible securities has restated its earnings per share of common stock on a fully diluted basis (considering the effect of conversion of the convertible securities), and
3. the extent to which the convertible security may be a defensive "equity substitute," providing the ability to participate in any appreciation in the price of the issuer's common stock.

Rights and Warrants. The Funds may invest in warrants or rights. Warrants basically are options to purchase equity securities at specific prices valid for a specific period of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to warrants, but normally have a short duration and are distributed directly by the issuer to its shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.

Preferred Stocks. Preferred stocks are equity securities but have certain attributes of debt securities. Preferred stock, unlike common stock, has a stated dividend rate payable from the corporation's earnings. Preferred stock dividends may be cumulative or non-cumulative, participating, or auction rate. "Cumulative" dividend provisions require all or a portion of prior unpaid dividends to be paid before the issuer can pay dividends on common shares.

If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as provisions for their call or redemption prior to maturity which can have a negative effect on their prices when interest rates decline. Preferred stock may be "participating" stock, which means that it may be entitled to a dividend exceeding the stated dividend in certain cases.

Preferred stocks are equity securities because they do not constitute a liability of the issuer and therefore do not offer the same degree of protection of capital as debt securities and may not offer the same degree of assurance of continued income as debt securities. The rights of preferred stock on distribution of a corporation's assets in the event of its liquidation are generally subordinate to the rights associated with a corporation's debt securities. Preferred stock generally has a preference over common stock on the distribution of a corporation's assets in the event of its liquidation.

Investments in Bonds and Other Debt Securities. The Fixed Income Funds in particular can invest in bonds, debentures and other debt securities to seek current income as part of their investment objectives.

A Fund's debt investments can include investment-grade and non-investment-grade bonds (commonly referred to as "junk bonds"). Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors Service, Inc., ("Moody's") or at least "BBB" by Standard & Poor's Rating Services ("S&P") or Fitch, Inc. ("Fitch") or that have comparable ratings by another nationally recognized rating organization. In making investments in debt securities, the Manager may rely to some extent on the ratings of ratings organizations or it may use its own research to evaluate a security's credit-worthiness. If the securities that a Fund buys are unrated, to be considered part of a Fund's holdings of investment-grade securities, they must be judged by the Manager to be of comparable quality to bonds rated as investment grade by a rating organization.

Special Risks of Lower-Grade Securities. Because lower-grade securities tend to offer higher yields than investment grade securities, a Fund may invest in lower grade securities if the Manager is trying to achieve greater income (and, in some cases, the appreciation possibilities of lower-grade securities may be a reason they are selected for a Fund's portfolio). High-yield convertible debt securities might be selected as "equity substitutes," as described above but are subject to a Fund's limitation on its investment in debt securities as stated in the Prospectus.

As mentioned above, "lower-grade" debt securities are those rated below "investment grade," which means they have a rating lower than "Baa" by Moody's or lower than "BBB" by S&P or Fitch, Inc. or similar ratings by other nationally recognized rating organizations. If they are unrated, and are determined by the Manager to be of comparable quality to debt securities rated below investment grade, they are included in the limitation on the percentage of a Fund's assets that can be invested in lower-grade securities.

While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's or Fitch are investment-grade and are not regarded as junk bonds, those securities may be subject to special risks, and have some speculative characteristics. Definitions of the debt security ratings categories of Moody's, Standard & Poor's and Fitch are included in Appendix B to this SAI.

Credit Risk. Credit risk relates to the ability of the issuer of a debt security to meet interest and principal payment obligations as they become due. Some of the special credit risks of lower-grade securities are discussed in the Prospectus. There is a greater risk that the issuer may default on its obligation to pay interest or to repay principal than in the case of investment grade securities. The issuer's low creditworthiness may increase the potential for its insolvency. An overall decline in values in the high yield bond market is also more likely during a period of a general economic downturn. An economic downturn or an increase in interest rates could severely disrupt the market for high yield bonds, adversely affecting the values of outstanding bonds as well as the ability of issuers to pay interest or repay principal. In the case of foreign high yield bonds, these risks are in addition to the special risks of foreign investing discussed in the Prospectus and in this SAI.

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already-issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

Fluctuations in the market value of fixed-income securities after the Funds buy them will not affect the interest income payable on those securities (unless the security pays interest at a variable rate pegged to interest rate changes). However, those price fluctuations will be reflected in the valuations of the securities, and therefore the Funds' net asset values will be affected by those fluctuations.

Prepayment Risk. Certain fixed-income securities are subject to the risk of unanticipated prepayment. That is the risk that when interest rates fall, borrowers will prepay the loans that underlie these securities more quickly than expected, causing the issuer of the security to repay the principal prior to the security's expected maturity. The Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If the Fund buys those securities at a premium, accelerated prepayments on those securities could cause it to lose a portion of its principal investment represented by the premium. The impact of prepayments on the price of a security may be difficult to predict and may increase the security's price volatility. Interest-only and principal-only securities are especially sensitive to interest rate changes, which can affect not only their prices but can also change the income flows and prepayment assumptions about those investments.

Extension Risk. If interest rates rise rapidly, repayments of principal on certain debt securities may occur at a slower rate than expected and the expected maturity of those securities could lengthen as a result. Those securities generally have a greater potential for loss when prevailing interest rates rise, which could cause their value to fall sharply.

Event-Linked Bonds. The Funds may invest in "event-linked" bonds. Event-linked bonds, which are sometimes referred to as "catastrophe" bonds, are fixed income securities for which the return of principal and payment of interest is contingent on the non-occurrence of a specific trigger event, such as a hurricane, earthquake, or other occurrence that leads to physical or economic loss. In some cases, the trigger event will not be deemed to have occurred unless the event is of a certain magnitude (based on scientific readings) or causes a certain measurable amount of loss to the issuer, a particular industry group or a reference index. If the trigger event occurs prior to maturity, a Fund may lose all or a portion of its principal and additional interest. The Funds may also invest in similar bonds where a Fund may lose all or a portion of its principal and additional interest if the mortality rate in a geographic area exceeds a stated threshold prior to maturity whether or not a particular catastrophic event has occurred.

Event-linked bonds may be issued by government agencies, insurance companies, reinsurers, and financial institutions, among other issuers, or special purpose vehicles associated with the foregoing. Often event-linked bonds provide for extensions of maturity in order to process and audit loss claims in those cases when a trigger event has occurred or is likely to have occurred. An extension of maturity may increase a bond's volatility.

Event-linked bonds may expose the Funds to certain other risks, including issuer default, adverse regulatory or jurisdictional interpretations, liquidity risk and adverse tax consequences. Lack of a liquid market may result in higher transaction costs and the possibility that a Fund may be forced to liquidate positions when it would not be advantageous to do so. Event-linked bonds are typically rated by one or more nationally recognized statistical rating organization and a Fund will only invest in event-linked bonds that meet the credit quality requirements for the Fund.

Floating Rate and Variable Rate Obligations. Some securities the Funds can purchase have variable or floating interest rates. Variable rates are adjusted at stated periodic intervals. Variable rate obligations can have a demand feature that allows the Funds to tender the obligation to the issuer or a third party prior to its maturity. The tender may be at par value plus accrued interest, according to the terms of the obligations.

The interest rate on a floating rate demand note is adjusted automatically according to a stated prevailing market rate, such as a bank's prime rate, the 91-day U.S. Treasury Bill rate, or some other standard. The instrument's rate is adjusted automatically each time the base rate is adjusted. The interest rate on a variable rate note is also based on a stated prevailing market rate but is adjusted automatically at specified intervals of not less than one year. Generally, the changes in the interest rate on such securities reduce the fluctuation in their market value. As interest rates decrease or increase, the potential for capital appreciation or depreciation is less than that for fixed-rate obligations of the same maturity. The Manager may determine that an unrated floating rate or variable rate demand obligation meets the Funds' quality standards by reason of being backed by a letter of credit or guarantee issued by a bank that meets those quality standards.

Floating rate and variable rate demand notes that have a stated maturity in excess of one year may have features that permit the holder to recover the principal amount of the underlying security at specified intervals not exceeding one year and upon no more than 30 days' notice. The issuer of that type of note normally has a corresponding right in its discretion, after a given period, to prepay the outstanding principal amount of the note plus accrued interest. Generally, the issuer must provide a specified number of days' notice to the holder.

Asset-Backed Securities. Asset-backed securities are fractional interests in pools of assets, typically accounts receivable or consumer loans. They are issued by trusts or special-purpose corporations. They are similar to mortgage-backed securities, described below, and are backed by a pool of assets that consist of obligations of individual borrowers. The income from the pool is passed through to the holders of the asset-back security. The pools may offer a credit enhancement, such as a bank letter of credit, to try to reduce the risks that the underlying debtors will not pay their obligations when due. However, the enhancement, if any, might not be for the full par value of the security. If the enhancement is exhausted and any required payments of interest or repayments of principal are not made, that Fund could suffer losses on its investment or delays in receiving payment.

The value of an asset-backed security is affected by changes in the market's perception of the asset backing the security, the creditworthiness of the servicing agent for the loan pool, the originator of the loans, or the financial institution providing any credit enhancement, and is also affected if any credit enhancement has been exhausted. The risks of investing in asset-backed securities are ultimately related to payment of consumer loans by the individual borrowers. As a purchaser of an asset-backed security, a Fund would generally have no recourse to the entity that originated the loans in the event of default by a borrower. The underlying loans are subject to prepayments, which may shorten the weighted average life of asset-backed securities and may lower their return, in the same manner as in the case of mortgage-backed securities and CMOs, described below.

Mortgage-Related Securities. Mortgage-related securities (also referred to as mortgage-backed securities) are a form of fixed-income investment collateralized by pools of commercial or residential mortgages. Pools of mortgage loans are assembled as securities for sale to investors by government agencies or entities or by private issuers. These securities include collateralized mortgage obligations ("CMOs"), mortgage pass-through securities, stripped mortgage pass-through securities, interests in real estate mortgage investment conduits ("REMICs") and other real-estate related securities.

Mortgage-related securities that are issued or guaranteed by agencies or instrumentalities of the U.S. government have relatively little credit risk (depending on the nature of the issuer). Privately issued mortgage-related securities have some credit risk, as the underlying mortgage may not fully collateralize the obligation and full payment of them is not guaranteed. Both types of mortgage-related securities are subject to interest rate risks and prepayment risks, as described in the Prospectuses.

As with other debt securities, the prices of mortgage-related securities tend to move inversely to changes in interest rates. The Fixed Income Funds and Value Fund/VA can buy mortgage-related securities that have interest rates that move inversely to changes in general interest rates, based on a multiple of a specific index. Although the value of a mortgage-related security may decline when interest rates rise, the converse is not always the case.
In periods of declining interest rates, mortgages are more likely to be prepaid. Therefore, a mortgage-related security's maturity can be shortened by unscheduled prepayments on the underlying mortgages. Therefore, it is not possible to predict accurately the security's yield. The principal that is returned earlier than expected may have to be reinvested in other investments having a lower yield than the prepaid security. Therefore, these securities may be less effective as a means of "locking in" attractive long-term interest rates, and they may have less potential for appreciation during periods of declining interest rates, than conventional bonds with comparable stated maturities.

Prepayment risks can lead to substantial fluctuations in the value of a mortgage-related security. In turn, this can affect the value of that Fund's shares. If a mortgage-related security has been purchased at a premium, all or part of the premium that Fund paid may be lost if there is a decline in the market value of the security, whether that results from interest rate changes or prepayments on the underlying mortgages. In the case of stripped mortgage-related securities, if they experience greater rates of prepayment than were anticipated, that Fund may fail to recoup its initial investment on the security.

During periods of rapidly rising interest rates, prepayments of mortgage-related securities may occur at slower than expected rates. Slower prepayments effectively may lengthen a mortgage-related security's expected maturity. Generally, that would cause the value of the security to fluctuate more widely in responses to changes in interest rates. If the prepayments on a Fund's mortgage-related securities were to decrease broadly, that Fund's effective duration, and therefore its sensitivity to interest rate changes, would increase. As with other debt securities, the values of mortgage-related securities may be affected by changes in the market's perception of the creditworthiness of the entity issuing the securities or guaranteeing them. Their values may also be affected by changes in government regulations and tax policies.

Forward Rolls. The Funds can enter into "forward roll" transactions with respect to mortgage-related securities (also referred to as "mortgage dollar rolls"). In this type of transaction, a Fund sells a mortgage-related security to a buyer and simultaneously agrees to repurchase a similar security (the same type of security, and having the same coupon and maturity) at a later date at a set price. The securities that are repurchased will have the same interest rate as the securities that are sold, but typically will be collateralized by different pools of mortgages (with different prepayment histories) than the securities that have been sold. Proceeds from the sale are invested in short-term instruments, such as repurchase agreements. The income from those investments, plus the fees from the forward roll transaction, are expected to generate income to a Fund in excess of the yield on the securities that have been sold.

The Funds will only enter into "covered" rolls. To assure its future payment of the purchase price, the Funds will identify on its books liquid assets in an amount equal to the payment obligation under the roll.

These transactions have risks. During the period between the sale and the repurchase, the Fund will not be entitled to receive interest and principal payments on the securities that have been sold. It is possible that the market value of the securities the Fund sells may decline below the price at which the Fund is obligated to repurchase securities.

Collateralized Mortgage Obligations. CMOs are multi-class bonds that are backed by pools of mortgage loans or mortgage pass-through certificates. They may be collateralized by:

1. pass-through certificates issued or guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac,
2. unsecuritized mortgage loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans' Affairs,
3. unsecuritized conventional mortgages,
4. other mortgage-related securities, or
5. any combination of these.

Each class of CMO, referred to as a "tranche," is issued at a specific coupon rate and has a stated maturity or final distribution date. Principal prepayments on the underlying mortgages may cause the CMO to be retired much earlier than the stated maturity or final distribution date. The principal and interest on the underlying mortgages may be allocated among the several classes of a series of a CMO in different ways. One or more trenches may have coupon rates that reset periodically at a specified increase over an index. These are floating rate CMOs, and typically have a cap on the coupon rate. Inverse floating rate CMOs have a coupon rate that moves in the reverse direction to an applicable index. The coupon rate on these CMOs will increase as general interest rates decrease. These are usually much more volatile than fixed rate CMOs or floating rate CMOs.

U.S. Government Securities. These are securities issued or guaranteed by the U.S. Treasury or other government agencies or federally-chartered corporate entities referred to as "instrumentalities." The obligations of U.S. government agencies or instrumentalities in which the Funds may invest may or may not be guaranteed or supported by the "full faith and credit" of the United States. "Full faith and credit," means generally that the taxing power of the U.S. government is pledged to the payment of interest and repayment of principal on a security. If a security is not backed by the full faith and credit of the United States, the owner of the security must look principally to the agency issuing the obligation for repayment. The owner might not be able to assert a claim against the United States if the issuing agency or instrumentality does not meet its commitment. The Funds will invest in securities of U.S. government agencies and instrumentalities only if the Manager is satisfied that the credit risk with respect to the agency or instrumentality is minimal.

U.S. Treasury Obligations. These include Treasury bills (maturities of one year or less when issued), Treasury notes (maturities of one to 10 years), and Treasury bonds (maturities of more than 10 years). Treasury securities are backed by the full faith and credit of the United States as to timely payments of interest and repayments of principal. They also can include U.S. Treasury securities that have been "stripped" by a Federal Reserve Bank, zero-coupon U.S. Treasury securities described below, and Treasury Inflation-Protection Securities ("TIPS").

Treasury Inflation-Protection Securities. The Funds can buy these TIPS, which are designed to provide an investment vehicle that is not vulnerable to inflation. The interest rate paid by TIPS is fixed. The principal value rises or falls semi-annually based on changes in the published Consumer Price Index. If inflation occurs, the principal and interest payments on TIPS are adjusted to protect investors from inflationary loss. If deflation occurs, the principal and interest payments will be adjusted downward, although the principal will not fall below its face amount at maturity.

Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities. These include direct obligations and mortgage-related securities that have different levels of credit support from the government. Some are supported by the full faith and credit of the U.S. government, such as Government National Mortgage Association ("GNMA") pass-through mortgage certificates (called "Ginnie Maes"). Some are supported by the right of the issuer to borrow from the U.S. Treasury under certain circumstances, such as Federal National Mortgage Association bonds ("Fannie Maes"). Others are supported only by the credit of the entity that issued them, such as Federal Home Loan Mortgage Corporation ("FHLMC") obligations ("Freddie Macs").

U.S. Government Mortgage-Related Securities. The Funds can invest in a variety of mortgage-related securities that are issued by U.S. government agencies or instrumentalities, some of which are described below.

GNMA Certificates. The Government National Mortgage Association is a wholly-owned corporate instrumentality of the United States within the U.S. Department of Housing and Urban Development. GNMA's principal programs involve its guarantees of privately-issued securities backed by pools of mortgages. Ginnie Maes are debt securities representing an interest in one mortgage or a pool of mortgages that are insured by the Federal Housing Administration ("FHA") or the Farmers Home Administration ("FMHA") or guaranteed by the Veterans Administration ("VA").

The Ginnie Maes in which the Funds invest are of the "fully modified pass-through" type. They provide that the registered holders of the Ginnie Maes will receive timely monthly payments of the pro-rata share of the scheduled principal payments on the underlying mortgages, whether or not those amounts are collected by the issuers. Amounts paid include, on a pro rata basis, any prepayment of principal of such mortgages and interest (net of servicing and other charges) on the aggregate unpaid principal balance of the Ginnie Maes, whether or not the interest on the underlying mortgages has been collected by the issuers.

The Ginnie Maes purchased by the Funds are guaranteed as to timely payment of principal and interest by GNMA. In giving that guaranty, GNMA expects that payments received by the issuers of Ginnie Maes on account of the mortgages backing the Ginnie Maes will be sufficient to make the required payments of principal of and interest on those Ginnie Maes. However, if those payments are insufficient, the guaranty agreements between the issuers of the Ginnie Maes and GNMA require the issuers to make advances sufficient for the payments. If the issuers fail to make those payments, GNMA will do so.

Under federal law, the full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guaranty issued by GNMA as to such mortgage pools. An opinion of an Assistant Attorney General of the United States, dated December 9, 1969, states that such guaranties "constitute general obligations of the United States backed by its full faith and credit." GNMA is empowered to borrow from the United States Treasury to the extent necessary to make any payments of principal and interest required under those guaranties.

Ginnie Maes are backed by the aggregate indebtedness secured by the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages. Except to the extent of payments received by the issuers on account of such mortgages, Ginnie Maes do not constitute a liability of those issuers, nor do they evidence any recourse against those issuers. Recourse is solely against GNMA. Holders of Ginnie Maes (such as the Funds) have no security interest in or lien on the underlying mortgages.

Monthly payments of principal will be made, and additional prepayments of principal may be made, to the Funds with respect to the mortgages underlying the Ginnie Maes owned by the Funds. All of the mortgages in the pools relating to the Ginnie Maes in the Funds are subject to prepayment without any significant premium or penalty, at the option of the mortgagors. While the mortgages on one-to-four family dwellings underlying certain Ginnie Maes have a stated maturity of up to 30 years, it has been the experience of the mortgage industry that the average life of comparable mortgages, as a result of prepayments, refinancing and payments from foreclosures, is considerably less.

Federal Home Loan Mortgage Corporation (FHLMC) Certificates. FHLMC, a corporate instrumentality of the United States, issues FHLMC Certificates representing interests in mortgage loans. FHLMC guarantees to each registered holder of a FHLMC Certificate timely payment of the amounts representing a holder's proportionate share in:

1. interest payments less servicing and guarantee fees,
2. principal prepayments, and
3. the ultimate collection of amounts representing the holder's proportionate interest in principal payments on the mortgage loans in the pool represented by the FHLMC Certificate, in each case whether or not such amounts are actually received.

The obligations of FHLMC under its guarantees are obligations solely of FHLMC and are not backed by the full faith and credit of the United States.

Federal National Mortgage Association (Fannie Mae) Certificates. Fannie Mae, a federally-chartered and privately-owned corporation, issues Fannie Mae Certificates which are backed by a pool of mortgage loans. Fannie Mae guarantees to each registered holder of a Fannie Mae Certificate that the holder will receive amounts representing the holder's proportionate interest in scheduled principal and interest payments, and any principal prepayments, on the mortgage loans in the pool represented by such Certificate, less servicing and guarantee fees, and the holder's proportionate interest in the full principal amount of any foreclosed or other liquidated mortgage loan. In each case the guarantee applies whether or not those amounts are actually received. The obligations of Fannie Mae under its guarantees are obligations solely of Fannie Mae and are not backed by the full faith and credit of the United States or any of its agencies or instrumentalities other than Fannie Mae.

Zero-Coupon U.S. Government Securities. The Funds may buy zero-coupon U.S. government securities. These will typically be U.S. Treasury Notes and Bonds that have been stripped of their unmatured interest coupons, the coupons themselves, or certificates representing interests in those stripped debt obligations and coupons.

Zero-coupon securities do not make periodic interest payments and are sold at a deep discount from their face value at maturity. The buyer recognizes a rate of return determined by the gradual appreciation of the security, which is redeemed at face value on a specified maturity date. This discount depends on the time remaining until maturity, as well as prevailing interest rates, the liquidity of the security and the credit quality of the issuer. The discount typically decreases as the maturity date approaches.

Because zero-coupon securities pay no interest and compound semi-annually at the rate fixed at the time of their issuance, their value is generally more volatile than the value of other debt securities that pay interest. Their value may fall more dramatically than the value of interest-bearing securities when interest rates rise. When prevailing interest rates fall, zero-coupon securities tend to rise more rapidly in value because they have a fixed rate of return.

A Fund's investment in zero-coupon securities may cause that Fund to recognize income and make distributions to shareholders before it receives any cash payments on the zero-coupon investment. To generate cash to satisfy those distribution requirements, a Fund may have to sell portfolio securities that it otherwise might have continued to hold or to use cash flows from other sources such as the sale of Fund shares.

Commercial (Privately-Issued) Mortgage Related Securities. The Funds can invest in commercial mortgage-related securities issued by private entities. Generally these are multi-class debt or pass-through certificates secured by mortgage loans on commercial properties. They are subject to the credit risk of the issuer. These securities typically are structured to provide protection to investors in senior classes from possible losses on the underlying loans. They do so by having holders of subordinated classes take the first loss if there are defaults on the underlying loans. They may also be protected to some extent by guarantees, reserve funds or additional collateralization mechanisms.

Loan Participation Interests. The Fund may invest in loan participation interests, subject to the Fund's limitation on investments in illiquid investments. A participation interest is an undivided interest in a loan made by the issuing financial institution in the proportion that the buyer's participation interest bears to the total principal amount of the loan. The issuing financial institution may have no obligation to the Fund other than to pay the Fund the proportionate amount of the principal and interest payments it receives. The Fund may also buy interests in trusts and other entities that hold loan obligations. 

Participation interests are primarily dependent upon the creditworthiness of the borrowing corporation, which is obligated to make payments of principal and interest on the loan. There is a risk that a borrower may have difficulty making payments. If a borrower fails to pay scheduled interest or principal payments, the Fund could experience a reduction in its income. The value of that participation interest might also decline, which could affect the net asset value of the Fund's shares. If the issuing financial institution fails to perform its obligations under the participation agreement, the Fund might incur costs and delays in realizing payment and suffer a loss of principal and/or interest. In some cases, these participation interests, whether held directly by the Fund or indirectly through an interest in a trust or other entity, may be partially "unfunded," meaning the Fund may be required to advance additional money on future dates. 

Foreign Securities. The Equity Funds and the Fixed Income Funds may invest in foreign securities, and Global Securities Fund/VA and Global Strategic Income Fund/VA expect to have substantial investments in foreign securities. These include equity securities issued by foreign companies and debt securities issued or guaranteed by foreign companies or governments, including supra-national entities. "Foreign securities" include equity and debt securities of companies organized under the laws of countries other than the United States and debt securities issued or guaranteed by governments other than the U.S. government or by foreign supra-national entities. They also include securities of companies (including those that are located in the U.S. or organized under U.S. law) that derive a significant portion of their revenue or profits from foreign businesses, investments or sales, or that have a significant portion of their assets abroad. They may be traded on foreign securities exchanges or in the foreign over-the-counter markets. Value Fund/VA can purchase up to 25% of its total assets in certain equity and debt securities issued or guaranteed by foreign companies or of foreign governments or their agencies and as stated in the Prospectus, Value Fund/VA does not concentrate 25% or more of its total assets in the securities of any one foreign government. Global Strategic Income Fund/VA has no limitation on the amount of foreign securities in which it may invest but will not concentrate 25% or more of its total assets in the securities of any one foreign government.

Securities of foreign issuers that are represented by American Depository Receipts or that are listed on a U.S. securities exchange or traded in the U.S. over-the-counter markets are not considered "foreign securities" for the purpose of a Fund's investment allocations, because they are not subject to many of the special considerations and risks, discussed below, that apply to foreign securities traded and held abroad.

Because the Funds may purchase securities denominated in foreign currencies, a change in the value of such foreign currency against the U.S. dollar will result in a change in the amount of income the Funds have available for distribution. Because a portion of the Funds' investment income may be received in foreign currencies, the Funds will be required to compute their income in U.S. dollars for distribution to shareholders, and therefore the Funds will absorb the cost of currency fluctuations. After the Funds have distributed income, subsequent foreign currency losses may result in the Funds' having distributed more income in a particular fiscal period than was available from investment income, which could result in a return of capital to shareholders.

Investing in foreign securities offers potential benefits not available from investing solely in securities of domestic issuers. They include the opportunity to invest in foreign issuers that appear to offer growth potential, or in foreign countries with economic policies or business cycles different from those of the U.S., or to reduce fluctuations in portfolio value by taking advantage of foreign stock markets that do not move in a manner parallel to U.S. markets. The Funds will hold foreign currency only in connection with the purchase or sale of foreign securities.

Foreign Debt Obligations. The debt obligations of foreign governments and entities may or may not be supported by the full faith and credit of the foreign government. The Fixed Income Funds may buy securities issued by certain supra-national entities, which include entities designated or supported by governments to promote economic reconstruction or development, international banking organizations and related government agencies. Examples are the International Bank for Reconstruction and Development (commonly called the "World Bank"), the Asian Development bank and the Inter-American Development Bank.

The governmental members of these supra-national entities are "stockholders" that typically make capital contributions and may be committed to make additional capital contributions if the entity is unable to repay its borrowings. A supra-national entity's lending activities may be limited to a percentage of its total capital, reserves and net income. There can be no assurance that the constituent foreign governments will continue to be able or willing to honor their capitalization commitments for those entities.

The Fixed Income Funds can invest in U.S. dollar-denominated "Brady Bonds." These foreign debt obligations may be fixed-rate par bonds or floating-rate discount bonds. They are generally collateralized in full as to repayment of principal at maturity by U.S. Treasury zero-coupon obligations that have the same maturity as the Brady Bonds. Brady Bonds can be viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity. Those uncollateralized amounts constitute what is called the "residual risk".

If there is a default on collateralized Brady Bonds resulting in acceleration of the payment obligations of the issuer, the zero-coupon U.S. Treasury securities held as collateral for the payment of principal will not be distributed to investors, nor will those obligations be sold to distribute the proceeds. The collateral will be held by the collateral agent to the scheduled maturity of the defaulted Brady Bonds. The defaulted bonds will continue to remain outstanding, and the face amount of the collateral will equal the principal payments which would have then been due on the Brady Bonds in the normal course. Because of the residual risk of Brady Bonds and the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, Brady Bonds are considered speculative investments.

Risks of Foreign Investing. Investments in foreign securities may offer special opportunities for investing but also present special additional risks and considerations not typically associated with investments in domestic securities. Some of these additional risks are:

• reduction of income by foreign taxes;

• fluctuation in value of foreign investments due to changes in currency rates or currency control regulations (for example, currency blockage);

• transaction charges for currency exchange;

• lack of public information about foreign issuers;

• lack of uniform accounting, auditing and financial reporting standards in foreign countries comparable to those applicable to domestic issuers;

• less volume on foreign exchanges than on U.S. exchanges;

• reater volatility and less liquidity on foreign markets than in the U.S.;

• less governmental regulation of foreign issuers, stock exchanges and brokers than in the U.S.;

• greater difficulties in commencing lawsuits;

• higher brokerage commission rates than in the U.S.;

• increased risks of delays in settlement of portfolio transactions or loss of certificates for portfolio securities;

• possibilities in some countries of expropriation, confiscatory taxation, currency devaluation, political, financial or social instability or adverse diplomatic developments; and

• unfavorable differences between the U.S. economy and foreign economies.

In the past, U.S. government policies have discouraged certain investments abroad by U.S. investors, through taxation or other restrictions, and it is possible that such restrictions could be re-imposed.

Special Risks of Emerging Markets. Emerging and developing markets abroad may also offer special opportunities for growth investing but have greater risks than more developed foreign markets, such as those in Europe, Canada, Australia, New Zealand and Japan. There may be even less liquidity in their securities markets, and settlements of purchases and sales of securities may be subject to additional delays. They are subject to greater risks of limitations on the repatriation of income and profits because of currency restrictions imposed by local governments. Those countries may also be subject to the risk of greater political and economic instability, which can greatly affect the volatility of prices of securities in those countries. The Manager will consider these factors when evaluating securities in these markets, because the selection of those securities must be consistent with a Fund's goal of preservation of principal.

Portfolio Turnover. "Portfolio turnover" describes the rates at which the Funds traded their portfolio securities during their last fiscal year. For example, if a Fund sold all of its securities during the year, its portfolio turnover rate would have been 100%. The Funds' portfolio turnover rates will fluctuate from year to year, and any of the Funds may have portfolio turnover rates of more than 100% annually.

The increase in the portfolio turnover rate in 2009 for Core Bond Fund/VA and High Income Fund/VA as compared to 2008 and 2007 was due primarily to a change in each Fund's portfolio managers in April 2009, who restructed the Fund's portfolio to implement their investment process.

Other Investments and Investment Strategies

Other Investment Techniques and Strategies. In seeking their respective objectives, the Funds may from time to time use the types of investment strategies and investments described below. They are not required to use all of these strategies at all times, and at times may not use them.

Investing in Small, Unseasoned Companies. A Fund may invest in securities of small, unseasoned companies, subject to limits (if any) stated in that Fund's Prospectus. These are companies that have been in operation for less than three years, including the operations of any predecessors. Securities of these companies may be subject to volatility in their prices. They may have a limited trading market or no trading market, which may adversely affect a Fund's ability to value them or to dispose of them and can reduce the price that Fund might be able to obtain for them. Other investors that own a security issued by a small, unseasoned issuer for which there is limited liquidity might trade the security when a Fund is attempting to dispose of their holdings of that security. In that case, a Fund might receive a lower price for its holdings than might otherwise be obtained.

Risks of Small- and Mid-Sized Companies. Small- and mid-sized companies may be either established or newer companies, including "unseasoned" companies that have been in operation for less than three years. While smaller companies might offer greater opportunities for gain than larger companies, they also may involve greater risk of loss. They may be more sensitive to changes in a company's earnings expectations and may experience more abrupt and erratic price movements. Smaller companies' securities often trade in lower volumes and it might be harder for the Fund to dispose of its holdings at an acceptable price when it wants to sell them. Small- and mid-sized companies may not have established markets for their products or services and may have fewer customers and product lines. They may have more limited access to financial resources and may not have the financial strength to sustain them through business downturns or adverse market conditions. Since small- and mid-sized companies typically reinvest a high proportion of their earnings in their business, they may not pay dividends for some time, particularly if they are newer companies. Smaller companies may have unseasoned management or less depth in management skill than larger, more established companies. They may be more reliant on the efforts of particular members of their management team and management changes may pose a greater risk to the success of the business. Securities of small, unseasoned companies may be particularly volatile, especially in the short term, and may have very limited liquidity. It may take a substantial period of time to realize a gain on an investment in a small- or mid-sized company, if any gain is realized at all.

When-Issued and Delayed-Delivery Transactions. The Funds may invest in securities on a "when-issued" basis and may purchase or sell securities on a "delayed-delivery" or "forward commitment" basis. When-issued and delayed-delivery are terms that refer to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery.

When such transactions are negotiated, the price (which is generally expressed in yield terms) is fixed at the time the commitment is made. Delivery and payment for the securities take place at a later date. The securities are subject to change in value from market fluctuations during the period until settlement. The value at delivery may be less than the purchase price. For example, changes in interest rates in a direction other than that expected by the Manager before settlement will affect the value of such securities and may cause a loss to the Funds. During the period between purchase and settlement, no payment is made by a Fund to the issuer and no interest accrues to that Fund from the investment until it receives the security at settlement. There is a risk of loss to a Fund if the value of the security changes prior to the settlement date, and there is the risk that the other party may not perform.

The Funds engage in when-issued transactions to secure what the Manager considers to be an advantageous price and yield at the time of entering into the obligation. When a Fund enters into a when-issued or delayed-delivery transaction, it relies on the other party to complete the transaction. Its failure to do so may cause that Fund to lose the opportunity to obtain the security at a price and yield the Manager considers to be advantageous.

When a Fund engages in when-issued and delayed-delivery transactions, it does so for the purpose of acquiring or selling securities consistent with its investment objective and policies for its portfolio or for delivery pursuant to options contracts it has entered into, and not for the purpose of investment leverage. Although a Fund will enter into delayed-delivery or when-issued purchase transactions to acquire securities, it may dispose of a commitment prior to settlement. If a Fund chooses to dispose of the right to acquire a when-issued security prior to its acquisition or to dispose of its right to delivery against a forward commitment, it may incur a gain or loss.

At the time a Fund makes the commitment to purchase or sell a security on a when-issued or delayed delivery basis, it records the transaction on its books and reflects the value of the security purchased in determining that Fund's net asset value. In a sale transaction, it records the proceeds to be received. That Fund will identify on its books liquid assets at least equal in value to the value of that Fund's purchase commitments until that Fund pays for the investment.

When-issued and delayed-delivery transactions can be used by the Funds as a defensive technique to hedge against anticipated changes in interest rates and prices. For instance, in periods of rising interest rates and falling prices, a Fund might sell securities in its portfolio on a forward commitment basis to attempt to limit its exposure to anticipated falling prices. In periods of falling interest rates and rising prices, a Fund might sell portfolio securities and purchase the same or similar securities on a when-issued or delayed-delivery basis to obtain the benefit of currently higher cash yields.

Zero-Coupon Securities. The Fixed Income Funds may buy zero-coupon and delayed interest securities, and "stripped" securities of foreign government issuers, which may or may not be backed by the "full faith and credit" of the issuing foreign government, and of domestic and foreign corporations. The Fixed Income Funds and Value Fund/VA may also buy zero-coupon and "stripped" U.S. government securities. Zero-coupon securities issued by foreign governments and by corporations will be subject to greater credit risks than U.S. government zero-coupon securities.

"Stripped" Mortgage-Related Securities. The Fixed Income Funds and Value Fund/VA can invest in stripped mortgage-related securities that are created by segregating the cash flows from underlying mortgage loans or mortgage securities to create two or more new securities. Each has a specified percentage of the underlying security's principal or interest payments. These are a form of derivative investment.

Mortgage securities may be partially stripped so that each class receives some interest and some principal. However, they may be completely stripped. In that case all of the interest is distributed to holders of one type of security, known as an "interest-only" security, or "I/O," and all of the principal is distributed to holders of another type of security, known as a "principal-only" security or "P/O." Strips can be created for pass-through certificates or CMOs.

The yields to maturity of I/Os and P/Os are very sensitive to principal repayments (including prepayments) on the underlying mortgages. If the underlying mortgages experience greater than anticipated prepayments of principal, a Fund might not fully recoup its investment in an I/O based on those assets. If underlying mortgages experience less than anticipated prepayments of principal, the yield on the P/Os based on them could decline substantially.

Repurchase Agreements. The Funds may acquire securities subject to repurchase agreements. They may do so for liquidity purposes to meet anticipated redemptions of Funds shares, or pending the investment of the proceeds from sales of Funds shares, or pending the settlement of portfolio securities transactions, or for temporary defensive purposes, as described below.

In a repurchase transaction, a Fund buys a security from, and simultaneously resells it to, an approved vendor for delivery on an agreed-upon future date. The resale price exceeds the purchase price by an amount that reflects an agreed-upon interest rate effective for the period during which the repurchase agreement is in effect. Approved vendors include U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that have been designated as primary dealers in government securities. They must meet credit requirements set by the Manager from time to time.

The majority of these transactions run from day to day, and delivery pursuant to the resale typically occurs within one to five days of the purchase. Repurchase agreements having a maturity beyond seven days are subject to each Fund's limit on holding illiquid investments. No Fund will enter into a repurchase agreement that causes more than 15% of its net assets (for Money Fund/VA, 10%) to be subject to repurchase agreements having a maturity beyond seven days. There is no limit on the amount of a Fund's net assets that may be subject to repurchase agreements having maturities of seven days or less.

Repurchase agreements, considered "loans" under the Investment Company Act, are collateralized by the underlying security. The Funds' repurchase agreements require that at all times while the repurchase agreements are in effect, the value of the collateral must equal or exceed the repurchase price to fully collateralize the repayment obligation. However, if the vendor fails to pay the resale price on the delivery date, the Funds may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so. The Manager will monitor the vendor's creditworthiness to confirm that the vendor is financially sound and will continuously monitor the collateral's value.

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the "SEC"), the Funds, along with other affiliated entities managed by the Manager, may transfer uninvested cash balances into one or more joint repurchase accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities that are collateral for repurchase agreements are financial assets subject to the Funds' entitlement orders through its securities account at its custodian bank until the agreements mature. Each joint repurchase arrangement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention or sale of the collateral may be subject to legal proceedings.

Illiquid and Restricted Securities. Generally, an illiquid asset is an asset that cannot be sold or disposed of in the ordinary course of business within seven days at approximately the price at which it has been valued. Under the policies and procedures established by the Board, the Manager determines the liquidity of portfolio investments. The Manager monitors holdings of illiquid and restricted securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. Among the types of illiquid securities are repurchase agreements maturing in more than seven days.

Restricted securities acquired through private placements have contractual restrictions on their public resale that might limit the ability to value or to dispose of the securities and might lower the price that could be realized on a sale. To sell a restricted security that is not registered under applicable securities laws, the securities might need to be registered. The expense of registering restricted securities may be negotiated with the issuer at the time of purchase. If the securities must be registered in order to be sold, a significant period may elapse between the time the decision is made to sell the security and the time the security is registered. There is a risk of downward price fluctuation during that period.

Limitations that apply to purchases of restricted securities do not limit purchases of restricted securities that are eligible for sale to qualified institutional buyers under Rule 144A of the Securities Act of 1933, if those securities have been determined to be liquid by the Manager under Board-approved guidelines. Those guidelines take into account the trading activity for the securities and the availability of reliable pricing information, among other factors. If there is a lack of trading interest in a particular Rule 144A security, holdings of that security may be considered to be illiquid.

Loans of Portfolio Securities. Securities lending pursuant to a Securities Lending Agency Agreement (the "Securities Lending Agreement") with Goldman Sachs Bank USA, doing business as Goldman Sachs Agency Lending ("Goldman Sachs"), may be used to attempt to increase income. Loans of portfolio securities are subject to the restrictions stated in the Prospectus and must comply with all applicable regulations and with the Funds' Securities Lending Procedures adopted by the Board. The terms of any loans must also meet applicable tests under the Internal Revenue Code.

There are certain risks in connection with securities lending, including possible delays in receiving additional collateral to secure a loan, or a delay or expenses in recovery of the loaned securities. Goldman Sachs has agreed, in general, to guarantee the obligations of borrowers to return loaned securities and to be responsible for certain expenses relating to securities lending. Under the Securities Lending Agreement, the Funds' securities lending procedures and applicable regulatory requirements (which are subject to change), the Funds must receive collateral from the borrower consisting of cash, bank letters of credit or securities of the U.S. Government (or its agencies or instrumentalities). On each business day, the amount of collateral that the Funds have received must at least equal the value of the loaned securities. If the Funds receive cash collateral from the borrower, the Manager, in its capacity as the Fund's collateral administrator, may invest that cash in certain high quality, short-term investments, including in money market funds advised by the Manager. The Funds will be subject to its proportional share of the expenses of such money market funds, including the advisory fee payable to the Manager or its affiliate as adviser to such funds. The Manager may charge a collateral administration fee of 0.08% on the value of cash collateral invested in other securities. All of the Funds' collateral investments must comply with its securities lending procedures. The Funds will be responsible for the risks associated with the investment of cash collateral, including the risk that the Fund may lose money on the investment or may fail to earn sufficient income to meet its obligations to the borrower.

The terms of the loans must permit the Funds to recall loaned securities on five business days' notice and the Funds will seek to recall loaned securities in time to vote on any matters that the Manager determines would have a material effect on the Funds' investment. The Securities Lending Agreement may be terminated by either Goldman Sachs or the Funds on 30 days' written notice.

Loans of portfolio securities are limited to not more than 25% of the value of the Funds' net assets.

Borrowing for Leverage. Each Fund, other than Money Fund/VA, has the ability to borrow from banks on an unsecured basis. Each Fund has undertaken to limit borrowing to 25% of the value of that Fund's net assets, which is further limited to 10% if borrowing is for a purpose other than to facilitate redemptions. Investing borrowed funds in portfolio securities is a speculative technique known as "leverage." A Fund cannot borrow money in excess of 33-1/3% of the value of that Fund's total assets. The Funds may borrow only from banks and/or affiliated investment companies. With respect to this fundamental policy, the Funds can borrow only if they maintain a 300% ratio of assets to borrowings at all times in the manner set forth in the Investment Company Act. If the value of that Fund's assets fails to meet this 300% asset coverage requirement, that Fund will reduce its bank debt within three days to meet the requirement. To do so, that Fund might have to sell a portion of its investments at a disadvantageous time.
A Fund will pay interest on these loans, and that interest expense will raise the overall expenses of that Fund and reduce its returns. If it does borrow, its expenses will be greater than comparable funds that do not borrow for leverage. Additionally, that Fund's net asset values per share might fluctuate more than that of funds that do not borrow. Currently, the Funds do not contemplate using this technique in the next year but if they do so, it will not likely be to a substantial degree.

Bank Obligations. The Funds can buy time deposits, certificates of deposit and bankers' acceptances. They must be:

• obligations issued or guaranteed by a domestic bank (including a foreign branch of a domestic bank) having total assets of at least U.S. $1 billion, or

• obligations of a foreign bank with total assets of at least U.S. $1 billion

"Banks" include commercial banks, savings banks and savings and loan associations, which may or may not be members of the Federal Deposit Insurance Corporation.

Commercial Paper. The Funds can invest in commercial paper if it is rated within the top three rating categories of S&P and Moody's or other rating organizations.

If the paper is not rated, it may be purchased if the Manager determines that it is comparable to rated commercial paper in the top three rating categories of national rating organizations.

The Funds can buy commercial paper, including U.S. dollar-denominated securities of foreign branches of U.S. banks, issued by other entities if the commercial paper is guaranteed as to principal and interest by a bank, government or corporation whose certificates of deposit or commercial paper may otherwise be purchased by the Funds.

Variable Amount Master Demand Notes. Master demand notes are corporate obligations that permit the investment of fluctuating amounts by the Funds at varying rates of interest under direct arrangements between the Funds, as lender, and the borrower. They permit daily changes in the amounts borrowed. The Funds have the right to increase the amount under the note at any time up to the full amount provided by the note agreement, or to decrease the amount. The borrower may prepay up to the full amount of the note without penalty. These notes may or may not be backed by bank letters of credit.

Because these notes are direct lending arrangements between the lender and borrower, it is not expected that there will be a trading market for them. There is no secondary market for these notes, although they are redeemable (and thus are immediately repayable by the borrower) at principal amount, plus accrued interest, at any time. Accordingly, the Funds' right to redeem such notes is dependent upon the ability of the borrower to pay principal and interest on demand.

The Funds have no limitations on the type of issuer from whom these notes will be purchased. However, in connection with such purchases and on an ongoing basis, the Manager will consider the earning power, cash flow and other liquidity ratios of the issuer, and its ability to pay principal and interest on demand, including a situation in which all holders of such notes made demand simultaneously. Investments in master demand notes are subject to the limitation on investments by the Funds in illiquid securities, described in the Prospectus. A description of the investment policies for Money Fund/VA is located below under the heading "Money Fund/VA Investment Policies."

Derivatives. The Funds can invest in a variety of derivative investments, including swaps, "structured" notes, convertible notes, options, forward contracts and futures contracts, to seek income or for hedging purposes. The use of derivatives requires special skills and knowledge of investment techniques that are different than what is required for normal portfolio management. If the Manager uses a derivative instrument at the wrong time or judges market conditions incorrectly, the use of derivatives may reduce a Fund's return.

Although it is not obligated to do so, the Funds can use derivatives to hedge. To attempt to protect against declines in the market value of a Fund's portfolio, to permit a Fund to retain unrealized gains in the value of portfolio securities which have appreciated, or to facilitate selling securities for investment reasons, a Fund could:

• sell futures contracts,

• buy puts on such futures or on securities, or

• write covered calls on securities or futures. Covered calls may also be used to increase a Fund's income, but the Manager does not expect to engage extensively in that practice.

The Funds can use hedging to establish a position in the securities market as a temporary substitute for purchasing particular securities. In that case a Fund would normally seek to purchase the securities and then terminate that hedging position. A Fund might also use this type of hedge to attempt to protect against the possibility that its portfolio securities would not be fully included in a rise in value of the market. To do so a Fund could:

• buy futures, or

• buy calls on such futures or on securities.

A Fund's strategy of hedging with futures and options on futures will be incidental to that Fund's activities in the underlying cash market. The particular hedging strategies a Fund can use are described below. A Fund may employ new hedging strategies when they are developed, if those investment methods are consistent with that Fund's investment objectives and are permissible under applicable regulations governing that Fund.

"Structured" Notes. "Structured" notes are specially-designed derivative debt instruments. The terms of the instrument may be "structured" by the purchaser and the issuer of the note. Payments of principal or interest on these notes may be linked to the value of an index (such as a currency or securities index), one or more securities or a commodity or to the financial performance of one or more obligors. The value of these notes will normally rise or fall in response to the changes in the performance of the underlying security, index, commodity or obligors.

Structured notes are subject to interest rate risk and are also subject to credit risk with respect both to the issuer and, if applicable, to the underlying security or obligor. If the underlying investment or index does not perform as anticipated, the Funds might receive less interest than the stated coupon payment or receive less principal upon maturity of the structured note. The price of structured notes may be very volatile and they may have a limited trading market, making it difficult for the Funds to value them or sell them at an acceptable price.  In some cases, the Funds may enter into agreements with an issuer of structured notes to purchase a minimum amount of these notes over time.

Swaps. The Funds may enter into swap agreements, including interest rate, total return, credit default and volatility swaps. Swap agreements are two-party contracts entered into primarily by institutional investors for a specified period of time typically ranging from a few weeks to more than one year. In a standard swap transaction, two parties agree to exchange the returns (or the difference between the returns) earned or realized on a particular asset, such as an equity or debt security, commodity or currency, or non-asset reference, such as an interest rate or index. The swapped returns are generally calculated with respect to a notional amount, that is, the return on a particular dollar amount invested in the underlying asset or reference. A Fund may enter into a swap agreement to, among other reasons, gain exposure to certain markets in the most economical way possible, protect against currency fluctuations, or reduce risk arising from ownership of a particular security or instrument. A Fund will identify liquid assets on that Fund's books (such as cash or U.S. government securities) to cover any amounts it could owe under swaps that exceed the amounts it is entitled to receive, and it will adjust that amount daily, as needed.

The Funds may enter into swap transactions with certain counterparties pursuant to master netting agreements. A master netting agreement provides that all swaps done between a Fund and that counterparty shall be regarded as parts of an integral agreement. If amounts are payable on a particular date in the same currency in respect of more than one swap transaction, the amount payable shall be the net amount. In addition, the master netting agreement may provide that if one party defaults generally or on any swap, the counterparty can terminate all outstanding swaps with that party.

The use of swap agreements by the Funds entails certain risks. The swaps market is generally unregulated. There is no central exchange or market for swap transactions and therefore they are less liquid investments than exchange-traded instruments and may be considered illiquid by a Fund. Swap agreements entail credit risk arising from the possibility that the counterparty will default. If the counterparty defaults, a Fund's loss will consist of the net amount of contractual payments that that Fund has not yet received. The Manager will monitor the creditworthiness of counterparties to a Fund's swap transactions on an ongoing basis. A Fund's successful use of swap agreements is dependent upon the Manager's ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Swap agreements may effectively add leverage to a Fund's portfolio because that Fund would be subject to investment exposure on the notional amount of the swap.

• Interest Rate Swaps. The Funds, especially Core Bond Fund/VA, High Income Fund/VA, Global Strategic Income Fund/ VA and Value Fund/VA, may enter into interest rate swaps. In an interest rate swap, a Fund and another party exchange their right to receive or their obligation to pay interest on a security or other reference rate. For example, they might swap the right to receive floating rate payments for fixed rate payments. There is a risk that, based on movements of interest rates, the payments made by a Fund under a swap agreement will be greater than the payments it receives.

• Total Return Swaps. The Funds may enter into total return swaps, under which one party agrees to pay the other the total return of a defined underlying asset, such as a security or basket of securities, or non-asset reference, such as a securities index, during the specified period in return for periodic payments based on a fixed or variable interest rate or the total return from different underlying assets or references. Total return swaps could result in losses if the underlying asset or reference does not perform as anticipated by the Manager.

• Credit Default Swaps. The Fixed Income Funds and Balanced Fund/ VA may enter into credit default swaps. A credit default swap enables an investor to buy or sell protection against a credit event, such as an issuer's failure to make timely payments of interest or principal, bankruptcy or restructuring. The Funds may seek to enhance returns by selling protection or attempt to mitigate credit risk by buying protection against the occurrence of a credit event by a specified issuer. The Funds may enter into credit default swaps, both directly and indirectly in the form of a swap embedded within a structured security. Credit default swaps may refer to a single security or on a basket of securities.

If a Fund buys credit protection using a credit default swap and a credit event occurs, that Fund will deliver the defaulted bonds underlying the swap and the swap counterparty will pay the par amount of the bonds. Alternatively, the credit default swap may be cash settled where the seller of protection will pay the buyer of protection the difference between the par value and the market value of the defaulted bonds. If a Fund sells credit protection using a credit default swap and a credit event occurs, that Fund will pay the par amount of the defaulted bonds underlying the swap and the swap counterparty will deliver the bonds. If the swap is on a basket of securities, the notional amount of the swap is reduced by the par amount of the defaulted bonds, and the fixed payments are then made on the reduced notional amount.

Risks of credit default swaps include counterparty credit risk (if the counterparty fails to meet its obligations) and the risk that a Fund will not properly assess the cost of the instrument based on the lack of transparency in the market. If a Fund is selling credit protection, there is a risk that a credit event will occur and that the Fund will have to pay par value on defaulted bonds. If a Fund is buying credit protection, there is a risk that no credit event will occur and that Fund will receive no benefit for the premium paid. In addition, if a Fund is buying credit protection and a credit event does occur, there is a risk when that Fund does not own the underlying security, that Fund will have difficulty acquiring the bond on the open market and may receive adverse pricing.

• Volatility Swap Contracts. The Funds may enter into volatility swaps to hedge the direction of volatility in a particular asset or non-asset reference, or for other non-speculative purposes. For volatility swaps, counterparties agree to buy or sell volatility at a specific level over a fixed period. Volatility swaps are subject to credit risks (if the counterparty fails to meet its obligations), and the risk that the Manager is incorrect in forecasts of volatility of the underlying asset or reference.

Swap Options and Swap Forwards. The Funds also may enter into options on swaps as well as forwards on swaps. A swap option is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement on pre-designated terms. The Funds may write (sell) and purchase put and call swap options. A swap forward is an agreement to enter into a swap agreement at some point in the future, usually three to six months from the date of the contract.

The writer of the contract receives the premium and bears the risk of unfavorable changes in the preset rate on the underlying swap. The Funds generally will incur a greater risk when it writes a swap option than when it purchases a swap option. When a Fund purchases a swap option it risks losing only the amount of the premium it has paid if that Fund lets the option expire unexercised. When a Fund writes a swap option it will become obligated, upon exercise of the option by the counterparty, according to the terms of the underlying agreement.

Futures. The Funds can buy and sell futures contracts that relate to debt securities (these are referred to as "interest rate futures"), broadly-based securities indices ("stock index futures" and "bond index futures"), foreign currencies, commodities and an individual stock ("single stock futures").

A broadly-based stock index is used as the basis for trading stock index futures. They may in some cases be based on stocks of issuers in a particular industry or group of industries. A stock index assigns relative values to the securities included in the index and its value fluctuates in response to the changes in value of the underlying securities. A stock index cannot be purchased or sold directly. Bond index futures are similar contracts based on the future value of the basket of securities that comprise the index. These contracts obligate the seller to deliver, and the purchaser to take, cash to settle the futures transaction. There is no delivery made of the underlying securities to settle the futures obligation. Either party may also settle the transaction by entering into an offsetting contract.

An interest rate future obligates the seller to deliver (and the purchaser to take) cash or a specified type of debt security to settle the futures transaction. Either party could also enter into an offsetting contract to close out the position. Similarly, a single stock future obligates the seller to deliver (and the purchaser to take) cash or a specified equity security to settle the futures transaction. Either party could also enter into an offsetting contract to close out the position. Single stock futures trade on a very limited number of exchanges, with contracts typically not fungible among the exchanges.

The Funds can invest a portion of its assets in commodity futures contracts. Commodity futures may be based upon commodities within five main commodity groups: (1) energy, which includes crude oil, natural gas, gasoline and heating oil; (2) livestock, which includes cattle and hogs; (3) agriculture, which includes wheat, corn, soybeans, cotton, coffee, sugar and cocoa; (4) industrial metals, which includes aluminum, copper, lead, nickel, tin and zinc; and (5) precious metals, which includes gold, platinum and silver. The Funds may purchase and sell commodity futures contracts, options on futures contracts and options and futures on commodity indices with respect to these five main commodity groups and the individual commodities within each group, as well as other types of commodities.

No money is paid or received by the Funds on the purchase or sale of a future. Upon entering into a futures transaction, the Funds will be required to deposit an initial margin payment with the futures commission merchant (the "futures broker"). Initial margin payments will be deposited with the Funds' custodian bank in an account registered in the futures broker's name. However, the futures broker can gain access to that account only under specified conditions. As the future is marked to market (that is, its value on that Fund's books is changed) to reflect changes in its market value, subsequent margin payments, called variation margin, will be paid to or by the futures broker daily.

At any time prior to expiration of the future, the Funds may elect to close out its position by taking an opposite position, at which time a final determination of variation margin is made and any additional cash must be paid by or released to that Fund. Any loss or gain on the future is then realized by that Fund for tax purposes. All futures transactions (except forward contracts) are effected through a clearinghouse associated with the exchange on which the contracts are traded.

Put and Call Options. The Funds can buy and sell exchange-traded and over-the-counter put options ("puts") and call options ("calls"), including index options, securities options, currency options, commodities options and options on futures.

Writing Call Options. The Funds may write (that is, sell) calls. If a Fund sells a call option, it must be covered. That means a Fund must own the security subject to the call while the call is outstanding, or the call must be covered by segregating liquid assets to enable that Fund to satisfy its obligations if the call is exercised. There is no limit on the amount of a Fund's total assets that may be subject to covered calls that Fund writes.

When a Fund writes a call on a security, it receives cash (a premium). That Fund agrees to sell the underlying security to a purchaser of a corresponding call on the same security during the call period at a fixed exercise price regardless of market price changes during the call period. The call period is usually not more than nine months. The exercise price may differ from the market price of the underlying security. That Fund has the risk of loss that the price of the underlying security may decline during the call period. That risk may be offset to some extent by the premium that Fund receives. If the value of the investment does not rise above the call price, it is likely that the call will lapse without being exercised. In that case that Fund would keep the cash premium and the investment.

When a Fund writes a call on an index, it receives cash (a premium). If the buyer of the call exercises it, that Fund will pay an amount of cash equal to the difference between the closing price of the call and the exercise price, multiplied by a specific multiple that determines the total value of the call for each point of difference. If the value of the underlying investment does not rise above the call price, it is likely that the call will lapse without being exercised. In that case, that Fund would keep the cash premium.

A Fund's custodian bank, or a securities depository acting for the custodian, will act as that Fund's escrow agent, through the facilities of the Options Clearing Corporation ("OCC"), as to the investments on which that Fund has written calls traded on exchanges or as to other acceptable escrow securities. In that way, no margin will be required for such transactions. OCC will release the securities on the expiration of the option or when the Fund enters into a closing transaction.

When a Fund writes an over-the-counter ("OTC") option, it will enter into an arrangement with a primary U.S. government securities dealer which will establish a formula price at which that Fund will have the absolute right to repurchase that OTC option. The formula price will generally be based on a multiple of the premium received for the option, plus the amount by which the option is exercisable below the market price of the underlying security (i.e., the option is "in the money"). When that Fund writes an OTC option, it will treat as illiquid (for purposes of its restriction on holding illiquid securities) the market-to-market value of the underlying security, unless the option is subject to a buy-back agreement with the executing broker.

To terminate its obligation on a call it has written, a Fund may purchase a corresponding call in a "closing purchase transaction." That Fund will then realize a profit or loss, depending upon whether the net of the amount of the option transaction costs and the premium received on the call that Fund wrote is more or less than the price of the call that Fund purchases to close out the transaction. That Fund may realize a profit if the call expires unexercised, because that Fund will retain the underlying security and the premium it received when it wrote the call. If that Fund cannot effect a closing purchase transaction due to the lack of a market, it will have to hold the callable securities until the call expires or is exercised.

A Fund may also write calls on a futures contract without owning the futures contract or securities deliverable under the contract. To do so, at the time the call is written, that Fund must cover the call by segregating an equivalent dollar amount of liquid assets as identified in that Fund's books. That Fund will segregate additional liquid assets if the value of the segregated assets drops below 100% of the current value of the future. Because of this segregation requirement, in no circumstances would that Fund's receipt of an exercise notice as to that future require that Fund to deliver a futures contract. It would simply put that Fund in a short futures position, which is permitted by that Fund's hedging policies.

Writing Put Options. The Funds may write (that is, sell) put options. A put option on securities gives the purchaser the right to sell, and the writer the obligation to buy, the underlying investment at the exercise price during the option period. A put must be covered by segregated liquid assets.

If a Fund writes a put, the put must be covered by liquid assets identified in that Fund's books. The premium a Fund receives from writing a put represents a profit, as long as the price of the underlying investment remains equal to or above the exercise price. However, a Fund also assumes the obligation during the option period to buy the underlying investment from the buyer of the put at the exercise price, even if the value of the investment falls below the exercise price.

If a put a Fund has written expires unexercised, that Fund realizes a gain in the amount of the premium less the transaction costs incurred. If the put is exercised, that Fund must fulfill its obligation to purchase the underlying investment at the exercise price. That price will usually exceed the market value of the investment at that time. In that case, that Fund may incur a loss if it sells the underlying investment. That loss will be equal to the sum of the sale price of the underlying investment and the premium received minus the sum of the exercise price and any transaction costs that Fund incurred.

When writing a put option on a security, to secure its obligation to pay for the underlying security a Fund will deposit in escrow liquid assets with a value equal to or greater than the exercise price of the underlying securities. That Fund therefore forgoes the opportunity of investing the segregated assets or writing calls against those assets.

As long as a Fund's obligation as the put writer continues, it may be assigned an exercise notice by the broker-dealer through which the put was sold. That notice will require that Fund to take delivery of the underlying security and pay the exercise price. That Fund has no control over when it may be required to purchase the underlying security, since it may be assigned an exercise notice at any time prior to the termination of its obligation as the writer of the put. That obligation terminates upon expiration of the put. It may also terminate if, before it receives an exercise notice, that Fund effects a closing purchase transaction by purchasing a put of the same series as it sold. Once that Fund has been assigned an exercise notice, it cannot effect a closing purchase transaction.

A Fund may decide to effect a closing purchase transaction to realize a profit on an outstanding put option it has written or to prevent the underlying security from being put. Effecting a closing purchase transaction will also permit that Fund to write another put option on the security, or to sell the security and use the proceeds from the sale for other investments. That Fund will realize a profit or loss from a closing purchase transaction depending on whether the cost of the transaction is less or more than the premium received from writing the put option.

Purchasing Puts and Calls. The Funds may purchase call options. When a Fund buys a call (other than in a closing purchase transaction), it pays a premium. That Fund then has the right to buy the underlying investment from a seller of a corresponding call on the same investment during the call period at a fixed exercise price.

A Fund benefits only if it sells the call at a profit or if, during the call period, the market price of the underlying investment is above the sum of the call price plus the transaction costs and the premium paid for the call and that Fund exercises the call. If that Fund does not exercise the call or sell it (whether or not at a profit), the call will become worthless at its expiration date. In that case that Fund will have paid the premium but lost the right to purchase the underlying investment.

A Fund can buy puts whether or not it owns the underlying investment. When a Fund purchases a put, it pays a premium and, except as to puts on indices, has the right to sell the underlying investment to a seller of a put on a corresponding investment during the put period at a fixed exercise price.

Buying a put on an investment the Fund does not own (such as an index or a future) permits the Fund either to resell the put or to buy the underlying investment and sell it at the exercise price. The resale price will vary inversely to the price of the underlying investment. If the market price of the underlying investment is above the exercise price and, as a result, the put is not exercised, the put will become worthless on its expiration date.

Buying a put on securities or futures a Fund owns enables the Fund to attempt to protect itself during the put period against a decline in the value of the underlying investment below the exercise price by selling the underlying investment at the exercise price to a seller of a corresponding put. If the market price of the underlying investment is equal to or above the exercise price and, as a result, the put is not exercised or resold, the put will become worthless at its expiration date. In that case the Fund will have paid the premium but lost the right to sell the underlying investment. However, the Fund may sell the put prior to its expiration. That sale may or may not be at a profit.

When the Fund purchases a call or put on an index or future, it pays a premium, but settlement is in cash rather than by delivery of the underlying investment to the Fund. Gain or loss depends on changes in the index in question (and thus on price movements in the securities market generally) rather than on price movements in individual securities or futures contracts.

Buying and Selling Options on Foreign Currencies. The Funds can buy and sell exchange-traded and over-the-counter put options and call options on foreign currencies. A Fund could use these calls and puts to try to protect against declines in the dollar value of foreign securities and increases in the dollar cost of foreign securities the Fund wants to acquire.

If the Manager anticipates a rise in the dollar value of a foreign currency in which securities to be acquired are denominated, the increased cost of those securities may be partially offset by purchasing calls or writing puts on that foreign currency. If the Manager anticipates a decline in the dollar value of a foreign currency, the decline in the dollar value of portfolio securities denominated in that currency might be partially offset by writing calls or purchasing puts on that foreign currency. However, the currency rates could fluctuate in a direction adverse to a Fund's position. That Fund will then have incurred option premium payments and transaction costs without a corresponding benefit.

A call the Fund writes on a foreign currency is "covered" if the Fund owns the underlying foreign currency covered by the call or has an absolute and immediate right to acquire that foreign currency without additional cash consideration (or it can do so for additional cash consideration held in a segregated account by its custodian bank) upon conversion or exchange of other foreign currency held in its portfolio.

A Fund could write a call on a foreign currency to provide a hedge against a decline in the U.S. dollar value of a security which a Fund owns or has the right to acquire and which is denominated in the currency underlying the option. That decline might be one that occurs due to an expected adverse change in the exchange rate. This is known as a "cross-hedging" strategy. In those circumstances, that Fund covers the option by maintaining cash, U.S. government securities or other liquid, high grade debt securities in an amount equal to the exercise price of the option, in a segregated account with that Fund's custodian bank.

Risks of Hedging with Options and Futures. The use of hedging strategies requires special skills and knowledge of investment techniques that are different than what is required for normal portfolio management. If the Manager uses a hedging strategy at the wrong time or judges market conditions incorrectly, hedging strategies may reduce a Fund's return. The Fund could also experience losses if the prices of its futures and options positions were not correlated with its other investments.

A Fund's option activities could affect its portfolio turnover rate and brokerage commissions. The exercise of calls written by a Fund might cause that Fund to sell related portfolio securities, thus increasing its turnover rate. The exercise by a Fund of puts on securities will cause the sale of underlying investments, increasing portfolio turnover. Although the decision whether to exercise a put it holds is within a Fund's control, holding a put might cause that Fund to sell the related investments for reasons that would not exist in the absence of the put.

A Fund could pay a brokerage commission each time it buys a call or put, sells a call or put, or buys or sells an underlying investment in connection with the exercise of a call or put. Those commissions could be higher on a relative basis than the commissions for direct purchases or sales of the underlying investments. Premiums paid for options are small in relation to the market value of the underlying investments. Consequently, put and call options offer large amounts of leverage. The leverage offered by trading in options could result in a Fund's net asset value being more sensitive to changes in the value of the underlying investment.

If a covered call written by a Fund is exercised on an investment that has increased in value, that Fund will be required to sell the investment at the call price. It will not be able to realize any profit if the investment has increased in value above the call price.

An option position may be closed out only on a market that provides secondary trading for options of the same series, and there is no assurance that a liquid secondary market will exist for any particular option. The Fund might experience losses if it could not close out a position because of an illiquid market for the future or option.

There is a risk in using short hedging by selling futures or purchasing puts on broadly-based indices or futures to attempt to protect against declines in the value of a Fund's portfolio securities. The risk is that the prices of the futures or the applicable index will correlate imperfectly with the behavior of the cash prices of a Fund's securities. For example, it is possible that while a Fund has used derivative instruments in a short hedge, the market may advance and the value of the securities held in that Fund's portfolio might decline. If that occurred, that Fund would lose money on the derivative instruments and also experience a decline in the value of its portfolio securities. However, while this could occur for a very brief period or to a very small degree, over time the value of a diversified portfolio of securities will tend to move in the same direction as the indices upon which the derivative instruments are based.

The risk of imperfect correlation increases as the composition of a Fund's portfolio diverges from the securities included in the applicable index. To compensate for the imperfect correlation of movements in the price of the portfolio securities being hedged and movements in the price of the hedging instruments, that Fund might use derivative instruments in a greater dollar amount than the dollar amount of portfolio securities being hedged. It might do so if the historical volatility of the prices of the portfolio securities being hedged is more than the historical volatility of the applicable index.

The ordinary spreads between prices in the cash and futures markets are subject to distortions, due to differences in the nature of those markets. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third,
from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities markets. Therefore, increased participation by speculators in the futures market may cause temporary price distortions.

The Fund can use derivative instruments to establish a position in the securities markets as a temporary substitute for the purchase of individual securities (long hedging) by buying futures and/or calls on such futures, broadly-based indices or on securities. It is possible that when the Fund does so the market might decline. If the Fund then concludes not to invest in securities because of concerns that the market might decline further or for other reasons, the Fund will realize a loss on the hedge position that is not offset by a reduction in the price of the securities purchased.

Forward Contracts. Forward contracts are foreign currency exchange contracts. They are used to buy or sell foreign currency for future delivery at a fixed price. The Funds can use them to "lock in" the U.S. dollar price of a security denominated in a foreign currency that the Fund has bought or sold, or to protect against possible losses from changes in the relative values of the U.S. dollar and a foreign currency. The Fund can also use "cross-hedging" where the Fund hedges against changes in currencies other than the currency in which a security it holds is denominated.

Under a forward contract, one party agrees to purchase, and another party agrees to sell, a specific currency at a future date. That date may be any fixed number of days from the date of the contract agreed upon by the parties. The transaction price is set at the time the contract is entered into. These contracts are traded in the inter-bank market conducted directly among currency traders (usually large commercial banks) and their customers.

The Fund may use forward contracts to protect against uncertainty in the level of future exchange rates. The use of forward contracts does not eliminate the risk of fluctuations in the prices of the underlying securities the Fund owns or intends to acquire, but it does fix a rate of exchange in advance. Although forward contracts may reduce the risk of loss from a decline in the value of the hedged currency, at the same time they limit any potential gain if the value of the hedged currency increases.

When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when it anticipates receiving dividend payments in a foreign currency, the Fund might desire to "lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent of the dividend payments. To do so, the Fund could enter into a forward contract for the purchase or sale of the amount of foreign currency involved in the underlying transaction, in a fixed amount of U.S. dollars per unit of the foreign currency. This is called a "transaction hedge." The transaction hedge will protect the Fund against a loss from an adverse change in the currency exchange rates during the period between the date on which the security is purchased or sold or on which the payment is declared, and the date on which the payments are made or received.

The Fund could also use forward contracts to lock in the U.S. dollar value of portfolio positions. This is called a "position hedge." When the Fund believes that a foreign currency might suffer a substantial decline against the U.S. dollar, it could enter into a forward contract to sell an amount of that foreign currency approximating the value of some or all of a Fund's portfolio securities denominated in that foreign currency. When the Fund believes that the U.S. dollar might suffer a substantial decline against a foreign currency, it could enter into a forward contract to buy that foreign currency for a fixed dollar amount. Alternatively, the Fund could enter into a forward contract to sell a different foreign currency for a fixed U.S. dollar amount if the Fund believes that the U.S. dollar value of the foreign currency to be sold pursuant to its forward contract will fall whenever there is a decline in the U.S. dollar value of the currency in which portfolio securities of the Fund are denominated. That is referred to as a "cross hedge."

A Fund will cover its short positions in these cases by identifying on its books assets having a value equal to the aggregate amount of that Fund's commitment under forward contracts. A Fund will not enter into forward contracts or maintain a net exposure to such contracts if the consummation of the contracts would obligate that Fund to deliver an amount of foreign currency in excess of the value of that Fund's portfolio securities or other assets denominated in that currency or another currency that is the subject of the hedge.

However, to avoid excess transactions and transaction costs, a Fund may maintain a net exposure to forward contracts in excess of the value of that Fund's portfolio securities or other assets denominated in foreign currencies if the excess amount is "covered" by liquid securities denominated in any currency. The cover must be at least equal at all times to the amount of that excess. As one alternative, the Fund may purchase a call option permitting the Fund to purchase the amount of foreign currency being hedged by a forward sale contract at a price no higher than the forward contract price. As another alternative, the Fund may purchase a put option permitting the Fund to sell the amount of foreign currency subject to a forward purchase contract at a price as high or higher than the forward contact price.

The precise matching of the amounts under forward contracts and the value of the securities involved generally will not be possible because the future value of securities denominated in foreign currencies will change as a consequence of market movements between the date the forward contract is entered into and the date it is sold. In some cases the Manager might decide to sell the security and deliver foreign currency to settle the original purchase obligation. If the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver, the Fund might have to purchase additional foreign currency on the "spot" (that is, cash) market to settle the security trade. If the market value of the security instead exceeds the amount of foreign currency the Fund is obligated to deliver to settle the trade, the Fund might have to sell on the spot market some of the foreign currency received upon the sale of the security. There will be additional transaction costs on the spot market in those cases.

The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward contracts involve the risk that anticipated currency movements will not be accurately predicted, causing the Fund to sustain losses on these contracts and to pay additional transactions costs. The use of forward contracts in this manner might reduce a Fund's performance if there are unanticipated changes in currency prices to a greater degree than if the Fund had not entered into such contracts.

At or before the maturity of a forward contract requiring a Fund to sell a currency, that Fund might sell a portfolio security and use the sale proceeds to make delivery of the currency. In the alternative a Fund might retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract. Under that contract the Fund will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, a Fund might close out a forward contract requiring it to purchase a specified currency by entering into a second contract entitling it to sell the same amount of the same currency on the maturity date of the first contract. The Fund would realize a gain or loss as a result of entering into such an offsetting forward contract under either circumstance. The gain or loss will depend on the extent to which the exchange rate or rates between the currencies involved moved between the execution dates of the first contract and offsetting contract.

The costs to the Fund of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no brokerage fees or commissions are involved. Because these contracts are not traded on an exchange, the Fund must evaluate the credit and performance risk of the counterparty under each forward contract.

Although the Fund values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. The Fund may convert foreign currency from time to time, and will incur costs in doing so. Foreign exchange dealers do not charge a fee for conversion, but they do seek to realize a profit based on the difference between the prices at which they buy and sell various currencies. Thus, a dealer might offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange if the Fund desires to resell that currency to the dealer.

Asset Coverage for Certain Investments and Trading Practices. Typically, the Fund's investments in equity and fixed-income securities do not involve any future financial obligations. However, the Fund may make investments or employ trading practices that obligate the Fund, on a fixed or contingent basis, to deliver an asset or make a cash payment to another party in the future. The Fund will comply with guidance from the U.S. Securities and Exchange Commission (the "SEC") and other applicable regulatory bodies with respect to coverage of certain investments and trading practices. This guidance may require earmarking or segregation by the Fund of cash or liquid securities with its custodian or a designated sub-custodian to the extent the Fund's obligations with respect to these strategies are not otherwise "covered" through ownership of the underlying security or financial instrument or by other portfolio positions, or by other means consistent with applicable regulatory policies. In some cases, SEC guidance permits the Fund to cover its obligation by entering into an offsetting transaction.

For example, if the Fund enters into a currency forward contract to sell foreign currency on a future date, the Fund may cover its obligation to deliver the foreign currency by earmarking or otherwise segregating cash or liquid securities having a value at least equal to the value of the deliverable currency. Alternatively, the Fund could cover its obligation by earmarking or otherwise segregating an amount of the foreign currency at least equal to the deliverable amount or by entering into an offsetting transaction to acquire an amount of foreign currency at least equal to the deliverable amount at a price at or below the sale price received by the Fund under the currency forward contract.

The Fund's approach to asset coverage may vary among different types of swaps. With respect to most swap agreements (but excluding, for example, credit default swaps), the Fund calculates the obligations of the parties to the agreement on a "net basis" (i.e., the two payment streams are netted out with the Fund receiving or paying, as the case may be, only the net amount of the two payments). Consequently the Fund 's current obligations (or rights) under these swap agreements will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). The Fund's current obligation, if any, under a swap agreement will generally be covered by earmarking or otherwise segregating cash or liquid securities having an aggregate net asset value at least equal to the accrued unpaid net amounts owed. To the extent that the obligations of the parties under these swaps are not calculated on a net basis, the amount earmarked or otherwise segregated will be the full amount of the Fund's obligations, if any. Alternatively, the Fund could cover its obligation by other means consistent with applicable regulatory policies.

With respect to credit default swaps, typically, if the Fund enters into a credit default swap as the buyer of credit protection, then it will earmark or otherwise segregate an amount of cash or liquid securities at least equal to any accrued payment or delivery obligations under the swap. Alternatively, if the Fund enters into a credit default swap as the seller of credit protection, then the Fund will earmark or otherwise segregate an amount of cash or liquid securities at least equal to the full notional amount of the swap. Alternatively, the Fund could cover its obligation by other means consistent with applicable regulatory policies.

Inasmuch as the Fund covers its obligations under these transactions as described above, the Manager and the Fund believe such obligations do not constitute senior securities and, accordingly, will not treat them as being subject to its borrowing restrictions. Earmarking or otherwise segregating a large percentage of the Fund's assets could impede the Manager's ability to manage the Fund's portfolio.

Regulatory Aspects of Derivatives and Hedging Instruments. The Commodity Futures Trading Commission has eliminated limitations on futures trading by certain regulated entities, including registered investment companies. Consequently, registered investment companies may engage in unlimited futures transactions and options thereon by claiming an exclusion from regulation as a commodity pool operator under the Commodity Exchange Act.

Options transactions are subject to limitations established by the option exchanges. The exchanges limit the maximum number of options that may be written or held by a single investor or group of investors acting in concert. Those limits apply regardless of whether the options were purchased, sold or held through one or more different exchanges or are held in one or more accounts or through one or more brokers. Thus, the number of options that can be sold by an investment company advised by the Manager may be affected by options written or held by other investment companies advised by the Manager or affiliated entities. The exchanges also impose position limits on futures transactions. An exchange may order the liquidation of positions found to be in violation of those limits and may impose certain other sanctions.

Under SEC staff interpretations regarding applicable provisions of the Investment Company Act, when a registered investment company purchases a future, it must identify cash or other liquid assets at its custodian bank in an amount equal to the purchase price of the future, less the margin deposit applicable to it.

Tax Aspects of Certain Hedging Instruments. Certain foreign currency exchange contracts in which a Fund may invest are treated as "Section 1256 contracts" under the IRC. In general, gains or losses relating to Section 1256 contracts are characterized as 60% long-term and 40% short-term capital gains or losses under the Code. However, foreign currency gains or losses arising from Section 1256 contracts that are forward contracts generally are treated as ordinary income or loss. In addition, Section 1256 contracts held by a Fund at the end of each taxable year are "marked-to-market," and unrealized gains or losses are treated as though they were realized. These contracts also may be marked-to-market for purposes of determining the excise tax applicable to investment company distributions and for other purposes under rules prescribed pursuant to the IRC. An election can be made by a Fund to exempt those transactions from this marked-to-market treatment.

Certain forward contracts a Fund enters into may result in "straddles" for federal income tax purposes. The straddle rules may affect the character and timing of gains (or losses) recognized by that Fund on straddle positions. Generally, a loss sustained on the disposition of a position making up a straddle is allowed only to the extent that the loss exceeds any unrecognized gain in the offsetting positions making up the straddle. Disallowed loss is generally allowed at the point where there is no unrecognized gain in the offsetting positions making up the straddle, or the offsetting position is disposed of.

Under the IRC, the following gains or losses are treated as ordinary income or loss:

1. gains or losses attributable to fluctuations in exchange rates that occur between the time the Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time a Fund actually collects such receivables or pays such liabilities, and
2. gains or losses attributable to fluctuations in the value of a foreign currency between the date of acquisition of a debt security denominated in a foreign currency or foreign currency forward contracts and the date of disposition.

Currency gains and losses are offset against market gains and losses on each trade before determining a net "Section 988" gain or loss under the IRC for that trade, which may increase or decrease the amount of a Fund's investment income available for distribution to its shareholders.

Passive Foreign Investment Companies. Under U.S. tax laws, passive foreign investment companies ("PFICs") are those foreign corporations which generate primarily "passive" income. Passive income is defined as any income that is considered foreign personal holding company income under the Internal Revenue Code. For federal tax purposes, a foreign corporation is deemed to be a PFIC if 75% or more of its gross income during a fiscal year is passive income or if 50% or more of its assets are assets that produce, or are held to produce, passive income.

Foreign mutual funds are generally deemed to be PFICs, since nearly all of the income of a mutual fund is passive income. Foreign mutual funds investments may be used to gain exposure to the securities of companies in countries that limit or prohibit direct foreign investment but are subject to limits under the Investment Company Act of 1940, as amended (the "Investment Company Act").

Other types of foreign corporations may also be considered PFICs if their percentage of passive income exceeds the limits described above. Federal tax laws impose severe tax penalties for failure to properly report investment income from PFICs. Although every effort is made to ensure compliance with federal tax reporting requirements for these investments, foreign corporations that are PFICs for federal tax purposes may not always be recognized as such.

Additional risks of investing in other investment companies are described under "Investment in Other Investment Companies."

Temporary Defensive and Interim Investments. When market conditions are unstable, or the Manager believes it is otherwise appropriate to reduce holdings in stocks or bonds, the Funds can invest in a variety of debt securities for defensive purposes. The Funds can also purchase these securities for liquidity purposes to meet cash needs due to the redemption of Fund shares, or to hold while waiting to reinvest cash received from the sale of other portfolio securities. The Funds can buy:

• obligations issued or guaranteed by the U.S. government or its instrumentalities or agencies,

• commercial paper (short-term, unsecured, promissory notes of domestic or foreign companies) rated in the three top rating categories of a nationally recognized rating organization,

• short-term debt obligations of corporate issuers, rated investment grade (rated at least Baa by Moody's or at least BBB by Standard & Poor's or a comparable rating by another rating organization), or unrated securities judged by the Manager to have a comparable quality to rated securities in those categories,

• certificates of deposit and bankers' acceptances of domestic and foreign banks having total assets in excess of $1 billion, and

• repurchase agreements.

Short-term debt securities would normally be selected for defensive or cash management purposes because they can normally be disposed of quickly, are not generally subject to significant fluctuations in principal value and their value will be less subject to interest rate risk than longer-term debt securities.

Investment in Other Investment Companies. The Funds can also invest in the securities of other investment companies, which can include open-end funds, closed-end funds and unit investment trusts, subject to the limits set forth in the Investment Company Act that apply to those types of investments. For example, a Fund can invest in Exchange-Traded Funds, which are typically open-end funds or unit investment trusts, listed on a stock exchange. A Fund might do so as a way of gaining exposure to the segments of the equity or fixed-income markets represented by the Exchange-Traded Funds' portfolio, at times when a Fund may not be able to buy those portfolio securities directly.

Investing in another investment company may involve the payment of substantial premiums above the value of such investment company's portfolio securities and is subject to limitations under the Investment Company Act. The Funds do not intend to invest in other investment companies unless the Manager believes that the potential benefits of the investment justify the payment of any premiums or sales charges. As a shareholder of an investment company, a Fund would be subject to its ratable share of that investment company's expenses, including its advisory and administration expenses. The Funds do not anticipate investing a substantial amount of their net assets in shares of other investment companies.

Money Fund/VA Investment Policies. Under Rule 2a-7 under the investment Company Act, Money Fund/VA may purchase only "Eligible Securities," as defined below, that the Manger, under procedures approved by the Trust's Board of Trustees, has determined have minimal credit risk. An "Eligible Security" is (a) a security that has received a rating in one of the two highest short-term rating categories by any two "nationally-recognized statistical rating organizations" as defined in Rule 2a-7 ("Rating Organizations"), or, if only one Rating Organization has rated that security, by that Rating Organization (the "Rating Requirements"), (b) a security that is guaranteed, and either that guarantee or the party providing that guarantee meets the Rating Requirements, or (c) an unrated security that is either issued by an issuer having another similar security that meets the Rating Requirements, or is judged by the Manager to be of comparable quality to investments that meet the Rating Requirements. Rule 2a-7 permits Money Fund/VA to purchase "First Tier Securities," which are Eligible Securities rated in the highest category for short-term debt obligations by at least two Rating Organizations, or, if only one Rating Organization has rated a particular security, by that Rating Organization, or comparable unrated securities, subject to limits set forth in the Money Fund/VA's Prospectus. The Fund can also buy "Second Tier Securities," which are Eligible Securities that are not First Tier securities.

If a security's rating is downgraded, the Manager and/or the Board may have to reassess the security's credit risk. If a security has ceased to be a First Tier Security, the Manager will promptly reassess whether the security continues to present "minimal credit risk." If the Manager becomes aware that any Rating Organization has downgraded its rating of a Second Tier Security or rated an unrated security below its second highest rating category, the Trust's Board of Trustees shall promptly reassess whether the security presents minimal credit risk and whether it is in Money Fund/VA's best interests to dispose of it.

If Money Fund/VA disposes of the security within five days of the Manager learning of the downgrade, the Manager will provide the Board with subsequent notice of such downgrade. If a security is in default, or ceases to be an Eligible Security, or is determined no longer to present minimal credit risks, the Board must determine if disposal of the security would be in Money Fund/VA's best interests.

The Rating Organizations currently designated as nationally-recognized statistical rating organizations by the SEC include Standard & Poor's (a division of the McGraw-Hill Companies), Moody's Investors Service, Inc., Fitch, Inc. and Dominion Bond Rating Service Limited. See Appendix B to this SAI for a description of the rating categories of those Rating Organizations.

• Certificates of Deposit and Commercial Paper. Money Fund/VA may invest in certificates of deposit of up to $100,000 of a domestic bank if such certificates of deposit are fully insured as to principal by the Federal Deposit Insurance Corporation. For purposes of this section, the term "bank" includes commercial banks, savings banks, and savings and loan associations and the term "foreign bank" includes foreign branches of U.S. banks (issuers of "Eurodollar" instruments), U.S. branches and agencies of foreign banks (issuers of "Yankee dollar" instruments) and foreign branches of foreign banks. Money Fund/VA also may purchase obligations issued by other entities if they are: (i) guaranteed as to principal and interest by a bank or corporation whose certificates of deposit or commercial paper may otherwise be purchased by Money Fund/VA, or (ii) subject to repurchase agreements (explained in the prospectus), if the collateral for the agreement complies with Rule 2a-7.

• Bank Loan Participation Agreements. Money Fund/VA may invest in bank loan participation agreements, although such investments have not been a principal investment strategy. They provide that Fund with an undivided interest in a loan made by the issuing bank in the proportion that Fund's interest bears to the total principal amount of the loan. In evaluating the risk of these investments, that Fund looks to the creditworthiness of the borrower that is obligated to make principal and interest payments on the loan.

• Time Deposits. Money Fund/VA may invest in fixed time deposits, which are non-negotiable deposits in a bank for a specified period of time at a stated interest rate, whether or not subject to withdrawal penalties; however, such deposits which are subject to such penalties, other than deposits maturing in less than seven days, are subject to the 10% limitation applicable to illiquid securities purchased by Money Fund/VA. As discussed in the Money Fund/VA's Prospectus, the limit on illiquid securities will decrease to 5% of the Fund's assets on May 28, 2010.

• Floating Rate/Variable Rate Notes. Money Fund/VA may invest in instruments with floating or variable interest rates. The interest rate on a floating rate obligation is based on a stated prevailing market rate, such as a bank's prime rate, the 90-day U.S. Treasury Bill rate, the rate of return on commercial paper or bank certificates of deposit, or some other standard, and is adjusted automatically each time such market rate is adjusted. The interest rate on a variable rate obligation is also based on a stated prevailing market rate but is adjusted automatically at a specified interval of no less than one year. Some variable rate or floating rate obligations in which Money Fund/VA may invest have a demand feature entitling the holder to demand payment at an amount approximately equal to the principal amount thereof plus accrued interest at any time, or at specified intervals not exceeding one year. These notes may or may not be backed by bank letters of credit. The interest rates on these notes fluctuate from time to time. Generally, the changes in the interest rate on such securities reduce the fluctuation in their market value. As interest rates decrease or increase, the potential for capital appreciation or depreciation is less than that for fixed-rate obligations of the same maturity.

• Master Demand Notes. Master demand notes are corporate obligations that permit the investment of fluctuating amounts by Money Fund/VA at varying rates of interest pursuant to direct arrangements between Money Fund/VA, as lender, and the corporate borrower that issues the note. These notes permit daily changes in the amounts borrowed. Money Fund/VA has the right to increase the amount under the note at any time up to the full amount provided by the note agreement, or to decrease the amount. The borrower may repay up to the full amount of the note at any time without penalty. It is not generally contemplated that master demand notes will be traded because they are direct lending arrangements between the lender and the borrower. There is no secondary market for these notes, although they are redeemable and thus immediately repayable by the borrower at face value, plus accrued interest, at any time. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, Money Fund/VA's right to redeem is dependent upon the ability of the borrower to pay principal and interest on demand. In evaluating the master demand arrangements, the Manager considers the earning power, cash flow, and other liquidity ratios of the issuer. If they are not rated by Rating Organizations, Money Fund/VA may invest in them only if, at the time of an investment, they are Eligible Securities. The Manager will continuously monitor the borrower's financial ability to meet all of its obligations because Money Fund/VA's liquidity might be impaired if the borrower were unable to pay principal and interest on demand. There is no limit on the amount of the Money Fund/VA's assets that may be invested in floating rate and variable rate obligations. Floating rate or variable rate obligations which do not provide for recovery of principal and interest within seven days' notice will be subject to the limitation applicable to illiquid securities purchased by Money Fund/VA.

Investment Restrictions

In addition to having a number of investment policies and restrictions identified in the Prospectuses or elsewhere as "fundamental policies," the Funds have other investment restrictions that are fundamental policies, described below.

Fundamental Policies. Fundamental policies are those policies that the Funds have adopted to govern its investments that can be changed only by the vote of a "majority" of each Fund's outstanding voting securities. Under the Investment Company Act, a "majority" vote is defined as the vote of the holders of the lesser of:

• 67% or more of the shares present or represented by proxy at a shareholder meeting, if the holders of more than 50% of the outstanding shares are present or represented by proxy, or

• more than 50% of the outstanding shares.

The Funds' (except Value Fund /VA) investment objectives are fundamental policies. Other policies described in the Prospectuses or this SAI are "fundamental" only if they are identified as such. The Funds' Board of Trustees can change non-fundamental policies without shareholder approval. However, significant changes to investment policies will be described in supplements or updates to the Prospectuses or this SAI, as appropriate. The Funds' most significant investment policies are described in the Prospectus.

Other Fundamental Investment Restrictions. The following investment restrictions are fundamental policies of the Funds (except Value Fund/VA).

• No Fund can buy securities issued or guaranteed by any one issuer if (i) more than 5% of its total assets would be invested in securities of that issuer or (ii) it would then own more than 10% of that issuer's voting securities, or (iii) it would then own more than 10% in principal amount of that issuer's outstanding debt securities. The restriction on debt securities does not apply to Global Strategic Income Fund/VA. All of the restrictions apply only to 75% of each Fund's total assets. The limits do not apply to securities issued by the U.S. government or any of its agencies or instrumentalities, or securities of other investment companies.

• The Funds cannot make loans except (a) through lending of securities, (b) through the purchase of debt instruments or similar evidences of indebtedness, (c) through an interfund lending program with other affiliated funds, and (d) through repurchase agreements.

• The Funds cannot concentrate investments. That means they cannot invest 25% or more of their total assets in companies in any one industry. Obligations of the U.S. government, its agencies and instrumentalities are not considered to be part of an "industry" for the purposes of this restriction. This policy does not limit investments by Money Fund/VA in obligations issued by banks.

• The Funds cannot buy or sell real estate or interests in real estate. However, the Funds can purchase debt securities secured by real estate or interests in real estate, or issued by companies, including real estate investment trusts, which invest in real estate or interests in real estate.

• The Funds cannot underwrite securities of other companies. A permitted exception is in case a Fund is deemed to be an underwriter under the Securities Act when reselling any securities held in its own portfolio.

• The Funds cannot invest in commodities or commodity contracts, other than the hedging instruments permitted by any of its other fundamental policies. It does not matter whether the hedging instrument is considered to be a commodity or commodity contract.

• The Funds cannot issue "senior securities," but this does not prohibit certain investment activities for which assets of the Funds are designated as segregated, or margin, collateral or escrow arrangements are established, to cover the related obligations. Examples of those activities include borrowing money, reverse repurchase agreements, delayed-delivery and when-issued arrangements for portfolio securities transactions, and contracts to buy or sell derivatives, hedging instruments, options or futures.

• The Funds cannot borrow money in excess of 33-1/3% of the value of that Fund's total assets. The Funds may borrow only from banks and/or affiliated investment companies. With respect to this fundamental policy, the Funds can borrow only if they maintain a 300% ratio of assets to borrowings at all times in the manner set forth in the Investment Company Act.

The following investment restrictions are fundamental policies of Value Fund/VA.

• Value Fund/VA cannot issue senior securities. However, it can make payments or deposits of margin in connection with options or futures transactions, lend its portfolio securities, enter into repurchase agreements, borrow money and pledge its assets as permitted by its other fundamental policies. For purposes of this restriction, the issuance of shares of common stock in multiple classes or series, the purchase or sale of options, futures contracts and options on futures contracts, forward commitments, and repurchase agreements entered into in accordance with Value Fund/VA's investment policies, and the pledge, mortgage or hypothecation of Value Fund/VA's assets are not deemed to be senior securities.

• Value Fund/VA cannot buy securities or other instruments issued or guaranteed by any one issuer if more than 5% of its total assets would be invested in securities or other instruments of that issuer or if it would then own more than 10% of that issuer's voting securities. This limitation applies to 75% of the Value Fund/VA's total assets. The limit does not apply to securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies.

• Value Fund/VA cannot invest 25% or more of its total assets in any one industry. That limit does not apply to securities issued or guaranteed by the U.S. government or its agencies and instrumentalities or securities issued by investment companies.

• Value Fund/VA cannot invest in physical commodities or commodities contracts. However, the Fund can invest in hedging instruments permitted by any of its other investment policies, and can buy or sell options, futures, securities or other instruments backed by, or the investment return from which is linked to, changes in the price of physical commodities, commodity contracts or currencies.

• Value Fund/VA cannot invest in real estate or in interests in real estate. However, the Fund can purchase securities of issuers holding real estate or interests in real estate (including securities of real estate investment trusts) if permitted by its other investment policies.

• Value Fund/VA cannot underwrite securities of other issuers. A permitted exception is in case it is deemed to be an underwriter under the Securities Act in reselling its portfolio securities.

• Value Fund/VA cannot make loans, except to the extent permitted under the Investment Company Act, the rules or regulations thereunder or any exemption therefrom that is applicable to the Fund, as such statute, rules or regulations may be amended or interpreted from time to time.

• Value Fund/VA may not borrow money, except to the extent permitted under the Investment Company Act, the rules or regulations thereunder or any exemption therefrom that is applicable to the Fund, as such statute, rules or regulations may be amended or interpreted from time to time.

Funds Non-Fundamental Restrictions. Main Street Small Cap Fund®/VA, Small- & Mid-Cap Growth Fund/VA and Value Fund/VA have other investment restrictions that are not fundamental policies, which means that they can be changed by the Board of Trustees without shareholder approval.

• Main Street Small Cap Fund®/VA has also adopted the following non-fundamental policy: With respect to the Main Street Small Cap Fund/VA's non-fundamental policy to invest, under normal circumstances, at least 80% of its net assets (plus the amount of any borrowings used for investment purposes) in equity securities of "small-cap" issuers, Main Street Small Cap Fund/VA will provide shareholders at least 60 days' prior notice of any change in such policy as required by the Investment Company Act.

• Effective April 30, 2010, Small- & Mid-Cap Growth Fund/VA has also adopted the following non-fundamental policy: Under normal market conditions, as a non-fundamental policy, the Fund will invest at least 80% of its net assets (plus borrowing for investment purposes) in equity securities of "small-cap" and "mid-cap" companies. This non-fundamental policy will not be changed without first providing 60 days' written notice to shareholders.

• Value Fund/VA has also adopted the following non-fundamental policy: The Fund cannot invest in securities of other investment companies, except to the extent permitted under the Investment Company Act, the rules or regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time.

Unless the Prospectus or this SAI states that a percentage restriction applies on an ongoing basis, it applies only at the time the Funds makes an investment (except in the case of borrowing and investments in illiquid securities). The Funds need not sell securities to meet the percentage limits if the value of the investment increases in proportion to the size of the Fund.

For purposes of the Funds' policy not to concentrate its investments as described above, the Funds have adopted classifications of industries and group of related industries. These classifications are not fundamental policies.

Disclosure of Portfolio Holdings

While recognizing the importance of providing Fund shareholders with information about their Fund's investments and providing portfolio information to a variety of third parties to assist with the management, distribution and administrative processes, the need for transparency must be balanced against the risk that third parties who gain access to a Fund's portfolio holdings information could attempt to use that information to trade ahead of or against a Fund, which could negatively affect the prices a Fund is able to obtain in portfolio transactions or the availability of the securities that a portfolio manager is trading on a Fund's behalf.

The Funds, the Manager, the Distributor and the Transfer Agent have therefore adopted policies and procedures regarding the dissemination of information about the Funds' portfolio holdings by employees, officers and directors or trustees of the Funds, the Manager, the Distributor and the Transfer Agent. These policies are designed to assure that non-public information about the Funds' portfolio securities holdings is distributed only for a legitimate business purpose, and is done in a manner that (a) conforms to applicable laws and regulations and (b) is designed to prevent that information from being used in a way that could negatively affect the Funds' investment program or enable third parties to use that information in a manner that is harmful to the Funds. It is a violation of the Code of Ethics for any covered person to release holdings in contravention of the portfolio holdings disclosure policies and procedures adopted by the Funds.

Portfolio Holdings Disclosure Policies. The Funds, the Manager, the Distributor and the Transfer Agent and their affiliates and subsidiaries, employees, officers, and directors or trustees, shall neither solicit nor accept any compensation or other consideration (including any agreement to maintain assets in the Funds or in other investment companies or accounts managed by the Manager or any affiliated person of the Manager) in connection with the disclosure of the Funds' non-public portfolio holdings. The receipt of investment advisory fees or other fees and compensation paid to the Manager and its subsidiaries pursuant to agreements approved by the Funds' Board shall not be deemed to be "compensation" or "consideration" for these purposes. Until publicly disclosed, the Funds' portfolio holdings are proprietary, confidential business information. After they are publicly disclosed, the Funds' portfolio holdings may be released in any appropriate manner.

• Public Disclosure. The Funds' portfolio holdings, other than Money Fund/VA, are made publicly available no later than 60 days after the close of each of the Funds' fiscal quarters, either in its annual or semi-annual report to shareholders or in its Statements of Investments on Form N-Q. Those documents are publicly available at the SEC. In addition, the top 20 month-end securities holdings (based on invested assets), listed by security or by issuer, may be posted on the OppenheimerFunds' website (at www.oppenheimerfunds.com) with a 15-day delay. The Funds may post a smaller list of holdings (e.g., the top five or top 10 portfolio holdings), or may not post any holdings, if the Manager believes that would be in the best interests of the Funds and their shareholders. Other general information about the Funds' portfolio investments, such as portfolio composition by asset class, industry, country, currency, credit rating or maturity, may also be publicly disclosed with a 15-day delay. 

• Money Fund/VA's portfolio holdings, as of the most recent prior close of the New York Stock Exchange (the "NYSE"), are posted on the Money Fund/VA's website at www.oppenheimerfunds.com on each business day. Therefore, the Money Fund/VA's portfolio holdings are made publicly available no later than one business day after the close of trading on the NYSE on each day on which the NYSE is open. The Money Fund/VA's portfolio holdings are also made publicly available no later than 60 days after the close of each of the Fund's fiscal quarters in its semi-annual and annual report to shareholders, or in its Statements of Investment on Form N-Q. Those documents are publicly available at the SEC.
  

The Fund's complete portfolio holdings positions may be released to the following categories of individuals or entities on an ongoing basis, provided that such individual or entity either (1) has signed an agreement to keep such information confidential and not trade on the basis of such information, or (2) as a member of the Fund's Board, or as an employee, officer or director of the Manager, the Distributor, or the Transfer Agent, or of their legal counsel, is subject to fiduciary obligations (a) not to disclose such information except in compliance with the Fund's policies and procedures and (b) not to trade for his or her personal account on the basis of such information:

• Employees of the Fund's Manager, Distributor and Transfer Agent who need to have access to such information (as determined by senior officers of such entities);

• The Fund's independent registered public accounting firm;

• Members of the Fund's Board and the Board's legal counsel;

• The Fund's custodian bank;

• A proxy voting service designated by the Fund and its Board;

• Rating/ranking organizations (such as Lipper, Inc. and Morningstar, Inc.);

• Portfolio pricing services retained by the Manager to provide portfolio security prices; and

• Dealers, to obtain bids (price quotations if securities are not priced by the Fund's regular pricing services).

Month-end lists of the Fund's complete portfolio holdings may be disclosed for legitimate business reasons, no sooner than 30 days after the relevant month end, pursuant to special requests and under limited circumstances discussed below, provided that:

• The third-party recipient must first submit a request for release of Fund portfolio holdings, explaining the business reason for the request;

• Senior officers (a Senior Vice President, Deputy General Counsel or above) in the Manager's Portfolio and Legal departments must approve the completed request for release of Fund portfolio holdings; and

• Before receiving the data, the third-party recipient must sign the Manager's portfolio holdings non-disclosure agreement, agreeing to keep confidential the information that is not publicly available regarding the Fund's holdings and agreeing not to trade directly or indirectly based on the information.

Other than for Money Fund/VA, portfolio holdings information of the Fund may be provided, under limited circumstances, to brokers or dealers with whom the Fund trades and entities that provide investment coverage or analytical information regarding the Fund's portfolio, provided that there is a legitimate investment reason for providing the information to the broker, dealer or other entity. Month-end portfolio holdings information may, under this procedure, be provided to vendors providing research information or analytics to the Fund, with at least a 15-day delay after the month end, but in certain cases may be provided to a broker or analytical vendor with a 1- 2 day lag to facilitate the provision of requested investment information to the Manager to facilitate a particular trade or portfolio manager's investment process for the Fund. Any third party receiving such information must first sign the Manager's portfolio holdings non-disclosure agreement as a pre-condition to receiving this information.

Portfolio holdings information (which may include information on individual securities positions or multiple securities) may be provided to the entities listed below (1) by portfolio traders employed by the Manager in connection with portfolio trading, and (2) by the members of the Manager's Security Valuation Group and Accounting Departments in connection with portfolio pricing or other portfolio evaluation purposes:

• Brokers and dealers in connection with portfolio transactions (purchases and sales);

• Brokers and dealers to obtain bids or bid and asked prices (if securities held by the Fund are not priced by the fund's regular pricing services);

• Dealers to obtain price quotations where the fund is not identified as the owner.

Portfolio holdings information (which may include information on the Fund's entire portfolio or individual securities therein) may be provided by senior officers of the Manager or attorneys on the legal staff of the Manager, Distributor, or Transfer Agent, in the following circumstances:

• Response to legal process in litigation matters, such as responses to subpoenas or in class action matters where the Fund may be part of the plaintiff class (and seeks recovery for losses on a security) or a defendant;

• Response to regulatory requests for information (from the SEC, the Financial Industry Regulatory Authority ("FINRA"), state securities regulators, and/or foreign securities authorities, including without limitation requests for information in inspections or for position reporting purposes);

• To potential sub-advisers of portfolios (pursuant to confidentiality agreements);

• To consultants for retirement plans for plan sponsors/discussions at due diligence meetings (pursuant to confidentiality agreements);

• Investment bankers in connection with merger discussions (pursuant to confidentiality agreements).

Portfolio managers and analysts may, subject to the Manager's policies on communications with the press and other media, discuss portfolio information in interviews with members of the media, or in due diligence or similar meetings with clients or prospective purchasers of Fund shares or their financial representatives.

The Fund's shareholders may, under unusual circumstances (such as a lack of liquidity in the Fund's portfolio to meet redemptions), receive redemption proceeds of their Fund shares paid as pro rata shares of securities held in the Fund's portfolio. In such circumstances, disclosure of the Fund's portfolio holdings may be made to such shareholders.

Any permitted release of otherwise non-public portfolio holdings information must be in accordance with the then-current policy on approved methods for communicating confidential information.

The Chief Compliance Officer (the "CCO") of the Fund and the Manager, Distributor, and Transfer Agent shall oversee the compliance by the Manager, Distributor, Transfer Agent, and their personnel with these policies and procedures. The CCO reports to the Fund's Board any material violation of these policies and procedures during the previous calendar quarter and makes recommendations to the Board as to any amendments that the CCO believes are necessary and desirable to carry out or improve these policies and procedures.

The Manager and the Fund have entered into ongoing arrangements to make available information about the Fund's portfolio holdings. One or more of the Oppenheimer funds may currently disclose portfolio holdings information based on ongoing arrangements to the following parties:

Advisor Asset Management	Fox-Pitt, Kelton, Inc.	Needham & Company
Alforma Capital Markets	Fraser Mackenzie	Neue Zurcher Bank
Altrushare	Friedman, Billings, Ramsey	Nomura Securities International, Inc.
Altus Investment Management	FTN Equity Capital Markets Corporation	Numis Securities Inc.
American Technology Research	Garp Research & Securities	Oddo Securities
Auerbach Grayson & Company	George K. Baum & Company	Omgeo LLC
Banc of America Securities	GMP Securities L.P.	Oppenheimer & Co., Inc.
Barclays Capital	Goldman Sachs & Company	Pacific Crest
Barnard Jacobs Mellet	Good Morning Securities	Paradigm Capital
BB&T Capital Markets	Goodbody Stockbrokers	Petercam/JPP Eurosecurities
Belle Haven Investments, Inc.	Handelsbanken Markets Securities	Piper Jaffray Company
Beltone Financial	Helvea Inc.	Prager Sealy & Company
Bergen Capital	Hewitt	R. Seelaus & Co., Inc.
Bloomberg	HJ Sims & Co., Inc.	Ramirez & Company
BMO Capital Markets	Howard Weil	Raymond James & Associates, Inc.
BNP Paribas	HSBC Securities	RBC Capital Markets
Brean Murray Carret & Company	Hyundai Securities America, Inc.	RBC Dain Rauscher
Brown Brothers Harriman & Company	ICICI Securities Inc.	Redburn Partners
Buckingham Research Group	Interactive Data	Renaissance Capital
Cabrera Capital	Intermonte	RiskMetrics Group
Callan Associates	Investec	Robert W. Baird & Company
Cambridge Associates	Janco Partners	Rocaton
Canaccord Adams, Inc.	Janney Montgomery Scott LLC	Rogers Casey
Caris & Company	Jefferies & Company	Roosevelt & Cross
Carnegie	Jennings Capital Inc.	Royal Bank of Scotland
Cazenove	Jesup & Lamont Securities	Russell/Mellon
Cheuvreux	JMP Securities	RV Kuhns
Citigroup	Johnson Rice & Company	Sal Oppenheim
Cleveland Research Company	JPMorgan Chase	Salman Partners
CLSA	Kaupthing Securities Inc.	Samsung Securities
Cogent	Keefe, Bruyette & Woods, Inc.	Sandler Morris Harris Group
Collins Stewart	Keijser Securities N.V.	Sandler O'Neill & Partners
Commerzbank	Kempen & Co. USA Inc.	Sanford C. Bernstein & Company, LLC
Contrarian Capital Management, LLC	Kepler Capital Markets	Santander Securities
Cormark Securities	KeyBanc Capital Markets	Scotia Capital
Cowen & Company	KPMG LLP	Seattle-Northwest Securities
Craig-Hallum Capital Group LLC	Kotak Mahindra Inc.	Sidoti & Company LLC
Credit Suisse	Lazard Capital	Siebert Brandford Shank & Company
Crews & Associates	LCG Associates	Simmons & Company
D.A. Davidson & Company	Lebenthal & Company	Societe Generale
Daewoo Securities Company, Ltd.	Leerink Swann	Standard & Poor's
Dahlman Rose & Company	Lipper	Sterne Agee
Daiwa Securities	Loop Capital Markets	Stifel, Nicolaus & Company
Davy	Macquarie Securities	Stone & Youngberg
DeMarche	MainFirst Bank AG	SunGard
DEPFA First Albany Corporation	MassMutual	Suntrust Robinson Humphrey
Desjardins Securities	Mediobanca Securities USA LLC	SWS Group, Inc.
Deutsche Bank	Merrill Lynch & Company, Inc.	Thomas Weisel Partners
Dougherty and Company LLC	Merrion Stockbrokers Ltd.	ThomsonReuters LLC
Dowling Partners	Mesirow Financial	Troika Dialog
Dresdner Kleinwort	MF Global Securities	UBS
Duncan Williams	Mirae Asset Securities	UOB Kay Hian (U.S.) Inc.
Dundee Securities	Mitsubishi Financial Securities	Vining & Sparks
DZ Financial Markets	Mizuho Securities USA	Vontobel Securities Ltd.
Edelweiss Securities Ltd.	ML Stern	Wachovia Securities Corporation
Emmet & Co., Inc.	Morgan Keegan	Watson Wyatt
Empirical Research	Morgan Stanley	Wedbush Morgan Securities
Enam Securities	Morningstar	Weeden & Company
Enskilda Securities	Motilal Oswal Securities	West LB
Evaluation Associates	MSCI Barra	WH Mell & Associates
Exane	M&T Securities	William Blair & Company
FactSet Research Systems	Multi-Bank Securities	Wilshire
FBR Capital Markets & Co.	Murphy & Durieu	Winchester Capital Partners, LLC
Fidelity Capital Markets	National Bank Financial	Ziegler Capital Markets Group
First Miami Securities	Natixis Bleichroeder Inc.

The shareholders of Global Securities Fund/VA, Main Street Fund/VA and Global Strategic Income Fund/VA may, under unusual circumstances (such as a lack of liquidity in a Fund's portfolio to meet redemptions), receive redemption proceeds of their Fund shares paid as pro rata shares of securities held in a Fund's portfolio. In such circumstances, disclosure of a Fund's portfolio holdings may be made to such shareholders.

Organization and History

Each Fund is an investment portfolio, or "series" of Oppenheimer Variable Account Funds (the "Trust"), a multi-series open-end diversified management investment company organized as a Massachusetts business trust that presently includes 11 series. Money Fund/VA, Core Bond Fund/VA and Capital Appreciation Fund/VA were all organized in 1983, High Income Fund/VA, Small- & Mid-Cap Growth Fund/VA and Balanced Fund/VA, were all organized in 1986, Global Securities Fund/VA was organized in 1990, Global Strategic Income Fund/VA was organized in 1993, Main Street Fund®/VA was organized in 1995, Main Street Small Cap Fund®/VA was organized in 1998 and Value Fund/ VA was organized in 2002. The suffix "VA" was added to each Fund's name on May 1, 1999. Prior to that date, Oppenheimer Capital Appreciation Fund/VA was named "Oppenheimer Growth Fund," and Oppenheimer Main Street® Growth Income Fund/VA was named "Oppenheimer Growth Income Fund." Prior to May 1, 2001, Oppenheimer Main Street Small Cap Fund®/VA was named "Oppenheimer Small Cap Growth Fund/VA." Prior to May 1, 2003, Oppenheimer Main Street Fund®/VA was named "Oppenheimer Main Street® Growth Income Fund/VA." Prior to April 29, 2004, Oppenheimer Balanced Fund/VA was named "Oppenheimer Multiple Strategies Fund/VA." Prior to April 29, 2005, Oppenheimer Core Bond Fund/VA was named "Oppenheimer Bond Fund/VA." Prior to April 30, 2010, Oppenheimer Small- & Mid-Cap Growth Fund/VA was named "Oppenheimer MidCap Fund/VA," prior to April 30, 2006, that Fund was named "Oppenheimer Aggressive Growth Fund/VA", and prior to May 1, 1998 that Fund was named "Oppenheimer Capital Appreciation Fund."  Prior to April 30, 2010, Oppenheimer Global Strategic Income Fund/VA was named "Oppenheimer Strategic Bond Fund/VA." All references to the Funds' Board of Trustees and Officers refer to the Trustees and Officers, respectively, of Oppenheimer Variable Account Funds.

Shareholders. Insurance companies that hold shares of the Funds in their separate accounts for the benefit of their customers' variable annuities, variable life insurance policies and other investment products are the record holders and the owners of shares of beneficial interest in the Funds. The right of those customers of the insurance companies to give directions to the insurance company for the purchase or redemption of shares is determined under the contract between the customer and the insurance company. The insurance companies, and not their customers, are "shareholders" of the Funds. The rights of those insurance companies as record holders and owners of shares of a Fund are different from the rights of their customers. These customers are indirect owners for all purposes except for those rights reserved by insurance companies in the insurance contract, or as permitted by the SEC. The term "shareholder" in this SAI refers to the indirect or underlying owner of shares held in the account, and not to the insurance companies.

Classes of Shares. The Trustees are authorized, without shareholder approval, to create new series and classes of shares, to reclassify unissued shares into additional series or classes and to divide or combine the shares of a class into a greater or lesser number of shares without changing the proportionate beneficial interest of a shareholder in the Fund. Shares do not have cumulative voting rights, preemptive rights or subscription rights. Shares may be voted in person or by proxy at shareholder meetings.

The Funds currently have four classes of shares authorized. All Funds offer a class of shares with no name designation referred to in this SAI and the Prospectus as "non-service shares." As of September 15, 2006, all Funds except Money Fund/VA also offer a service share class, subject to a Distribution and Service Plan. Money Fund/VA currently only offers the class of non-service shares. Global Securities Fund/VA and High Income Fund/VA offer two additional share classes, referred to in this SAI "Class 3" and "Class 4", which are subject to a redemption fee. In addition, Class 4 shares are subject to a Distribution and Service Plan. Each class of shares:

• has its own dividends and distributions,

• pays certain expenses which may be different for the different classes,

• will generally have a different net asset value,

• will generally have separate voting rights on matters in which interests of one class are different from interests of another class, and

• votes as a class on matters that affect that class alone.

Each share of each class has one vote at shareholder meetings, with fractional shares voting proportionally, on matters submitted to a vote of shareholders. Each share of a Fund represents an interest in each Fund proportionately equal to the interest of each other share of the same class of that Fund.

Meetings of Shareholders. The Trust is a Massachusetts business Trust. The Funds are not required to hold, and do not plan to hold, regular annual meetings of shareholders, but may hold shareholder meetings from time to time on important matters or when required to do so by the Investment Company Act or other applicable law. Shareholders have the right, upon a vote or declaration in writing of two-thirds of the outstanding shares of the Funds, to remove a Trustee or to take other action described in the Trust's Declaration of Trust.

The Trustees will call a meeting of shareholders to vote on the removal of a Trustee upon the written request of the record holders of 10% of its outstanding shares. If the Trustees receive a request from at least 10 shareholders stating that they wish to communicate with other shareholders to request a meeting to remove a Trustee, the Trustees will then either make the Funds' shareholder list available to the applicants or mail their communication to all other shareholders at the applicants' expense. The shareholders making the request must have been shareholders for at least six months and must hold shares of a Fund valued at $25,000 or more or constituting at least 1% of a Fund's outstanding shares. The Trustees may also take other action as permitted by the Investment Company Act.

Shareholder and Trustee Liability. The Trust's Declaration of Trust contains an express disclaimer of shareholder or Trustee liability for the Trust's obligations. It also provides for indemnification and reimbursement of expenses out of the Trust's property for any shareholder held personally liable for its obligations. The Declaration of Trust also states that upon request, the Trust shall assume the defense of any claim made against a shareholder for any act or obligation of the Trust and shall satisfy any judgment on that claim. Massachusetts law permits a shareholder of a business trust (such as the Trust) to be held personally liable as a "partner" under certain circumstances. However, the risk that a Fund shareholder will incur financial loss from being held liable as a "partner" of the Trust is limited to the relatively remote circumstances in which the Trust would be unable to meet its obligations.

The Trust's contractual arrangements state that any person doing business with the Trust (and each shareholder of the Funds) agrees under its Declaration of Trust to look solely to the assets of the Funds for satisfaction of any claim or demand that may arise out of any dealings with the Funds. Additionally, the Trustees shall have no personal liability to any such person, to the extent permitted by law.

Board of Trustees and Oversight Committees

The Fund is governed by a Board of Trustees, which is responsible for overseeing the Fund. The Board is led by William L. Armstong, an independent trustee, who is not an "interested person" of the Fund, as that term is defined in the Investment Company Act of 1940. The Board meets periodically throughout the year to oversee the Fund's activities, including to review its performance, oversee potential conflicts that could affect the Fund, and review the actions of the Manager. With respect to its oversight of risk, the Board relies on reports and information received from various parties, including the Manager, internal auditors, the Fund's Chief Compliance Officer, the Fund's outside auditors and Fund counsel. It is important to note that, despite the efforts of the Board and of the various parties that play a role in the oversight of risk, it is likely that not all risks will be identified or mitigated.

The Board has an Audit Committee, a Review Committee and a Governance Committee. Each of the Committees is comprised solely of Trustees who are not "interested persons" under the Investment Company Act (the "Independent Trustees").

During the Funds' fiscal year ended December 31, 2009, the Audit Committee held 5 meetings, the Review Committee held 5 meetings and the Governance Committee held 3 meetings.

The members of the Audit Committee are George C. Bowen (Chairman), Edward L. Cameron, Robert J. Malone and F. William Marshall, Jr. The Audit Committee selects the Fund's independent registered public accounting firm (also referred to as the "independent Auditors"). Other main functions of the Audit Committee, outlined in the Audit Committee Charter, include, but are not limited to: (i) reviewing the scope and results of financial statement audits and the audit fees charged; (ii) reviewing reports from the Fund independent Auditors regarding the Fund internal accounting procedures and controls; (iii) reviewing reports from the Manager's Internal Audit Department; (iv) reviewing certain reports from and meet periodically with the Funds' Chief Compliance Officer; (v) maintaining a separate line of communication between the Fund independent Auditors and the Independent Directors/Trustees; (vi) reviewing the independence of the Fund independent Auditors; and (vii) approving in advance the provision of any audit or non-audit services by the Fund independent Auditors, including tax services, that are not prohibited by the Sarbanes-Oxley Act, to the Fund, the Manager and certain affiliates of the Manager. The Audit Committee also reviews reports concerning the valuation on certain investments.

The members of the Review Committee are Sam Freedman (Chairman), Jon S. Fossel and Beverly L. Hamilton. Among other duties, as set forth in the Review Committee's Charter, the Review Committee reviews Fund performance and expenses as well as oversees several of the Fund's principal service providers and certain policies and procedures of the Fund.

The members of the Governance Committee are Robert J. Malone (Chairman), William Armstrong, Edward L. Cameron, Beverly L. Hamilton and F. William Marshall, Jr. The Governance Committee has adopted a charter setting forth its duties and responsibilities. Among other duties, the Governance Committee reviews and oversees Fund governance and the nomination of Directors/Trustees, including Independent Directors/Trustees. The Governance Committee has adopted a process for shareholder submission of nominees for board positions. Shareholders may submit names of individuals, accompanied by complete and properly supported resumes, for the Governance Committee's consideration by mailing such information to the Governance Committee in care of the Fund. The Governance Committee has not established specific qualifications that it believes must be met by a nominee. In evaluating nominees, the Governance Committee considers, among other things, an individual's background, skills, and experience; whether the individual is an "interested person" as defined in the Investment Company Act; and whether the individual would be deemed an "audit committee financial expert" within the meaning of applicable SEC rules. The Governance Committee also considers whether the individual's background, skills, and experience will complement the background, skills, and experience of other Trustees and will contribute to the Board's diversity. The Governance Committee may consider such persons at such time as it meets to consider possible nominees. The Governance Committee, however, reserves sole discretion to determine which candidates for Director/Trustee it will recommend to the Board and the shareholders and it may identify candidates other than those submitted by shareholders. The Governance Committee may, but need not, consider the advice and recommendation of the Manager or its affiliates in selecting nominees. The full Board elects new Directors/Trustees except for those instances when a shareholder vote is required.

Shareholders who desire to communicate with the Board should address correspondence to the Board or an individual Board member and may submit correspondence electronically at www.oppenheimerfunds.com under the caption "contact us" or by mail to the Fund at the address on the front cover of this SAI.

Below is a brief discussion of the specific experience, qualifications attributes or skills of each Board member that led the Board to conclude that he or she should serve as a Trustee of the Fund.

Each Independent Director/Trustee has served on the Board for the number of years listed below, during the course of which he or she has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations. Each Director's/Trustee's outside professional experience is outlined in the table of Biographical Information, below.

Trustees and Officers of the Fund

Except for Mr. Glavin, each of the Trustees is an Independent Trustee and is also a director or trustee of the following Oppenheimer funds (referred to as "Denver Board Funds"):

Oppenheimer Capital Income Fund	Oppenheimer Principal Protected Trust
Oppenheimer Cash Reserves	Oppenheimer Principal Protected Trust II
Oppenheimer Champion Income	Oppenheimer Principal Protected Trust III
Oppenheimer Commodity Strategy Total Return Fund	Oppenheimer Senior Floating Rate Fund
Oppenheimer Equity Fund, Inc.	Oppenheimer Strategic Income Fund
Oppenheimer Integrity Funds	Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund	Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government Fund	Centennial Government Trust
Oppenheimer Main Street Funds, Inc.	Centennial Money Market Trust
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer Master Event-Linked Bond Fund, LLC
Oppenheimer Master Loan Fund, LLC
Oppenheimer Municipal Fund
Oppenheimer Portfolio Series Fixed Income Active Allocation Fund

Messrs. Bhaman, Damian, Edwards, Ferreira, Glavin, Govil, Keffer, Legg, Memani, Petersen, Ram, Steinmetz, Strzalkowski, Vandehey, Vardharaj, Welsh, Williams, Wixted, Wong, Zack, Ziehl and Zibelli and Mss. Bloomberg, Bullington, Ives, Ruffle and Wolf, who are officers of the Funds, hold the same offices with one or more of the other Denver Board Funds.

Present or former officers, directors, trustees and employees (and their immediate family members) of the Fund, the Manager and its affiliates, and retirement plans established by them for their employees are permitted to purchase Class A shares of other Oppenheimer funds at net asset value without sales charge. The sales charge on Class A shares is waived for that group because of the reduced sales efforts realized by the Distributor. Present or former officers, directors, trustees and employees (and their eligible family members) of the Fund, the Manager and its affiliates, its parent company and the subsidiaries of its parent company, and retirement plans established for the benefit of such individuals, are also permitted to purchase Class Y shares of the Oppenheimer funds that offer Class Y shares.

As of April 1, 2010 the Trustees and officers of the Fund, as a group, owned less than 1% of any class of shares of the Fund beneficially or of record. The foregoing statement does not reflect ownership of shares held of record by an employee benefit plan for employees of the Manager, other than the shares beneficially owned under that plan by the officers of the Fund. In addition, none of the Independent Trustees (nor any of their immediate family members) owns securities of either the Manager or the Distributor or of any entity directly or indirectly controlling, controlled by or under common control with the Manager or the Distributor.

Biographical Information. The Trustees and officers, their positions with the Fund, length of service in such position(s) and principal occupations and business affiliations during at least the past five years are listed in the charts below. The charts also include information about each Trustee's beneficial share ownership in the Fund and in all of the registered investment companies that the Trustee oversees in the Oppenheimer family of funds ("Supervised Funds"). The address of each Independent Trustee in the chart below is 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each Trustee serves for an indefinite term, or until his or her resignation, retirement, death or removal.

Each Independent Trustee has served the Fund in the following capacities from the following dates:
	Position(s)	Length of Service
William L. Armstrong	Board Chariman	Since 2003
	Trustee	Since 1999
George C. Bowen	Trustee	Since 1999
Edward L. Cameron	Trustee	Since 1999
Jon S. Fossel	Trustee	Since 1990
Sam Freedman	Trustee	Since 1996
Beverly L. Hamilton	Trustee	Since 2002
Robert J. Malone	Trustee	Since 2002
F. William Marshall, Jr.	Trustee	Since 2000

Independent Trustees
Name, Age, Position(s)	Principal Occupations(s) During the Past 5 Years; Other Trusteeship/Directorships Held	Portfolios Overseen in Fund Complex
William L. Armstrong (73), Chairman of the Board of Trustees	President, Colorado Christian University (since 2006); Chairman, Cherry Creek Mortgage Company (since 1991), Chairman, Centennial State Mortgage Company (since 1994), Chairman, The El Paso Mortgage Company (since 1993); Chairman, Ambassador Media Corporation (since 1984); Chairman, Broadway Ventures (since 1984); Director of Helmerich Payne, Inc. (oil and gas drilling/production company) (since 1992), former Director of Campus Crusade for Christ (non-profit) (1991-2008); former Director, The Lynde and Harry Bradley Foundation, Inc. (non-profit organization) (2002-2006); former Chairman of: Transland Financial Services, Inc. (private mortgage banking company) (1997-2003), Great Frontier Insurance (1995-2000), Frontier Real Estate, Inc. (residential real estate brokerage) (1994-2000) and Frontier Title (title insurance agency) (1995-2000); former Director of the following: UNUMProvident (insurance company) (1991-2004), Storage Technology Corporation (computer equipment company) (1991-2003) and International Family Entertainment (television channel) (1992-1997); U.S. Senator (January 1979-January 1991). Mr. Armstrong has served on the Board for 11 years, during the course of which he has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	35
George C. Bowen (73), Trustee	Assistant Secretary and Director of Centennial Asset Management Corporation (December 1991-April 1999); President, Treasurer and Director of Centennial Capital Corporation (June 1989-April 1999); Chief Executive Officer and Director of MultiSource Services, Inc. (March 1996-April 1999); Mr. Bowen held several positions with the Manager and with subsidiary or affiliated companies of the Manager (September 1987-April 1999). Mr. Bowen has served on the Board for 12 years, during the course of which he has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	35
Edward L. Cameron (71), Trustee	Member of The Life Guard of Mount Vernon (George Washington historical site) (June 2000 – June 2006); Partner of PricewaterhouseCoopers LLP (accounting firm) (July 1974-June 1999); Chairman of Price Waterhouse LLP Global Investment Management Industry Services Group (accounting firm) (July 1994-June 1998). Mr. Cameron has served on the Board for 11 years, during the course of which he has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	35
Jon S. Fossel (68), Trustee	Chairman of the Board (since 2006) and Director (since June 2002) of UNUMProvident (insurance company); Director of Northwestern Energy Corp. (public utility corporation) (since November 2004); Director of P.R. Pharmaceuticals (October 1999-October 2003); Director of Rocky Mountain Elk Foundation (non-profit organization) (February 1998-February 2003 and February 2005-February 2007); Chairman and Director (until October 1996) and President and Chief Executive Officer (until October 1995) of the Manager; President, Chief Executive Officer and Director of the following: Oppenheimer Acquisition Corp. ("OAC") (parent holding company of the Manager), Shareholders Services, Inc. and Shareholder Financial Services, Inc. (until October 1995). Mr. Fossel has served on the Board for 20 years, during the course of which he has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	35
Sam Freedman (69), Trustee	Director of Colorado UpLIFT (charitable organization) (since September 1984). Mr. Freedman held several positions with the Manager and with subsidiary or affiliated companies of the Manager (until October 1994). Mr. Freeman has served on the Board for 14 years, during the course of which he has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	35
Beverly L. Hamilton (63), Trustee	Trustee of Monterey Institute for International Studies (educational organization) (since February 2000); Board Member of Middlebury College (educational organization) (since December 2005); Chairman (since 2010) of American Funds' Emerging Markets Growth Fund, Inc. (mutual fund); Director of The California Endowment (philanthropic organization) (April 2002-April 2008); Director (February 2002-2005) and Chairman of Trustees (2006-2007) of the Community Hospital of Monterey Peninsula; Director (October 1991-2005); Vice Chairman (2006-2009) of American Funds' Emerging Markets Growth Fund, Inc. (mutual fund); President of ARCO Investment Management Company (February 1991-April 2000); Member of the investment committees of The Rockefeller Foundation (2001-2006) and The University of Michigan (since 2000); Advisor at Credit Suisse First Boston's Sprout venture capital unit (venture capital fund) (1994-January 2005); Trustee of MassMutual Institutional Funds (investment company) (1996-June 2004); Trustee of MML Series Investment Fund (investment company) (April 1989-June 2004); Member of the investment committee of Hartford Hospital (2000-2003); and Advisor to Unilever (Holland) pension fund (2000-2003). Ms. Hamilton has served on the Board for 8 years, during the course of which she has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	35
Robert J. Malone (65), Trustee	Board of Directors of Opera Colorado Foundation (non-profit organization) (since March 2008); Director of Jones Knowledge, Inc. (since 2006); Director of Jones International University (educational organization) (since August 2005); Chairman, Chief Executive Officer and Director of Steele Street Bank Trust (commercial banking) (since August 2003); Director of Colorado UpLIFT (charitable organization) (since 1986); Trustee of the Gallagher Family Foundation (non-profit organization) (since 2000); Former Chairman of U.S. Bank-Colorado (subsidiary of U.S. Bancorp and formerly Colorado National Bank) (July 1996-April 1999); Director of Commercial Assets, Inc. (real estate investment trust) (1993-2000); Director of Jones Knowledge, Inc. (2001-July 2004); and Director of U.S. Exploration, Inc. (oil and gas exploration) (1997-February 2004). Mr. Malone has served on the Board for 8 years, during the course of which he has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	35
F. William Marshall, Jr. (67), Trustee	Trustee Emeritus of Worcester Polytech Institute (WPI) (private university) (since 2009); Trustee of MassMutual Select Funds (formerly MassMutual Institutional Funds) (investment company) (since 1996) and MML Series Investment Fund (investment company) (since 1996); President and Treasurer of the SIS Funds (private charitable fund) (since January 1999); Former Trustee of WPI (1985-2008); Former Chairman of the Board (2004-2006) and Former Chairman of the Investment Committee of WPI (1994-2008); Chairman of SIS Family Bank, F.S.B. (formerly SIS Bank) (commercial bank) (January 1999-July 1999); Executive Vice President of Peoples Heritage Financial Group, Inc. (commercial bank) (January 1999-July 1999); and Former President and Chief Executive Officer of SIS Bancorp. (1993-1999). Mr. Marshall has served on the Board for 10 years, during the course of which he has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	37*

* Includes two open-end investment companies: MassMutual Select Funds and MML Series Investment Fund. In accordance with the instructions for SEC Form N-1A, for purposes of this section only, MassMutual Select Funds and MML Series Investment Fund are included in the "Fund Complex." The Manager does not consider MassMutual Select Funds and MML Series Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as that term may be otherwise interpreted.

Mr. Glavin is an "Interested Trustee" because he is affiliated with the Manager by virtue of his positions as an officer and director of the Manager, and as a shareholder of its parent company. Mr. Glavin was elected as a Trustee of the Fund with the understanding that if he ceases to be the chief exectuive officer of the Manager, he will resign as a Trustee of the Fund and of the other Denver Board Funds (defined above). Mr. Glavin's address is Two World Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Interested Trustee and Officer
Name, Age, Position(s)	Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships Held	Portfolios Overseen in Fund Complex
William F. Glavin Jr. (51) Trustee, President and Principal Executive Officer	Chairman of the Manager (since 2010); Chief Executive Officer and Director of the Manager (since January 2009); President of the Manager (since May 2009); Director of Oppenheimer Acquisition Corp. ("OAC") (the Manager's parent holding company) (since June 2009); Executive Vice President (March 2006 - February 2009) and Chief Operating Officer (July 2007 - February 2009) of Massachusetts Mutual Life Insurance Company (OAC's parent company); Director (May 2004 - March 2006) and Chief Operating Officer and Chief Compliance Officer (May 2004 - January 2005), President (January 2005 - March 2006) and Chief Executive Officer (June 2005 - March 2006) of Babson Capital Management LLC; Director (March 2005 - March 2006), President (May 2003 - March 2006) and Chief Compliance Officer (July 2005 - March 2006) of Babson Capital Securities, Inc. (a broker-dealer); President (May 2003 - March 2006) of Babson Investment Company, Inc.; Director (May 2004 - August 2006) of Babson Capital Europe Limited; Director (May 2004 - October 2006) of Babson Capital Guernsey Limited; Director (May 2004 - March 2006) of Babson Capital Management LLC; Non-Executive Director (March 2005 - March 2007) of Baring Asset Management Limited; Director (February 2005 - June 2006) Baring Pension Trustees Limited; Director and Treasurer (December 2003 - November 2006) of Charter Oak Capital Management, Inc.; Director (May 2006 -September 2006) of C.M. Benefit Insurance Company; Director (May 2008 -June 2009) and Executive Vice President (June 2007 -July 2009) of C.M. Life Insurance Company; President (March 2006 -May 2007) of MassMutual Assignment Company; Director (January 2005 -December 2006), Deputy Chairman (March 2005 -December 2006) and President (February 2005 -March 2005) of MassMutual Holdings (Bermuda) Limited; Director (May 2008 -June 2009) and Executive Vice President (June 2007 - July 2009) of MML Bay State Life Insurance Company; Chief Executive Officer and President (April 2007 -January 2009) of MML Distributors, LLC.; and Chairman (March 2006 -December 2008) and Chief Executive Officer (May 2007 -December 2008) of MML Investors Services, Inc. Mr. Glavin has served on the Board since December 2009, during the course of which he has become familiar with the Fund's (and other Oppenheimer funds') financial, accounting, regulatory and investment matters and has contributed to the Board's deliberations.	93

The addresses of the officers in the chart below are as follows: for Messrs. Bhaman, Damian, Edwards, Ferreira, Glavin, Govil, Keffer, Memani, Ram, Steinmetz, Strzalkowski, Vardharaj, Williams, Wong, Zack, Ziehl and Zibelli and Mss. Bloomberg and Ruffle, Two World Financial Center, 225 Liberty Street, New York, New York 10281-1008, for Messrs. Legg, Petersen, Vandehey, Welsh and Wixted and Mss. Bullington, Ives and Wolf, 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each officer serves for an indefinite term or until his or her resignation, retirement death or removal.

Each of the Officers has served the Funds in the following capacities from the following dates:
Rajeev Bhaman	Vice President and Portfolio Manager	Since 2004
John Damian	Vice President and Portfolio Manager	Since 2008 & 2009 respectively
Emmanuel Ferreira	Vice President and Portfolio Manager	Since 2003
Manind Govil	Vice President and Portfolio Manager	Since 2009
Krishna Memani	Vice President and Portfolio Manager	Since 2009
Benjamin Ram	Vice President and Portfolio Manager	Since 2009
Arthur P. Steinmetz	Vice President and Portfolio Manager	Since 1993
Peter A. Strzalkowski	Vice President and Portfolio Manager	Since 2009
Raman Vardharaj	Vice President and Portfolio Manager	Since 2009
Joseph Welsh	Vice President and Portfolio Manager	Since 2009
Mitch Williams	Vice President and Portfolio Manager	Since 2008 & 2009 respectively
Carol E. Wolf	Vice President and Portfolio Manager	Since 1998
Caleb Wong	Vice President and Portfolio Manager	Since 2009
Ronald Zibelli, Jr.	Vice President and Portfolio Manager	Since 2006
Matthew Ziehl	Vice President and Portfolio Manager	Since 2009
Thomas Keffer	Vice President and Chief Business Officer	Since 2009
Mark S. Vandehey	Vice President and Chief Compliance Officer	Since 2004
Brian W. Wixted	Treasurer and Principal Financial & Accounting Officer	Since 1999
Brian S. Petersen	Assistant Treasurer	Since 2004
Stephanie Bullington	Assistant Treasurer	Since 2008
Robert G. Zack	Vice President and Secretary	Since 2001
Lisa I. Bloomberg	Assistant Secretary	Since 2004
Kathleen T. Ives	Assistant Secretary	Since 2001
Taylor V. Edwards	Assistant Secretary	Since 2008
Randy G. Legg	Assistant Secretary	Since 2008
Adrienne M. Ruffle	Assistant Secretary	Since 2008

Other Officers of the Funds - Portfolio Managers
Name, Age, Position(s)	Principal Occupation(s) During the Last 5 Years	Portfolios Overseen in Fund Complex
Rajeev Bhaman (46) Vice President and Portfolio Manager	Senior Vice President of the Manager (since May 2006). He was a Vice President of the Manager (January 1997-May 2006).	2
John Damian (41) Vice President and Portfolio Manager	Senior Vice President and Director of Value Equity Investments (since February 2007); Vice President of the Manager (September 2001-February 2007). Senior Analyst/Director for Citigroup Asset Management (November 1999-September 2001).	5
Emmanuel Ferreira (41) Vice President and Portfolio Manager	Vice President of the Manager since January 2003; Portfolio Manager at Lashire Investments (July 1999-December 2002).	3
Manind "Mani" Govil (40) Vice President and Portfolio Manager	Mr. Govil, CFA, has been a Senior Vice President, the Main Street Team Leader and a portfolio manager of the Manager since May 2009. Prior to joining the Manager, Mr. Govil was a portfolio manager with RS Investment Management Co. LLC (October 2006-March 2009). He served as the head of equity investments at The Guardian Life Insurance Company of America (August 2005-October 2006) when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. He served as the lead portfolio manager - large cap blend/core equity, co-head of equities and head of equity research (2001-July 2005), and was lead portfolio manager - core equity (April 1996-July 2005), at Mercantile Capital Advisers, Inc. A portfolio manager of other portfolios in the OppenheimerFunds complex.	4
Krishna Memani (49) Vice President and Portfolio Manager	Senior Vice President and Head of the Investment Grade Fixed Income Team of the Manager since March 2009. Mr. Memani was a Managing Director and Head of the U.S. and European Credit Analyst Team at Deutsche Bank Securities from June 2006 through January 2009. He was the Chief Credit Strategist at Credit Suisse Securities from August 2002 through March 2006. He was a Managing Director and Senior Portfolio Manager at Putnam Investments from September 1998 through June 2002.	10
Benjamin Ram (38) Vice President and Portfolio Manager	Vice President and portfolio manager of the Manager since May 2009. Prior to joining the Manager, Mr. Ram was sector manager for financial investments and a co portfolio manager for mid-cap portfolios with the RS Core Equity Team of RS Investment Management Co. LLC (October 2006-May 2009). He served as Portfolio Manager Mid Cap Strategies, Sector Manager Financials at The Guardian Life Insurance Company of America (January 2006-October 2006) when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. He was a financials analyst, from 2003 to 2005, and co portfolio manager, from 2005 to 2006, at Mercantile Capital Advisers, Inc. Mr. Ram was a bank analyst at Legg Mason Securities from 2000 to 2003 and was a senior financial analyst at the CitiFinancial division of Citigroup, Inc. from 1997 to 2000. Mr. Ram is a portfolio manager of other portfolios in the OppenheimerFunds complex.	3
Arthur P. Steinmetz (51) Vice President and Portfolio Manager	Chief Investment Officer of Fixed-Income Investments of the Manager (since April 2009) and Executive Vice President of the Manager (since October 2009). He was a Senior Vice President of the Manager (March 1993-September 2009) and Director of Fixed-Income Investments of the Manager (January 2009-April 2009).	4
Peter A. Strzalkowski (44) Vice President and Portfolio Manager	Vice President of the Manager (since August 2007), CFA and a member of the Manager's Investment Grade Fixed-Income Team (since April 2009). A Managing Partner and Chief Investment Officer of Vector Capital Management, LLC (July 2006-August 2007). A Senior Portfolio Manager at Highland Capital Management, L.P. (June 2005-July 2006). A Senior Fixed Income Portfolio Manager at Microsoft Corp. (June 2003-June 2005).	7
Raman Vardharaj (39) Vice President and Portfolio Manager	Vice President of the Manager (since May 2009) and CFA. Prior to joining the Manager, Mr. Vardharaj was sector manager and a senior quantitative analyst creating stock selection models, monitoring portfolio risks and analyzing portfolio performance across the RS Core Equity Team of RS Investment Management Co. LLC (October 2006-May 2009). He served as quantitative analyst at The Guardian Life Insurance Company of America (1998-October 2006) when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. He is a portfolio manager of other portfolios in the OppenheimerFunds complex.	2
Joseph Welsh (46) Vice President and Portfolio Manager	Head of the Manager's High Yield Corporate Debt Team (since April 2009); Vice President of the Manager (since December 2000) and a CFA. He was an Assistant Vice President of the Manager (December 1996-November 2000) and a high yield bond analyst of the Manager (January 1995-December 1996). He was a senior bond analyst with W.R. Huff Asset Management (November 1991-December 1994).	6
Mitch Williams (41) Vice President and Portfolio Manager	Vice President of the Manager (since July 2006); Vice President of the Fund (since February 2009); CFA and a Senior Research Manager (since April 2002). He was a Vice President and Research Analyst for Evergreen Funds (October 2000-January 2002).	4
Carol E. Wolf (58) Vice President and Portfolio Manager	Senior Vice President of the Manager (since June 2000); Vice President of the Manager (June 1990-June 2000).	10
Caleb Wong (44) Vice President and Portfolio Manager	Vice President of the Manager (since June 1999); employed in fixed-income quantitative research and risk management for the Manager (since July 1996).	5
Ronald Zibelli, Jr. (51) Vice President and Portfolio Manager	Vice President of the Manager (since May 2006) and a CFA. He was a Managing Director and Small Cap Growth Team Leader at Merrill Lynch Investment Managers (January 2002-May 2006).	5
Matthew Ziehl (43) Vice President and Portfolio Manager	Vice President and portfolio manager of the Manager (since May 2009). Prior to joining the Manager, Mr. Ziehl was a portfolio manager with RS Investment Management Co. LLC (October 2006-May 2009) and served as a managing director at The Guardian Life Insurance Company of America (December 2001-October 2006) when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. He was a team leader and co portfolio manager with Salomon Brothers Asset Management, Inc. for small growth portfolios (January 2001-December 2001). A portfolio manager of other portfolios in the OppenheimerFunds complex.	2

Name, Age, Position(s)	Principal Occupation(s) During the Past 5 Years	Portfolios Overseen in Fund Complex
Thomas W. Keffer (54) Vice President and Chief Business Officer	Senior Vice President of the Manager (since March 1997); Director of Investment Brand Management of the Manager (since November 1997); Senior Vice President of OppenheimerFunds Distributor, Inc. (since December 1997).	93
Mark S. Vandehey (59) Vice President and Chief Compliance Officer	Senior Vice President and Chief Compliance Officer of the Manager (since March 2004); Chief Compliance Officer of OppenheimerFunds Distributor, Inc., Centennial Asset Management and Shareholder Services, Inc. (since March 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and Shareholder Services, Inc. (since June 1983).	93
Brian W. Wixted (50) Treasurer and Principal Financial & Accounting Officer	Senior Vice President of the Manager (since March 1999); Treasurer of the Manager and the following: HarbourView Asset Management Corporation, Shareholder Financial Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management, Inc. and Oppenheimer Partnership Holdings, Inc. (March 1999-June 2008), OFI Private Investments, Inc. (March 2000-June 2008), OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since June 2003); Treasurer and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager) (since May 2000); Assistant Treasurer of the following: OAC (March 1999-June 2008).	93
Brian Petersen (39) Assistant Treasurer	Vice President of the Manager (since February 2007); Assistant Vice President of the Manager (August 2002-February 2007); Manager/Financial Product Accounting of the Manager (November 1998-July 2002).	93
Stephanie Bullington (33) Assistant Treasurer	Vice President of the Manager (since January 2010); Assistant Vice President of the Manager (October 2005-January 2010); Assistant Vice President of ButterField Fund Services (Bermuda) Limited, part of The Bank of N.T. Butterfield Son Limited (Butterfield) (February 2004-June 2005).	93
Robert G. Zack (61) Secretary	Executive Vice President (since January 2004) and General Counsel (since March 2002) of the Manager; General Counsel and Director of the Distributor (since December 2001); General Counsel of Centennial Asset Management Corporation (since December 2001); Senior Vice President and General Counsel of HarbourView Asset Management Corporation (since December 2001); Secretary and General Counsel of OAC (since November 2001); Assistant Secretary (since September 1997) and Director (since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President, General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice President, General Counsel and Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice President and General Counsel of OFI Institutional Asset Management, Inc. (since November 2001).	93
Kathleen T. Ives (44) Assistant Secretary	Senior Vice President (since May 2009), Deputy General Counsel (since May 2008) and Assistant Secretary (since October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset Management Corporation (since October 2003); Vice President and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc. (since December 2001); Vice President of the Manager (June 1998-May 2009); Senior Counsel of the Manager (October 2003-May 2008).	93
Lisa I. Bloomberg (42) Assistant Secretary	Senior Vice President (since February 2010) and Deputy General Counsel (since May 2008) of the Manager; Vice President (May 2004-January 2010) and Associate Counsel of the Manager (May 2004-May 2008); First Vice President (April 2001-April 2004), Associate General Counsel (December 2000-April 2004) of UBS Financial Services, Inc.	93
Taylor V. Edwards (42) Assistant Secretary	Vice President (since February 2007) and Associate Counsel (since May 2009) of the Manager; Assistant Vice President (January 2006-January 2007) and Assistant Counsel (January 2006-April 2009) of the Manager; Associate at Dechert LLP (September 2000-December 2005).	93
Randy G. Legg (44) Assistant Secretary	Vice President (since June 2005) and Associate Counsel (since January 2007) of the Manager; Assistant Vice President (February 2004-June 2005) and Assistant Counsel (February 2004-January 2007) of the Manager.	93
Adrienne M. Ruffle (32) Assistant Secretary	Vice President (since February 2007) and Associate Counsel (since May 2009) of the Manager; Assistant Vice President (February 2005-January 2007) and Assistant Counsel (February 2005-April 2009) of the Manager; Associate (September 2002-February 2005) at Sidley Austin LLP.	93

Trustees Share Ownership. The chart below shows information about each Trustee's beneficial share ownership in the Fund and in all of the registered investment companies that the Trustee oversees in the Supervised Funds.

As of December 31, 2009
	Dollar Range of Shares Beneficially Owned in the Fund	Aggregate Dollar Range of Shares Beneficially Owned in Supervised Funds
Independent Trustees
William L. Armstrong	None	Over $100,000
George C. Bowen	None	Over $100,000
Edward L. Cameron	None	Over $100,000
Jon S. Fossel	None	Over $100,000
Sam Freedman	None	Over $100,000
Beverly L. Hamilton	None	Over $100,000
Robert J. Malone	None	Over $100,000
F. William Marshall, Jr.	None	Over $100,000
Interested Trustee
William F. Glavin	None	Over $100,000

Remuneration of the Officers and Trustees. The officers and the interested Trustees of the Fund, who are affiliated with the Manager, receive no salary or fee from the Fund. The Independent Trustees' total compensation from the Fund and fund complex represents compensation, including accrued retirement benefits, for serving as a Trustee and member of a committee (if applicable) of the Boards of the Fund and other funds in the OppenheimerFunds complex during the calendar year ended December 31, 2009.

Name and Other Fund Position(s) (as applicable)	Aggregate Compensation From the Fund1	Total Compensation From the Fund and Fund Complex2
	Fiscal Year Ended December 31, 2009	Year Ended December 31, 2009
William L. Armstrong	$ 53,656	$267,000
Chairman of the Board and Governance Committee Member
George C. Bowen	$ 43,173	$214,800
Audit Committee Chairman
Edward L. Cameron	$ 34,942	$174,000
Audit Committee Member
Jon S. Fossel	$ 33,859	$174,000
Review Committee Member
Sam Freedman	$ 41,426	$206,100
Review Committee Chairman
Beverly Hamilton	$ 35,0003	$174,281
Review Committee Member and Governance Committee Member
Robert J. Malone	$ 40,184	$200,100
Governance Committee Chairman and Audit Committee Member
F. William Marshall, Jr.	$ 27,175	$280,0504
Audit Committee Member and Governance Committee Member

1. "Aggregate Compensation from the Fund" includes fees and deferred compensation, if any.
2. In accordance with SEC regulations, for purposes of this section only, "Fund Complex" includes the Oppenheimer funds, the MassMutual Institutional Funds, the MassMutual Select Funds and the MML Series Investment Fund, the investment adviser for which is the indirect parent company of the Fund's Manager. The Manager also serves as the Sub-Adviser to the following: MassMutual Premier International Equity Fund, MassMutual Premier Main Street Fund, MassMutual Premier Strategic Income Fund, MassMutual Premier Capital Appreciation Fund, and MassMutual Premier Global Fund. The Manager does not consider MassMutual Institutional Funds, MassMutual Select Funds and MML Series Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as that term may be otherwise interpreted.
3. Includes $35,000 deferred by Ms. Hamilton under the "Compensation Deferral Plan" described below.
4. Includes $106,050 compensation paid to Mr. Marshall for serving as a Trustee for MassMutual Select Funds and MML Series Investment Fund.

Compensation Deferral Plan. The Board of Trustees has adopted a Compensation Deferral Plan for Independent Trustees that enables them to elect to defer receipt of all or a portion of the annual fees they are entitled to receive from certain Funds. Under the plan, the compensation deferred by a Trustee is periodically adjusted as though an equivalent amount had been invested in shares of one or more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under the plan will be determined based on the amount of compensation deferred and the performance of the selected funds.

Deferral of the Trustees' fees under the plan will not materially affect a Fund's assets, liabilities or net income per share. The plan will not obligate a fund to retain the services of any Trustee or to pay any particular level of compensation to any Trustee. Pursuant to an Order issued by the SEC, a fund may invest in the funds selected by the Trustee under the plan without shareholder approval for the limited purpose of determining the value of the Trustee's deferred compensation account.

Major Shareholders.  As of April 1, 2010, the only persons or entities who owned of record or were known by the Funds to own beneficially 5% or more of any class of the Funds' outstanding shares were the Manager and the insurance companies and their respective affiliates, such shares were held as shown in Appendix A.

The Manager

The Manager is wholly-owned by Oppenheimer Acquisition Corp., a holding company primarily owned by Massachusetts Mutual Life Insurance Company, a global, diversified insurance and financial services company.

Code of Ethics. The Funds (except Money Fund/VA), Manager and the Distributor have a Code of Ethics. It is designed to detect and prevent improper personal trading by certain employees, including portfolio managers, that would compete with or take advantage of a Fund's portfolio transactions. Covered persons include persons with knowledge of the investments and investment intentions of the Fund and other funds advised by the Manager. The Code of Ethics does permit personnel subject to the Code to invest in securities, including securities that may be purchased or held by the Fund, subject to a number of restrictions and controls. Compliance with the Code of Ethics is carefully monitored and enforced by the Manager.

The Code of Ethics is an exhibit to the Funds' registration statement filed with the SEC and can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information about the hours of operation of the Public Reference Room by calling the SEC at 1.202.551.8090. The Code of Ethics can also be viewed as part of the Funds' registration statement on the SEC's EDGAR database at the SEC's Internet website at http://www.sec.gov. Copies may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov., or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

The Investment Advisory Agreement. The Manager provides investment advisory and management services to each Fund under an investment advisory agreement between the Manager of each Fund. The Manager selects securities for the Funds' portfolios and handles their day-to-day business. The portfolio managers of the Funds are employed by the Manager and are the persons who are principally responsible for the day-to-day management of the Funds' portfolios. Other members of the Manager's investment teams provide the portfolio managers with counsel and support in managing the Funds' portfolios.

The agreement requires the Manager, at its expense, to provide the Funds with adequate office space, facilities and equipment. It also requires the Manager to provide and supervise the activities of all administrative and clerical personnel required to provide effective administration for the Funds. Those responsibilities include the compilation and maintenance of records with respect to Funds' operations, the preparation and filing of specified reports, and composition of proxy materials and registration statements for the continuous public sale of shares of the Funds.

The Funds pays expenses not expressly assumed by the Manager under the advisory agreements. The advisory agreements lists examples of expenses paid by the Funds. The major categories relate to interest, taxes, brokerage commissions, fees to certain Trustees, legal and audit expenses, custodian and transfer agent expenses, share issuance costs, certain printing and registration costs and non-recurring expenses, including litigation costs. The management fees paid by the Funds to the Manager are calculated at the rates described in the Prospectus, which are applied to the assets of the Funds as a whole. The fees are allocated to each class of shares based upon the relative proportion of a Fund's net assets represented by that class. The management fees paid by the Funds to the Manager during their last three fiscal years were:

Management Fees for the Fiscal Year Ended December 31
Fund	2007	2008	2009
Balanced Fund/VA	$3,873,049	$2,905,296	$1,759,787
Capital Appreciation/VA	$13,693,507	$11,123,637	$8,611,318
Core Bond Fund/VA	$2,674,865	$2,241,087	$1,142,088
Global Securities Fund/VA	$24,819,247	$19,436,828	$14,552,153
Global Strategic Income Fund/VA	$15,516,248	$21,372,387	$20,955,987
High Income Fund/VA	$3,718,374	$2,529,797	$1,019,105
Main Street Fund/VA	$14,769,190	$12,491,552	$9,599,661
Main Street Small Cap Fund/VA	$5,996,201	$5,909,561	$4,857,461
Money Fund/VA	$815,496	$955,875	$982,135
Small- & Mid-Cap Growth Fund/VA	$7,411,075	$5,532,191	$3,638,767
Value Fund/VA	$46,993	$48,203	$41,350

The investment advisory agreements state that in the absence of willful misfeasance, bad faith, gross negligence in the performance of its duties or reckless disregard of its obligations and duties under the investment advisory agreements, the Manager is not liable for any loss the Funds sustain in connection with matters to which the agreement relates.

The agreements permit the Manager to act as investment advisor for any other person, firm or corporation and to use the name "Oppenheimer" in connection with other investment companies for which it may act as investment advisor or general distributor. If OFI shall no longer act as investment advisor to the Funds, OFI may withdraw the right of the Funds to use the name "Oppenheimer" as part of their name.

Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting Policies and Procedures, which include Proxy Voting Guidelines, under which the Fund votes proxies relating to securities held by the Fund ("portfolio proxies"). OppenheimerFunds, Inc. generally undertakes to vote portfolio proxies with a view to enhancing the value of the company's stock held by the Funds. The Fund has retained an independent, third party proxy voting agent to vote portfolio proxies in accordance with the Fund's Proxy Voting Guidelines and to maintain records of such portfolio proxy voting. The Portfolio Proxy Voting Policies and Procedures include provisions to address conflicts of interest that may arise between the Fund and the Manager or the Manager's affiliates or business relationships. Such a conflict of interest may arise, for example, where the Manager or an affiliate of the Manager manages or administers the assets of a pension plan or other investment account of the portfolio company soliciting the proxy or seeks to serve in that capacity. The Manager and its affiliates generally seek to avoid such material conflicts of interest by maintaining separate investment decision making processes to prevent the sharing of business objectives with respect to proposed or actual actions regarding portfolio proxy voting decisions. Additionally, the Manager employs the following procedures, as long as OFI determines that the course of action is consistent with the best interests of the Fund and its shareholders: (1) if the proposal that gives rise to the conflict is specifically addressed in the Proxy Voting Guidelines, the Manager will vote the portfolio proxy in accordance with the Proxy Voting Guidelines, provided that they do not provide discretion to the Manager on how to vote on the matter; (2) if such proposal is not specifically addressed in the Proxy Voting Guidelines or the Proxy Voting Guidelines provide discretion to the Manager on how to vote, the Manager will vote in accordance with the third-party proxy voting agent's general recommended guidelines on the proposal provided that the Manager has reasonably determined that there is no conflict of interest on the part of the proxy voting agent; and (3) if neither of the previous two procedures provides an appropriate voting recommendation, the Manager may retain an independent fiduciary to advise the Manager on how to vote the proposal or may abstain from voting. The Proxy Voting Guidelines' provisions with respect to certain routine and non-routine proxy proposals are summarized below:

• The Fund evaluates director nominees on a case-by-case basis, examining the following factors, among others: composition of the board and key board committees, experience and qualifications, attendance at board meetings, corporate governance provisions and takeover activity, long-term company performance and the nominee's investment in the company.

• The Fund generally supports proposals requiring the position of chairman to be filled by an independent director unless there are compelling reasons to recommend against the proposal such as a counterbalancing governance structure.

• The Fund generally supports proposals asking that a majority of directors be independent. The Fund generally supports proposals asking that a board audit, compensation, and/or nominating committee be composed exclusively of independent directors.

• The Fund generally supports shareholder proposals to reduce a super-majority vote requirement, and opposes management proposals to add a super-majority vote requirement.

• The Fund generally supports proposals to allow shareholders the ability to call special meetings.

• The Fund generally supports proposals to allow or make easier shareholder action by written consent.

• The Fund generally votes against proposals to create a new class of stock with superior voting rights.

• The Fund generally votes against proposals to classify a board.

• The Fund generally supports proposals to eliminate cumulative voting.

• The Fund generally opposes re-pricing of stock options without shareholder approval.

• The Fund generally supports proposals to require majority voting for the election of directors.

• The Fund generally supports proposals seeking additional disclosure of executive and director pay information.

• The Fund generally supports proposals seeking disclosure regarding the company's, board's or committee's use of compensation consultants.

• The Fund generally supports "pay-for-performance" proposals that align a significant portion of total compensation of senior executives to company performance.

• The Fund generally supports having shareholder votes on poison pills.

• The Fund generally supports proposals calling for companies to adopt a policy of not providing tax gross-up payments.

• In the case of social, political and environmental responsibility issues, the Fund will generally abstain where there could be a detrimental impact on share value or where the perceived value if the proposal was adopted is unclear or unsubstantiated. The Fund generally supports proposals that would clearly have a discernible positive impact on short- or long-term share value, or that would have a presently indiscernible impact on short- or long-term share value but promotes general long-term interests of the company and its shareholders.

The Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Fund's Form N-PX filing is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048 and (ii) on the SEC's website at www.sec.gov.

Money Fund/VA is the only Fund that has not adopted the Portfolio Proxy Voting Policies and Procedues.

Pending Litigation. Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds ("Defendant Funds") advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name as defendants certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund's investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys' fees and litigation expenses.

In 2009, lawsuits were filed in state court against the Manager and a subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys' fees and litigation expenses.

Other lawsuits have been filed since 2008 in various state and federal courts, against the Manager and certain of its affiliates. Those lawsuits were filed by investors who made investments through an affiliate of the Manager, and relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm ("Madoff"). Those suits allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys' fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors as defendants. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

The Manager believes that the lawsuits described above are without legal merit and is defending against them vigorously. The Defendant Funds' Boards of Trustees have also engaged counsel to defend the suits brought against those Funds and the present and former Independent Trustees named in those suits. While it is premature to render any opinion as to the outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer funds.

Portfolio Managers. Each Fund's portfolio is managed by the following:

Fund	Portfolio Manager(s)
Balanced Fund/VA	Emmanuel Ferreira, Krishna Memani, Peter A. Strzalkowski
Capital Appreciation Fund/VA	Julie Van Cleave
Core Bond Fund/VA	Krishna Memani, Peter A. Strzalkowski
Global Securities Fund/VA	Rajeev Bhaman
Global Strategic Income Fund/VA	Arthur P. Steinmetz, Krishna Memani, Joseph Welsh, Caleb Wong
High Income Fund/VA	Joseph Welsh
Main Street Fund/VA	Manind "Mani" Govil, Benjamin Ram
Main Street Small Cap Fund/VA	Matthew Ziehl, Raman Vardharaj
Money Fund/VA	Carol E. Wolf
Small- & Mid-Cap Growth Fund/VA	Ronald Zibelli, Jr.
Value Fund/VA	Mitch Williams, John Damian

Each of the above individuals is referred to as "Portfolio Manager" and collectively they are referred to as the "Portfolio Managers." They are the persons who are responsible for the day-to-day management of each Fund's respective investments.

Other Accounts Managed. In addition to managing the Funds' investment portfolio, Messrs. Bhaman, Damian, Ferreira, Govil, Memani, Ram, Steinmetz, Strzalkowski, Vardharaj, Welsh, Williams, Wong, Ziehl and Zibelli and Ms. Cleave and Wolf also manage other investment portfolios or accounts on behalf of the Manager or its affiliates. The following tables provide information regarding those portfolios and accounts as of December 31, 2009, except that information for Ms. Cleave is as of the most recent practicable date. Except for one registered investment company managed by Mr. Bhaman, no portfolio or account has a performance-based advisory fee:

Fund Name & Portfolio Managers	Registered Investment Companies Managed	Total Assets in Registered Investment Companies Managed1	Other Pooled Investment Vehicles Managed	Total Assets in Other Pooled Investment Vehicles Managed1	Other Accounts Managed	Total Assets in Other Accounts Managed1,2
Balanced Fund/VA
Emmanuel Ferreira	3	$2,556	0	$0	0	$0
Krishna Memani	15	$19,603	0	$0	0	$0
Peter A. Strzalkowski	15	$14,764	0	$0	0	$0
Capital Appreciation Fund/VA
Julie Van Cleave	8	$11,0323	1	$1363	1	$1,0373
Core Bond/VA
Krishna Memani	15	$19,963	0	$0	0	$0
Peter A. Strzalkowski	15	$14,818	0	$0	0	$0
Global Securities Fund/VA
Rajeev Bhaman	8	$13,188	4	$516	2	$496
Global Strategic Income Fund/VA
Arthur P. Steinmetz	4	$21,352	2	$123	0	$0
Krishna Memani	15	$15,747	0	$0	0	$0
Joseph Welsh	5	$11,701	1	$51	0	0
Caleb Wong	6	$10,469	1	113	0	$0
High Income Fund/VA
Joseph Welsh	5	$15,967	1	$51	0	$0
Main Street Fund/VA
Manind Govil	7	$9,742	0	$0	1	$296
Benjamin Ram	4	$1,333	0	$0	0	$0
Main Street Small Cap Fund/VA
Matthew Ziehl	6	$4,444	0	$0	1	$115
Raman Vardharaj	6	$4,444	0	$0	1	$115
Money Fund/VA
Carol E. Wolf	4	$11,891	2	$648	0	$0
Small- & Mid-Cap Growth Fund/VA
Ronald J. Zibelli, Jr.	2	$1,134	2	$71	0	$0
Value Fund/VA
Mitch Williams	8	$5,430	0	$0	4	$179
John Damian	12	$8,353	0	0	1	$127

1. In millions.
2. Does not include personal accounts of portfolio managers and their families, which are subject to the Code of Ethics.
3. Estimated assets as of March 31, 2010. Ms. Van Cleave became portfolio manager as of April 26, 2010.

As indicated above, each of the Portfolio Managers also manages other funds and accounts. Potentially, at times, those responsibilities could conflict with the interests of the Funds. That may occur whether the investment strategies of the other funds or accounts are the same as, or different from, the Funds' investment objectives and strategies. For example, a Portfolio Manager may need to allocate investment opportunities between a Fund and another fund or account having similar objectives or strategies, or a Portfolio Manager may need to execute transactions for another fund or account that could have a negative impact on the value of securities held by a Fund. Not all funds and accounts advised by the Manager have the same management fee. If the management fee structure of another fund or account is more advantageous to the Manager than the fee structure of a Fund, the Manager could have an incentive to favor the other fund or account. However, the Manager's compliance procedures and Code of Ethics recognize the Manager's fiduciary obligations to treat all of its clients, including the Funds, fairly and equitably, and are designed to preclude the Portfolio Managers from favoring one client over another. It is possible, of course, that those compliance procedures and the Code of Ethics may not always be adequate to do so. At various times, the Funds' Portfolio Managers may manage other funds or accounts with investment objectives and strategies that are similar to those of the Funds, or may manage funds or accounts with investment objectives and strategies that are different from those of the Funds.

Compensation of the Portfolio Managers. The Funds' Portfolio Managers are employed and compensated by the Manager, not the Funds. The Manager's compensation structure is designed to attract and retain highly qualified investment management professionals and to reward individual and team contributions toward creating shareholder value. As of December 31, 2009, each Portfolio Managers' compensation consisted principally of three elements: a base salary, an annual discretionary bonus and eligibility to participate in long-term awards of options and appreciation rights in regard to the common stock of the Manager's holding company parent. Senior portfolio managers may also be eligible to participate in the Manager's deferred compensation plan.

To help the Manager attract and retain talent, the base pay component of each portfolio manager is reviewed regularly to ensure that it reflects the performance of the individual, is commensurate with the requirements of the particular portfolio, reflects any specific competence or specialty of the individual manager, and is competitive with other comparable positions. The annual discretionary bonus is determined by senior management of the Manager and is based on a number of factors, including management quality (such as style consistency, risk management, sector coverage, team leadership and coaching) and organizational development. The Portfolio Managers' compensation is not based on the total value of a Fund's portfolio assets or its investment performance. However, each portfolio managers' compensation is based on the performance of a tracking portfolio that is substantially similar to the Fund or Funds that he or she manages, measured against an appropriate Lipper benchmark selected by management. The Manager has a number of procedures in place to ensure that portfolio managers do not allocate securities to those portfolios in an inequitable manner, including monitoring and dispersion analysis. The compensation structure of certain other funds and accounts managed by the Portfolio Managers differs from the compensation structure of the Funds, described above. A portion of the Portfolio Managers' compensation with regard to other portfolios may be based on the performance of those portfolios compared to a particular benchmark and, with respect to one portfolio managed by Mr. Bhaman, may, under certain circumstances, include an amount based in part on the amount of that portfolio's management fee.

Ownership of Fund Shares. As of December 31, 2009, the Portfolio Managers did not beneficially own any shares of the Funds, which are sold only through insurance companies to their contract owners.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement. One of the duties of the Manager under the investment advisory agreements is to arrange the portfolio transactions for the Funds. The advisory agreements contain provisions relating to the employment of broker-dealers to effect the Funds' portfolio transactions. The Manager is authorized by the advisory agreements to employ broker-dealers, including "affiliated brokers," as that term is defined in the Investment Company Act, that the Manager thinks, in its best judgment based on all relevant factors, will implement the policy of the Funds to obtain, at reasonable expense, the "best execution" of the Funds' portfolio transactions. "Best execution" means prompt and reliable execution at the most favorable price obtainable for the services provided. The Manager need not seek competitive commission bidding. However, it is expected to be aware of the current rates of eligible brokers and to minimize the commissions paid to the extent consistent with the interests and policies of the Funds as established by its Board of Trustees.

Under the investment advisory agreements, in choosing brokers to execute portfolio transactions for the Funds, the Manager may select brokers (other than affiliates) that provide both brokerage and research services to the Funds. The commissions paid to those brokers may be higher than another qualified broker would charge, if the Manager makes a good faith determination that the commission is fair and reasonable in relation to the services provided.

Brokerage Practices Followed by the Manager. The Manager allocates brokerage for the Funds subject to the provisions of the investment advisory agreements and other applicable rules and procedures described below.

The Manager's portfolio traders allocate brokerage based upon recommendations from the Manager's portfolio managers, together with the portfolio traders' judgment as to the execution capability of the broker or dealer. In certain instances, portfolio managers may directly place trades and allocate brokerage. In either case, the Manager's executive officers supervise the allocation of brokerage.

For Equity Funds, transactions in securities other than those for which an exchange is the primary market are generally done with principals or market makers. In transactions on foreign exchanges, a Fund may be required to pay fixed brokerage commissions and therefore would not have the benefit of negotiated commissions that are available in U.S. markets. Brokerage commissions are paid primarily for transactions in listed securities or for certain fixed-income agency transactions executed in the secondary market. Otherwise, brokerage commissions are paid only if it appears likely that a better price or execution can be obtained by doing so. In an option transaction, a Fund ordinarily uses the same broker for the purchase or sale of the option and any transaction in the securities to which the option relates.

For the Fixed-Income Funds, most securities purchases made by a Fund are in principal transactions at net prices. A Fund usually deals directly with the selling or purchasing principal or market maker without incurring charges for the services of a broker on its behalf unless the Manager determines that a better price or execution may be obtained by using the services of a broker. Therefore, a Fund does not incur substantial brokerage costs. Portfolio securities purchased from underwriters include a commission or concession paid by the issuer to the underwriter in the price of the security. Portfolio securities purchased from dealers include a spread between the bid and asked price. In an option transaction, a Fund ordinarily uses the same broker for the purchase or sale of the option and any transaction in the investment to which the option relates.

Other accounts advised by the Manager have investment policies similar to those of the Funds. Those other accounts may purchase or sell the same securities as a Fund at the same time as that Fund, which could affect the supply and price of the securities. If two or more accounts advised by the Manager purchase the same security on the same day from the same dealer, the transactions under those combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each account. When possible, the Manager tries to combine concurrent orders to purchase or sell the same security by more than one of the accounts managed by the Manager or its affiliates. The transactions under those combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each account.

Rule 12b-1 under the Investment Company Act prohibits any fund from compensating a broker or dealer for promoting or selling the fund's shares by (1) directing to that broker or dealer any of the fund's portfolio transactions, or (2) directing any other remuneration to that broker or dealer, such as commissions, mark-ups, mark downs or other fees from the fund's portfolio transactions, that were effected by another broker or dealer (these latter arrangements are considered to be a type of "step-out" transaction). In other words, a fund and its investment adviser cannot use the fund's brokerage for the purpose of rewarding broker-dealers for selling the fund's shares.

However, the Rule permits funds to effect brokerage transactions through firms that also sell fund shares, provided that certain procedures are adopted to prevent a quid pro quo with respect to portfolio brokerage allocations. As permitted by the Rule, the Manager has adopted procedures (and the Funds' Board of Trustees has approved those procedures) that permit the Funds to direct portfolio securities transactions to brokers or dealers that also promote or sell shares of the Funds, subject to the "best execution" considerations discussed above. Those procedures are designed to prevent: (1) the Manager's personnel who effect the Funds' portfolio transactions from taking into account a broker's or dealer's promotion or sales of the Funds shares when allocating the Funds' portfolio transactions, and (2) the Funds, the Manager and the Distributor from entering into agreements or understandings under which the Manager directs or is expected to direct the Funds' brokerage directly, or through a "step-out" arrangement, to any broker or dealer in consideration of that broker's or dealer's promotion or sale of the Funds' shares or the shares of any of the other Oppenheimer funds.

The investment advisory agreement permits the Manager to allocate brokerage for research services. The research services provided by a particular broker may be useful both to the Funds and to one or more of the other accounts advised by the Manager or its affiliates. Investment research may be supplied to the Manager by the broker or by a third party at the instance of a broker through which trades are placed.

Investment research services include information and analysis on particular companies and industries as well as market or economic trends and portfolio strategy, market quotations for portfolio evaluations, analytical software and similar products and services. If a research service also assists the Manager in a non research capacity (such as bookkeeping or other administrative functions), then only the percentage or component that provides assistance to the Manager in the investment decision making process may be paid in commission dollars.

Although the Manager currently does not do so, the Board of Trustees may permit the Manager to use stated commissions on secondary fixed-income agency trades to obtain research if the broker represents to the Manager that: (i) the trade is not from or for the broker's own inventory, (ii) the trade was executed by the broker on an agency basis at the stated commission, and (iii) the trade is not a riskless principal transaction. The Board of Trustees may also permit the Manager to use commissions on fixed-price offerings to obtain research, in the same manner as is permitted for agency transactions.

The research services provided by brokers broaden the scope and supplement the research activities of the Manager. That research provides additional views and comparisons for consideration, and helps the Manager to obtain market information for the valuation of securities that are either held in the Funds' portfolio or are being considered for purchase. The Manager provides information to the Board about the commissions paid to brokers furnishing such services, together with the Manager's representation that the amount of such commissions was reasonably related to the value or benefit of such services.

During the fiscal years ended December 31, 2007, 2008 and 2009, the Fund paid the total brokerage commissions indicated in the chart below:

	Total Brokerage Commissions Paid by the Funds*
Fund	2007	2008	2009
Balanced Fund/VA	$331,665	$366,700	$225,733
Capital AppreciationFund/VA	$2,112,465	$2,131,803	$1,203,623
Core Bond Fund/VA	$51,115	$79,727	$19,457
Global Securities Fund/VA	$1,409,080	$1,165,815	$954,874
Global Strategic Income Fund/VA	$969,370	$541,579	$470,849
High Income Fund/VA	$99,156	$45,699	$2,432
Main Street Fund/VA	$2,631,874	$1,650,295	$1,909,107
Main Street Small Cap Fund/VA	$2,165,986	$1,480,655	$2,087,784
Small- & Mid-Cap Growth Fund/VA	$1,778,422	$1,186,270	$1,014,498
Value Fund/VA	$13,231	$16,525	$13,470

* Amounts do not include spreads or commissions on principal transactions on a net trade basis.

During the fiscal year ended December 31, 2009, the Fund paid the following amounts in commissions to firms that provide brokerage and research services to the Fund with respect to the aggregate portfolio transactions indicated. All such transactions were on a "best execution" basis, as described above. The provision of research services was not necessarily a factor in the placement of all such transactions.

Fund	Commissions Paid to Firms that Provide Research	Aggregate Transactions by Firms that Provide Research
Balanced Fund/VA	$199,505	$158,402,202
Capital Appreciation Fund/VA	$1,070,845	$1,036,277,421
Core Bond Fund/VA	$0	$0
Global Securities Fund/VA	$934,439	$733,117,548
Global Strategic Income Fund/VA	$0	$0
High Income Fund/VA	$0	$0
Main Street Fund/VA	$1,263,767	$1,974,092,327
Main Street Small Cap Fund/VA	1,575,395	$1,551,275,731
Small- & Mid-Cap Growth Fund/VA	$886,625	$822,590,663
Value Fund/VA	$12,715	$12,857,095

Distribution and Service Arrangements

The Distributor. Under its General Distributor's Agreement with each Fund, OppenheimerFunds Distributor, Inc. ("OFDI" or the "Distributor") will act as the principal underwriter for the Funds' Service shares and Class 4 shares only.

Each Fund has adopted a Distribution and Service Plan under Rule 12b-1 of the Investment Company Act (a "Plan") for its Service shares and Class 4 shares, although as of December 31, 2009, only Global Securities Fund/VA and High Income Fund/VA offered Class 4 shares. Each Fund that offers Service shares and/or Class 4 shares will make compensation payments to the Distributor in connection with the distribution and/or servicing of those shares. The Distributor will pay insurance company separate account sponsors and other entities that offer and/or provide services to Service shares and Class 4 shares, as described in the applicable Fund's Prospectus.

Each Plan has been approved by a vote of (i) the Board of Trustees of the Trust, including a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on that Plan, and (ii) the Manager as the then-sole initial holder of such shares.

Under the Plans, the Funds currently use the fees it receives to pay insurance company separate account sponsors or their affiliates (each is referred to as a "Recipient") for personal services and account maintenance services they provide for their customers who hold Service and Class 4 shares. The services include, among others, answering customer inquiries about the Funds, assisting in establishing and maintaining accounts in the Funds, and providing other services at the request of a Fund.

Under the Plans, no payment will be made to any Recipient in any period if the aggregate net assets of a Fund's Service and Class 4 shares held by the Recipient for itself and its customers did not exceed a minimum amount, if any, that may be determined from time to time by a majority of the Trust's Independent Trustees. The Plans provide for a fee of 0.25% of average annual net assets (although the Board of Trustees had set the fee at 0.15% of average net assets for all series prior to May 1, 2003). As of December 31, 2009, the Board had set no minimum asset amount. For the fiscal year ended December 31, 2009, all payments made under the Service share Plan were paid by the Distributor, to Recipients (including Recipients affiliated with the Manager).

The Service shares class payments during the fiscal year ended December 31, 2009, for all Funds having Service shares outstanding as of that date, were as follows:

Fund	Service Plan Payments by OFDI
Balanced Fund/VA Service Shares	$191,645
Capital Appreciation Fund/VA Service Shares	$922,244
Core Bond Fund/VA Service Shares	$131,620
Global Securities Fund/VA Service Shares	$2,073,540
Global Securities Fund/VA Class 4 Shares	$166,600
Global Strategic Income Fund/VA Service Shares	$7,869,295
High Income Fund/VA Service Shares	$135,505
High Income Fund/VA Class 4 Shares	$15,712
Main Street Fund/VA Service Shares	$2,572,759
Main Street Small Cap Fund/VA Service Shares	$1,530,214
Small- & Mid-Cap Growth Fund/VA Service Shares	$56,482
Value Fund/VA Service Shares	$12,371

Under the Plans, the Manager and the Distributor may make payments to affiliates. In their sole discretion, they may also from time to time make substantial payments from their own resources, which include the profits the Manager derives from the advisory fees it receives from the Funds, to compensate brokers, dealers, financial institutions and other intermediaries for providing distribution assistance and/or administrative services or that otherwise promote sales of the Funds' shares. These payments, some of which may be referred to as "revenue sharing," may relate to the Funds' inclusion on a financial intermediary's preferred list of funds offered to its clients.

Unless a plan is terminated as described below, each Plan continues in effect from year to year but only if the Trust's Board of Trustees and its Independent Trustees specially vote annually to approve its continuance. Approval must be by a vote cast in person at a meeting called for the purpose of voting on continuing each Plan. Each Plan may be terminated at any time by the vote of a majority of the Independent Trustees or by the vote of the holders of a "majority" (as defined in the Investment Company Act) of the outstanding Service shares or Class 4 shares. The Board of Trustees and the Independent Trustees must approve all material amendments to each plan. An amendment to increase materially the amount of payments to be made under a plan must be approved by shareholders of the class affected by the amendment.

While the plans are in effect and Service shares and/or Class 4 shares are outstanding, the Treasurer of the Trust shall provide separate written reports on each plan to the Board of Trustees at least quarterly for their review. The reports shall detail the amount of all payments made under a plan and the purpose for which the payments were made. Those reports are subject to the review and approval of the Independent Trustees.

Payments to Fund Intermediaries

Financial intermediaries may receive various forms of compensation or reimbursement from the Fund in the form of distribution and service (12b-1) plan payments as described above. They may also receive payments or concessions from the Distributor, derived from sales charges paid by the financial intermediary's clients, also as described in this SAI. In addition, the Manager and the Distributor (including their affiliates) may make payments to financial intermediaries in connection with the intermediaries' offering and sales of Fund shares and shares of other Oppenheimer funds, or their provision of marketing or promotional support, transaction processing or administrative services. Among the financial intermediaries that may receive these payments are brokers or dealers who sell or hold shares of the Fund, banks (including bank trust departments), registered investment advisers, insurance companies, retirement plan or qualified tuition program administrators, third party administrators, recordkeepers or other institutions that have selling, servicing or similar arrangements with the Manager or the Distributor. The payments to financial intermediaries vary by the types of product sold, the features of the Fund share class and the role played by the intermediary.

Types of payments to financial intermediaries may include, without limitation, all or portions of the following, and/or the Fund, or an investor buying or selling Fund shares may pay:

• an initial front-end sales charge, all or a portion of which is payable by the Distributor to financial intermediaries (see the "About Your Account" section in the Prospectus);

• ongoing asset-based distribution and/or service fees (described in the section "About the Fund - Distribution and Service (12b-1) Plans" above);

• shareholder servicing expenses that are paid from Fund assets to reimburse the Manager or the Distributor for Fund expenses they incur for providing omnibus accounting, recordkeeping, networking, sub-transfer agency or other administrative or shareholder services (including retirement plan and 529 plan administrative services fees).

In addition, the Manager or Distributor may, at their discretion, make the following types of payments from their own respective resources, which may include profits the Manager derives from investment advisory fees paid by the Fund. Payments are made based on the guidelines established by the Manager and Distributor, subject to applicable law. These payments are often referred to as "revenue sharing" payments, and may include:

• compensation for marketing support, support provided in offering shares in the Fund or other Oppenheimer funds through certain trading platforms and programs, and transaction processing or other services;

• other compensation to the extent the payment is not prohibited by law or by any self-regulatory agency, such as FINRA.

Although brokers or dealers that sell Fund shares may also act as a broker or dealer in connection with the purchase or sale of portfolio securities by the Fund or other Oppenheimer funds, the Manager does not consider a financial intermediary's sales of shares of the Fund or other Oppenheimer funds when choosing brokers or dealers to effect portfolio transactions for the Fund or other Oppenheimer funds.

Revenue sharing payments can pay for distribution-related or asset retention items including, without limitation:

• transactional support, one-time charges for setting up access for the Fund or other Oppenheimer funds on particular trading systems, and paying the intermediary's networking fees;

• program support, such as expenses related to including the Oppenheimer funds in retirement plans, college savings plans, fee-based advisory or wrap fee programs, fund "supermarkets", bank or trust company products or insurance companies' variable annuity or variable life insurance products;

• placement on the dealer's list of offered funds and providing representatives of the Distributor with access to a financial intermediary's sales meetings, sales representatives and management representatives; or

• firm support, such as business planning assistance, advertising, or educating a financial intermediary's sales personnel about the Oppenheimer funds and shareholder financial planning needs.

These payments may provide an incentive to financial intermediaries to actively market or promote the sale of shares of the Fund or other Oppenheimer funds, or to support the marketing or promotional efforts of the Distributor in offering shares of the Fund or other Oppenheimer funds. In addition, some types of payments may provide a financial intermediary with an incentive to recommend the Fund or a particular share class. Financial intermediaries may earn profits on these payments, since the amount of the payments may exceed the cost of providing the services. Certain of these payments are subject to limitations under applicable law. Financial intermediaries may categorize and disclose these arrangements to their clients and to members of the public in a manner different from the disclosures in the Fund's Prospectus and this SAI. You should ask your financial intermediary for information about any payments it receives from the Fund, the Manager or the Distributor and any services it provides, as well as the fees and commissions it charges.

For the year ended December 31, 2009, the following financial intermediaries that are broker dealers offering shares of the Oppenheimer and Centennial funds, and/or their respective affiliates, received revenue sharing or similar distribution related payments from the Manager or the Distributor for marketing or program support:

A.G. Edwards and Sons, Inc.	IFC Holdings Inc.	Prime Capital Services, Inc.
Advantage Capital Corporation	Independent Financial Group, LLC	Primevest Financial Services, Inc.
Aegon USA	ING Financial Advisers, LLC	Proequities, Inc.
Aetna Life Insurance & Annuity Company	ING Financial Partners	Protective Life and Annuity Insurance   Company
AIG Advisor Group, Inc.	ING Life Insurance & Annuity Co.	Protective Life Insurance Company
AIG Life Variable Annuity Company	Invest Financial Corporation	Pruco Securities, LLC
Allianz Life Insurance Company	Investacorp, Inc.	Prudential Investment Management   Services, Inc.
Allstate Life Insurance Company	Investment Centers of America	Raymond James & Associates, Inc.
American General Annuity Insurance   Company	Janney Montgomery Scott LLC	Raymond James Financial Services, Inc.
American Portfolios Financial Services, Inc.	Jefferson Pilot Securities Corporation	RBC Capital Markets Corporation
Ameriprise Advisor Services, Inc.	JJB Hillard W.L. Lyons, Inc.	RBC Dain Rauscher
Ameriprise Financial Services, Inc.	JP Morgan Securities, Inc.	Robert W. Baird & Co.
Ameritas Life Insurance Company	Kemper Investors Life Insurance Company	Royal Alliance Associates, Inc.
Annuity Investors Life Insurance Company	KMS Financial Services Inc.	Sagepoint Financial Advisors
AXA Advisors, LLC	Lasalle Street Securities LLC	Securities America, Inc.
AXA Equitable Life Insurance Company	Legend Equities Corporation	Securities Service Network
Banc of America Investment Services, Inc.	Lincoln Benefit National Life	Security Benefit Life Insurance Company
Bank of New York Mellon	Lincoln Financial Advisors Corporation	Sigma Financial Corp.
Cadaret Grant & Co.	Lincoln Financial Securities Corporation	Signator Investments, Inc.
Cambridge Investment Research, Inc.	Lincoln Investment Planning, Inc.	SII Investments, Inc.
CCO Investment Services Corporation	Lincoln National Life Insurance Company	Sorrento Pacific Financial LLC
Chase Investment Services Corporation	LPL Financial Corporation	State Farm VP Management Corp.
Citigroup Global Markets, Inc.	Massachusetts Mutual Life Insurance   Company	State Street Global Markets, LLC
CitiStreet Advisors LLC	Massmutual Financial Group	Stifel, Nicolaus & Company, Inc.
Citizens Bank of Rhode Island	Merrill Lynch Pierce Fenner & Smith Inc.	Sun Life Assurance Company of Canada   (U.S.)
C.M. Life Insurance Company	MetLife Investors Insurance Company	Sun Life Financial Distributors, Inc.
Columbus Life Insurance Company	MetLife Investors Insurance Company -   Security First	Sun Life Insurance and Annuity   Company (Bermuda) Ltd.
Commonwealth Financial Network	MetLife Securities, Inc.	Sun Life Insurance and Annuity   Company of New York
CUNA Brokerage Services, Inc.	Minnesota Life Insurance Company	Sun Life Insurance Company
CUNA Mutual Insurance Society	MML Bay State Life Insurance Company	Sun Trust Securities, Inc.
CUSO Financial Services, LP	MML Investor Services, Inc.	Sunamerica Securities, Inc.
E*TRADE Clearing LLC	MONY Life Insurance Company of America	SunGard Institutional Brokerage Inc.
Edward D. Jones and Company, LP	Morgan Stanley & Co., Incorporated	SunTrust Bank
Essex National Securities, Inc.	Morgan Stanley Dean Witter	Suntrust Investment Services, Inc.
Federal Kemper Life Assurance Company	Morgan Stanley Smith Barney LLC	Thrivent Financial for Lutherans
Financial Network Investment Corporation	Multi-Financial Securities Corporation	Thrivent Investment Management, Inc.
Financial Services Corporation	Nathan and Lewis Securities, Inc.	Towers Square Securities, Inc.
First Clearing LLC	National Planning Corporation	Transamerica Life Insurance Co.
First Global Capital Corporation	National Planning Holdings, Inc.	UBS Financial Services, Inc.
FSC Securities Corporation	Nationwide Financial Services, Inc.	Union Central Life Insurance Company
GE Financial Assurance	New England Securities, Inc.	United Planners' Financial Services of   America
GE Life and Annuity Company	New York Life Insurance and Annuity   Company	Uvest Investment Services
Genworth Financial, Inc.	NFP Securities Inc.	Valic Financial Advisors, Inc.
Glenbrook Life and Annuity Company	North Ridge Securities Corp.	Vanderbilt Securities LLC
GPC Securities Inc.	Northwestern Mutual Investment Services,   LLC	VSR Financial Services, Inc.
Great West Life Insurance Company	NRP Financial, Inc.	Wachovia Securities, LLC
Guardian Insurance & Annuity Company	Oppenheimer & Co. Inc.	Walnut Street Securities, Inc.
H. Beck, Inc.	Pacific Life Insurance Co.	Wells Fargo Advisors, LLC
H.D. Vest Investment Services, Inc.	Park Avenue Securities LLC	Wells Fargo Investments, LLC
Hartford Life & Annuity Insurance   Company	Pershing LLC	Wescom Financial Services
Hartford Life Insurance Company	PFS Investments, Inc.	Woodbury Financial Services, Inc.
Hewitt Associates LLC	Phoenix Life Insurance Company
HSBC Securities Inc.	PlanMember Securities

For the year ended December 31, 2009, the following firms (which in some cases are broker-dealers) received payments from the Manager or Distributor for administrative or other services provided (other than revenue sharing arrangements), as described above:

A.G. Edwards and Sons, Inc.	First Southwest Company	Pershing LLC
Acensus, Inc.	First Trust Corp.	Plan Administrators Inc.
ACS HR Solutions LLC	Geller Group Ltd.	PlanMember Securities
ADP Broker-Dealer, Inc.	Genworth Financial, Inc.	Primevest Financial Services, Inc.
Aetna Life Insurance & Annuity Company	Great West Life Insurance Company	Principal Life Insurance
Alliance Benefit Group	H&R Block Financial Advisors, Inc.	Prudential Investment Management   Services, Inc.
American Diversified Distribution, LLC	H.D. Vest Investment Services, Inc.	PSMI Group
American Funds	Hartford Life Insurance Company	Raymond James & Associates, Inc.
American United Life Insurance Co.	Hewitt Associates LLC	Reliance Trust Co.
Ameriprise Financial Services, Inc.	ICMA-RC Services LLC	Robert W. Baird & Co.
Ameritrade, Inc.	Ingham Group	RSM McGladrey, Inc.
AST Trust Company	Interactive Retirement Systems	Schwab Retirement Plan Services Company
AXA Equitable Life Insurance Company	Intuition Systems, Inc.	Scott & Stringfellow, Inc.
Benefit Administration Co.	Invest Financial Corporation	Scottrade, Inc.
Benefit Consultants Group	Janney Montgomery Scott LLC	SII Investments, Inc.
Benefit Plans Administrative Services, Inc.	JJB Hillard W. L. Lyons, Inc.	Southwest Securities, Inc.
Benetech, Inc.	John Hancock Life Insurance Company	Standard Insurance Co.
Boston Financial Data Services, Inc.	JP Morgan Securities, Inc.	Standard Retirement Services, Inc.
Charles Schwab & Co., Inc.	July Business Services	Stanley, Hunt, Dupree & Rhine
Citigroup Global Markets Inc.	Lincoln Benefit National Life	Stanton Group, Inc.
CitiStreet Advisors LLC	Lincoln Investment Planning Inc.	Sterne Agee & Leach, Inc.
City National Investments Trust	LPL Financial Corporation	Stifel Nicolaus & Company, Inc.
Clark Consulting	Marshall & Ilsley Trust Company, Inc.	Sun Trust Securities, Inc.
Columbia Management Distributors, Inc.	Massachusetts Mutual Life Insurance   Company	Symetra Investment Services, Inc.
CPI Qualified Plan Consultants	Matrix Settlement & Clearance Services	T. Rowe Price
DA Davidson & Co.	Mercer HR Services	The Princeton Retirement Group
Daily Access. Com, Inc.	Merrill Lynch Pierce Fenner & Smith Inc.	The Retirement Plan Company, LLC
Davenport & Company, LLC	Mesirow Financial, Inc.	Transamerica Retirement Services
David Lerner Associates, Inc.	Mid Atlantic Capital Co.	TruSource
Digital Retirement Solutions	Milliman, Inc.	UBS Financial Services, Inc.
Diversified Advisors Investments Inc.	Morgan Stanley & Co., Incorporated	Unified Fund Services, Inc.
DR, Inc.	Morgan Stanley Dean Witter	Union Bank & Trust Company
Dyatech, LLC	Mutual of Omaha Insurance Company	US Clearing Co.
E*TRADE Clearing LLC	National City Bank	USAA Investment Management Co.
Edward D. Jones and Company, LP	National Deferred Compensation	USI Consulting Group
ExpertPlan.com	National Financial Services LLC	Valic Financial Advisors, Inc.
Ferris Baker Watts, Inc.	National Planning Holdings, Inc.	Vanguard Group
Fidelity Brokerage Services, LLC	New York Life Insurance and Annuity   Company	Wachovia Securities, LLC
Fidelity Investments Institutional   Operations Co.	Newport Retirement Services	Wedbush Morgan Securities
Financial Administrative Services   Corporation	Northwest Plan Services Inc.	Wells Fargo Bank NA
First Clearing LLC	Oppenheimer & Co. Inc.	Wells Fargo Investments, LLC
First Global Capital Corporation	Peoples Securities, Inc.	Wilmington Trust Company

Performance of the Fund

Explanation of Performance Terminology. The Funds use a variety of terms to illustrate their investment performance. Those terms include "cumulative total return," "average annual total return," "average annual total return at net asset value" and "total return at net asset value." An explanation of how total returns are calculated is set forth below. The charts below show the Funds' performance as of the Funds' most recent fiscal year end. You can obtain current performance information by calling the Funds' Transfer Agent at 1.800.981.2871 or by visiting the OppenheimerFunds Internet website at www.oppenheimerfunds.com.

The Funds' illustrations of their performance data in advertisements must comply with rules of the SEC. Those rules describe the types of performance data that may be used and how it is to be calculated. In general, any advertisement by a Fund of its performance data must include the average annual total returns for the advertised class of shares of that Fund.

Use of standardized performance calculations enables an investor to compare the Funds' performance to the performance of other funds for the same periods. However, a number of factors should be considered before using the Funds' performance information as a basis for comparison with other investments:

• Yields and total returns measure the performance of a hypothetical account in a Fund over various periods and do not show the performance of each shareholder's account. Your account's performance will vary from the model performance data if the participating insurance company selects to have dividends paid in cash, or you buy or sell shares during the period, or you bought your shares at a different time and price than the shares used in the model.

• The Funds' performance does not reflect the charges deducted from an investor's separate account by the insurance company or other sponsor of that separate account, which vary from product to product. If these charges were deducted, performance will be lower than as described in the Funds' Prospectus and Statement of Additional Information. In addition, the separate accounts may have inception dates different from those of the Funds. The sponsor for your insurance product can provide performance information that reflects those charges and inception dates.

• The Funds' performance returns may not reflect the effect of taxes on dividends and capital gains distributions.

• An investment in the Funds is not insured by the FDIC or any other government agency.

• The principal value of the Funds' shares, its yields and total returns are not guaranteed and normally will fluctuate on a daily basis.

• The preceding statement does not apply to Money Fund/VA, which seeks to maintain a stable net asset value of $1.00 per share. There can be no assurance that Money Fund/VA will be able to do so.

• When an investor's shares are redeemed, they may be worth more or less than their original cost.

• Oppenheimer Small- & Mid-Cap Growth Fund/VA did not adopt its investment policy on investing in small- and mid-cap stocks until April 30, 2010, and prior to that, the Fund did not adopt its investment policy on investing in mid-cap stocks until April 30, 2006.

• Yields and total returns for any given past period represent historical performance information and are not, and should not be considered, a prediction of future yields or returns. The Funds' total returns should not be expected to be the same as the returns of other Oppenheimer funds, whether or not such other funds have the same portfolio managers and/or similar names.

The performance of each class of shares is shown separately, because the performance of each class of shares will usually be different. That is because of the different kinds of expenses each class bears. The yields and total returns of each class of shares of the Funds are affected by market conditions, the quality of that Fund's investments, the maturity of debt investments, the types of investments that Fund holds, and its operating expenses that are allocated to the particular class.

Yields. The Fixed Income Funds use a variety of different yields to illustrate their current returns. Each class of shares calculates its yield separately because of the different expenses that affect each class.

• Standardized Yield. The "standardized yield" (sometimes referred to just as "yield") is shown for a class of shares for a stated 30-day period. It is not based on actual distributions paid by the Fixed Income Funds to shareholders in the 30-day period, but is a hypothetical yield based upon the net investment income from the Fixed Income Funds' portfolio investments for that period. It may therefore differ from the "dividend yield" for the same class of shares, described below.

Standardized yield is calculated using the following formula set forth in rules adopted by the SEC, designed to assure uniformity in the way that all funds calculate their yields:

The symbols above represent the following factors:
a =dividends and interest earned during the 30-day period.
b =expenses accrued for the period (net of any expense assumptions).
c =the average daily number of shares of that class outstanding during the 30-day period that were entitled to receive dividends.
d =the maximum offering price per share of that class on the last day of the period, adjusted for undistributed net investment income.

• Dividend Yield. The Fixed Income Funds may quote a "dividend yield" for each class of its shares. Dividend yield is based on the dividends paid on a class of shares during the actual dividend period. To calculate dividend yield, the dividends of a class declared during a stated period are added together, and the sum is multiplied by 12 (to annualize the yield) and divided by the maximum offering price on the last day of the dividend period. Because the Fixed Income Funds pay their annual dividend in March of each year, dividend yield is shown for the 30 days ended March 31, 2010. The formula is shown below:

Dividend Yield = Distribution Paid ÷ No. of Days in the Period x No. of Days in the Calendar Year
                                   Maximum Offering Price (payment date)

Fund	Standardized Yield for the 30-Day Period Ended 12/31/09	Dividend Yield for the 30-Day Period Ended 03/31/10
Core Bond Fund/VA Non-Service Shares	5.75%	1.90%
Core Bond Fund/VA Service Shares	5.62%	1.68%
High Income Fund/VA Non-Service Shares	9.07%	6.69%
High Income Fund/VA Service Shares	8.81%	6.42%
High Income Fund/VA Class 3 Shares	9.08%	6.61%
High Income Fund/VA Class 4 Shares	8.82%	6.30%
Global Strategic Income Fund/VA Non-Service Shares	5.38%	6.42%
Global Strategic Income Fund/VA Service Shares	5.13%	6.09%

• Money Fund/VA Yields. The current yield for Money Fund/VA is calculated for a seven-day period of time as follows. First, a base period return is calculated for the seven-day period by determining the net change in the value of a hypothetical pre-existing account having one share at the beginning of the seven-day period. The change includes dividends declared on the original share and dividends declared on any shares purchased with dividends on that share, but such dividends are adjusted to exclude any realized or unrealized capital gains or losses affecting the dividends declared. Next, the base period return is multiplied by 365/7 to obtain the current yield to the nearest hundredth of one percent.

The compounded effective yield for a seven-day period is calculated by
(1)adding 1 to the base period return (obtained as described above),
(2)raising the sum to a power equal to 365 divided by 7, and
(3)subtracting 1 from the result.

Total Return Information. There are different types of "total returns" to measure the Funds' performance. Total return is the change in value of a hypothetical investment in a Fund over a given period, assuming that all dividends and capital gains distributions are reinvested in additional shares and that the investment is redeemed at the end of the period. Because of differences in expenses for each class of shares, the total returns for each class are separately measured. The cumulative total return measures the change in value over the entire period (for example, ten years). An average annual total return shows the average rate of return for each year in a period that would produce the cumulative total return over the entire period. However, average annual total returns do not show actual year-by-year performance. Each Fund uses standardized calculations for its total returns as prescribed by the SEC. The methodology is discussed below.

• Average Annual Total Return. The "average annual total return" of each class is an average annual compounded rate of return for each year in a specified number of years. It is the rate of return based on the change in value of a hypothetical initial investment of $1,000 ("P" in the formula below) held for a number of years ("n" in the formula) to achieve an Ending Redeemable Value ("ERV" in the formula) of that investment, according to the following formula:

• Cumulative Total Return. The "cumulative total return" calculation measures the change in value of a hypothetical investment of $1,000 over an entire period of years. Its calculation uses some of the same factors as average annual total return, but it does not average the rate of return on an annual basis. Cumulative total return is determined as follows:

The Funds' Total Returns for the Periods Ended 12/31/09
Fund and Class/Inception Date	1 Year	5-Years (or life of class)	10 Years (or life of class)
Balanced Fund/VA Non-Service Shares (2/9/87)	21.89%	(3.76%)	1.03%
Balanced Fund/VA Service Shares (5/1/02)	21.60%	(4.00%)	0.14%
Capital Appreciation Fund/VA Non-Service Shares (4/3/85)	44.52%	0.39%	(0.93%)
Capital Appreciation Fund/VA Service Shares (9/18/01)	44.15%	0.14%	2.04%
Core Bond Fund/VA Non-Service Shares (4/3/85)	9.61%	(5.51%)	0.57%
Core Bond Fund/VA Service Shares (5/1/02)	9.05%	(5.78%)	1.37%
Global Securities Fund/VA Non-Service Shares (11/12/90)	39.77%	3.64%	3.91%
Global Securities Fund/VA Service Shares (7/13/00)	39.36%	3.38%	2.55%
Global Securities Fund/VA Class 3 Shares (5/1/03)	39.70%	3.64%	11.33%
Global Securities Fund/VA Class 4 Shares (5/3/04)	39.38%	3.38%	5.78%
Global Strategic Income Fund/VA Non-Service Shares (5/3/93)	18.83%	4.30%	6.23%
Global Strategic Income Fund/VA Service Shares (3/19/01)	18.41%	4.04%	6.15%
High Income Fund/VA Non-Service Shares (4/30/86)	25.32%	(21.46%)	(9.06%)
High Income Fund/VA Service Shares (9/18/01)	25.95%	(21.44%)	(10.51%)
High Income Fund/VA Class 3 Shares (5/1/07)	26.75%	(39.79%)	N/A
High Income Fund/VA Class 4 Shares (5/1/07)	26.42%	(39.60%)	N/A
Main Street Fund/VA Non-Service Shares (7/5/95)	28.29%	0.10%	(0.75%)
Main Street Fund/VA Service Shares (7/13/00)	27.99%	0.14%	(1.34%)
Main Street Small Cap Fund/VA Non-Service Shares (5/1/98)	37.20%	1.27%	2.33%
Main Street Small Cap Fund/VA Service Shares (7/16/01)	36.88%	1.03%	5.59%
Money Fund/VA (4/3/85)	0.32%	3.11%	2.88%
Small- & Mid-Cap Growth Fund/VA Non-Service Shares (8/15/86)	32.61%	(3.64%)	(5.80%)
Small- & Mid-Cap Growth Fund/VA Service Shares (10/16/00)	32.26%	(3.91%)	(8.55%)
Value Fund/VA Non-Service Shares (1/2/03)	45.08%	3.35%	8.25%
Value Fund/VA Service Shares (9/18/06)	32.57%	(4.02%)	N/A

Other Performance Comparisons. In its Annual Report to shareholders, the Fund compares its performance to that of one or more appropriate market indices. You can obtain that information by visiting the OppenheimerFunds website at www.oppenheimerfunds.com or by calling the Fund's Transfer Agent at the telephone number shown on the cover of this SAI. The Fund may also compare its performance to that of other investments, including other mutual funds, or use rankings of its performance by independent ranking entities. The following are examples of some of those comparisons.

     Lipper Rankings. From time to time the Fund may publish the ranking of the performance of its share classes by Lipper, Inc. ("Lipper"), a widely-recognized independent mutual fund monitoring service. Lipper monitors and ranks the performance of regulated investment companies for various periods in categories based on investment styles. Lipper also publishes "peer-group" indices and averages of the performance of all mutual funds in particular categories.

     Morningstar Ratings. From time to time the Fund may publish the "star ratings" of its classes of shares by Morningstar, Inc. ("Morningstar"), an independent mutual fund monitoring service that rates and ranks mutual funds within their specialized market sectors. Morningstar proprietary star ratings reflect risk-adjusted historical total investment returns for funds with at least a three-year performance history. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.

     Performance Rankings and Comparisons by Other Entities and Publications. From time to time the Fund may include in its advertisements and sales literature performance information about the Fund cited in newspapers and other periodicals such as The New York Times, The Wall Street Journal, Barron's or other similar publications. That information may include performance quotations from other sources, including Lipper and Morningstar or the Fund's performance may be compared to the performance of various market indices, other investments, or averages, performance rankings or other benchmarks prepared by recognized mutual fund statistical services. The Fund's advertisements and sales literature may also include, for illustrative or comparative purposes, statistical data or other information about general or specific market and economic conditions, for example:

• information about the performance of certain securities or commodities markets or segments of those markets,

• information about the performance of the economies of particular countries or regions,

• the earnings of companies included in segments of particular industries, sectors, securities markets, countries or regions,

• the availability of different types of securities or offerings of securities,

• information relating to the gross national or gross domestic product of the United States or other countries or regions,

• comparisons of various market sectors or indices to demonstrate performance, risk, or other characteristics of the Fund.

From time to time, the Fund may publish rankings or ratings of the Manager or Transfer Agent by third parties, including comparisons of investor services provided to shareholders of the Oppenheimer funds to those provided by other mutual fund families selected by the rating or ranking services. Those comparisons may be based on the opinions of the rating or ranking service itself, using its research or judgment, or may be based on surveys of investors, brokers, shareholders or others.

Investors may also wish to compare the returns on the Fund's share classes to the return on fixed-income investments available from banks and thrift institutions, including certificates of deposit, ordinary interest-paying checking and savings accounts, and other forms of fixed or variable time deposits or instruments such as Treasury bills. However, the Fund's returns and share price are not guaranteed or insured by the FDIC or any other agency and will fluctuate daily, while bank depository obligations may be insured by the FDIC and may provide fixed rates of return. Repayment of principal and payment of interest on Treasury securities is backed by the full faith and credit of the U.S. Government.

How to Buy Shares

Shares of the Funds are sold to provide benefits under variable life insurance policies and variable annuity and other insurance company separate accounts, as explained in the Prospectuses of the Funds and of the insurance product you have selected. Instructions from an investor to buy or sell shares of a Fund should be directed to the insurance sponsor for the investor's separate account, or that insurance sponsor's agent.

Allocation of Expenses. Each Fund pays expenses related to its daily operations, such as custodian fees, Trustees' fees, transfer agency fees, legal fees and auditing costs. Those expenses are paid out of each Fund's assets and are not paid directly by shareholders. However, those expenses reduce the net asset values of shares, and therefore are indirectly borne by shareholders through their investment.

For each Fund that has more than one class of shares outstanding, methodology for calculating the net asset value, dividends and distributions of each Fund's share classes recognizes two types of expenses. General expenses that do not pertain specifically to any one class are allocated pro rata to the shares of all classes. The allocation is based on the percentage of a Fund's total assets that is represented by the assets of each class, and then equally to each outstanding share within a given class. Such general expenses include management fees, legal, bookkeeping and audit fees, printing and mailing costs of shareholder reports, Prospectuses, Statements of Additional Information and other materials for current shareholders, fees to unaffiliated Trustees, custodian expenses, share issuance costs, organization and start-up costs, interest, taxes and brokerage commissions, and non-recurring expenses, such as litigation costs.

Other expenses that are directly attributable to a particular class are allocated equally to each outstanding share within that class. Examples of such expenses include distribution and service plan (12b-1) fees, transfer and shareholder servicing agent fees and expenses, and shareholder meeting expenses (to the extent that such expenses pertain only to a specific class).

Determination of Net Asset Values Per Share. The net asset values per share of each class of shares of the Funds are determined as of the close of business of the NYSE on each day that the NYSE is open. The calculation is done by dividing the value of a Fund's net assets attributable to a class by the number of shares of that class that are outstanding. The NYSE normally closes at 4:00 p.m., Eastern time, but may close earlier on some other days (for example, in case of weather emergencies or on days falling before a U.S. holiday). All references to time in this SAI mean "Eastern time." The NYSE's most recent annual announcement (which is subject to change) states that it will close on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.

Dealers other than NYSE members may conduct trading in certain securities on days on which the NYSE is closed (including weekends and holidays) or after 4:00 p.m. on a regular business day. Because the Funds' net asset values will not be calculated on those days, the Funds' net asset values per share may be significantly affected on such days when shareholders may not purchase or redeem shares. Additionally, trading on many foreign stock exchanges and over-the-counter markets normally is completed before the close of the NYSE.

Changes in the values of securities traded on foreign exchanges or markets as a result of events that occur after the prices of those securities are determined, but before the close of the NYSE, will not be reflected in the Funds' calculation of its net asset values that day unless the Manager determines that the event is likely to effect a material change in the value of the security. The Manager, or an internal valuation committee established by the Manager, as applicable, may establish a valuation, under procedures established by the Board and subject to the approval, ratification and confirmation by the Board at its next ensuing meeting.

Securities Valuation. The Funds' Board of Trustees has established procedures for the valuation of the Funds' securities. In general those procedures for all Funds other than Money Fund/VA are as follows:

• Equity securities traded on a U.S. securities exchange are valued as follows:

1. if last sale information is regularly reported, they are valued at the last reported sale price on the principal exchange on which they are traded, on that day, or
2. if last sale information is not available on a valuation date, they are valued at the last reported sale price preceding the valuation date if it is within the spread of the closing "bid" and "asked" prices on the valuation date or, if not, at the closing "bid" price on the valuation date.

• Equity securities traded on a foreign securities exchange generally are valued in one of the following ways:

1. at the last sale price available to the pricing service approved by the Board of Trustees, or
2. at the last sale price obtained by the Manager from the report of the principal exchange on which the security is traded at its last trading session on or immediately before the valuation date, or
3. at the mean between the "bid" and "asked" prices obtained from the principal exchange on which the security is traded or, on the basis of reasonable inquiry, from two market makers in the security.

• Long-term debt securities having a remaining maturity in excess of 60 days are valued based on the mean between the "bid" and "asked" prices determined by a portfolio pricing service approved by the Funds' Board of Trustees or obtained by the Manager from two active market makers in the security on the basis of reasonable inquiry.

• The following securities are valued at the mean between the "bid" and "asked" prices determined by a pricing service approved by the Funds' Board of Trustees or obtained by the Manager from two active market makers in the security on the basis of reasonable inquiry:

1. debt instruments that have a maturity of more than 397 days when issued,
2. debt instruments that had a maturity of 397 days or less when issued and have a remaining maturity of more than 60 days, and
3. non-money market debt instruments that had a maturity of 397 days or less when issued and which have a remaining maturity of 60 days or less.

• The following securities are valued at cost, adjusted for amortization of premiums and accretion of discounts:

1. money market debt securities held by a non-money market fund that had a maturity of less than 397 days when issued that have a remaining maturity of 60 days or less, and
2. debt instruments held by a money market fund that have a remaining maturity of 397 days or less.

• Securities (including restricted securities) not having readily-available market quotations are valued at fair value determined under the Board's procedures. If the Manager is unable to locate two market makers willing to give quotes, a security may be priced at the mean between the "bid" and "asked" prices provided by a single active market maker (which in certain cases may be the "bid" price if no "asked" price is available).

In the case of U.S. government securities, mortgage-backed securities, corporate bonds and foreign government securities, when last sale information is not generally available, the Manager may use pricing services approved by the Board of Trustees. The pricing service may use "matrix" comparisons to the prices for comparable instruments on the basis of quality, yield and maturity. Other special factors may be involved (such as the tax-exempt status of the interest paid by municipal securities). The Manager will monitor the accuracy of the pricing services. That monitoring may include comparing prices used for portfolio valuation to actual sales prices of selected securities.

The closing prices in the New York foreign exchange market on a particular business day that are provided to the Manager by a bank, dealer or pricing service that the Manager has determined to be reliable are used to value foreign currency, including forward contracts, and to convert to U.S. dollars securities that are denominated in foreign currency.

Puts, calls, and futures are valued at the last sale price on the principal exchange on which they are traded, as determined by a pricing service approved by the Board of Trustees or by the Manager. If there were no sales that day, they shall be valued at the last sale price on the preceding trading day if it is within the spread of the closing "bid" and "asked" prices on the principal exchange on the valuation date. If not, the value shall be the closing bid price on the principal exchange on the valuation date. If the put, call or future is not traded on an exchange, it shall be valued by the mean between "bid" and "asked" prices obtained by the Manager from two active market makers. In certain cases that may be at the "bid" price if no "asked" price is available.

When a Fund writes an option, an amount equal to the premium received is included in that Fund's Statement of Assets and Liabilities as an asset. An equivalent credit is included in the liability section. The credit is adjusted ("marked-to-market") to reflect the current market value of the option. In determining the Funds' gain on investments, if a call or put written by a Fund is exercised, the proceeds are increased by the premium received. If a call or put written by a Fund expires, that Fund has a gain in the amount of the premium. If a Fund enters into a closing purchase transaction, it will have a gain or loss, depending on whether the premium received was more or less than the cost of the closing transaction. If a Fund exercises a put it holds, the amount that Fund receives on its sale of the underlying investment is reduced by the amount of premium paid by that Fund.

Money Fund/VA Net Asset Valuation Per Share. Money Fund/VA will seek to maintain a net asset value of $1.00 per share for purchases and redemptions. There can be no assurance it will be able to do so. Money Fund/VA operates under Rule 2a-7 under which it may use the amortized cost method of valuing their shares. The Funds' Board of Trustees has adopted procedures for that purpose. The amortized cost method values a security initially at its cost and thereafter assumes a constant amortization of any premium or accretion of any discount, regardless of the impact of fluctuating interest rates on the market value of the security. This method does not take into account unrealized capital gains or losses.

The Funds' Board of Trustees has established procedures intended to stabilize Money Fund/VA's net asset value at $1.00 per share. If Money Fund/VA's net asset value per share were to deviate from $1.00 by more than 0.5%, Rule 2a-7 requires the Board promptly to consider what action, if any, should be taken. If the Trustees find that the extent of any such deviation may result in material dilution or other unfair effects on shareholders, the Board will take whatever steps it considers appropriate to eliminate or reduce such dilution or unfair effects, including, without limitation, selling portfolio securities prior to maturity, shortening the average portfolio maturity, withholding or reducing dividends, reducing the outstanding number of shares of that Fund without monetary consideration, or calculating net asset value per share by using available market quotations.

As long as Money Fund/VA uses Rule 2a-7, it must abide by certain conditions described in the Prospectus which limit the maturity of securities that Fund buys. Under Rule 2a-7, the maturity of an instrument is generally considered to be its stated maturity (or in the case of an instrument called for redemption, the date on which the redemption payment must be made), with special exceptions for certain variable rate demand and floating rate instruments. Repurchase agreements and securities loan agreements are, in general, treated as having maturity equal to the period scheduled until repurchase or return, or if subject to demand, equal to the notice period.

While amortized cost method provides certainty in valuation, there may be periods during which the value of an instrument, as determined by amortized cost, is higher or lower than the price Money Fund/VA would receive if it sold the instrument. During periods of declining interest rates, the daily yield on shares of that Fund may tend to be lower (and net investment income and daily dividends higher) than market prices or estimates of market prices for its portfolio. Thus, if the use of amortized cost by the funds resulted in a lower aggregate portfolio value on a particular day, a prospective investor in Money Fund/VA would be able to obtain a somewhat higher yield than would result from investment in a fund utilizing solely market values, and existing investors in that Fund would receive less investment income than if Money Fund/VA were priced at market value. Conversely, during periods of rising interest rates, the daily yield on shares of that Fund will tend to be higher and its aggregate value lower than that of a portfolio priced at market value. A prospective investor would receive a lower yield than from an investment in a portfolio priced at market value, while existing investors in Money Fund/VA would receive more investment income than if that Fund were priced at market value.

Fair Value Pricing. Pursuant to Rule 2a-7, Money Fund/VA will also calculate a shadow price for periodic review by the Board. For purposes of calculating the shadow price, Money Fund/VA may if after the close of the principal market on which a security held by the Fund is traded and before the time as of which the Fund's net asset value is calculated that day, an event occurs that the Manager learns of and believes in the exercise of its judgment will cause a material change in the value of that security, that security may be valued by another method that the Board believes would more accurately reflect the security's fair value. Fair value determinations by the Manager are subject to review, approval and ratification by the Board at its next scheduled meeting after the fair valuations are determined.

Money Fund/VA's use of fair value pricing procedures involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security.

Payments "In Kind". The Prospectus states that payment for shares tendered for redemption is ordinarily made in cash. However, under certain circumstances, the Board of Trustees of the Global Securities Fund/VA, Main Street Fund®/VA and Global Strategic Income Fund/VA may determine that it would be detrimental to the best interests of the remaining shareholders of those Funds to make payment of a redemption order wholly or partly in cash. In that case, the Funds may pay the redemption proceeds in whole or in part by a distribution "in kind" of liquid portfolio securities from the portfolio of the Funds, in lieu of cash. The Board of Trustees of the Fund has adopted procedures for "in kind" redemptions. In accordance with the procedures, the Board of Trustees of a Fund may be required to approve an "in kind" redemption paid to a shareholder that holds 5% or more of the shares of any class, or of all outstanding shares, of that Fund, or to any other shareholder that may be deemed to be an "affiliated person" under section 2(a)(3) of the Investment Company Act.

Each of Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund®/VA and Oppenheimer Global Strategic Income Fund/VA has elected to be governed by Rule 18f-1 under the Investment Company Act. Under that rule, each of Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund®/VA and Oppenheimer Global Strategic Income Fund/VA is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net assets of such Fund redeemed during any 90-day period for any one shareholder. As of the date of this SAI, those Funds intend to redeem shares in kind only under certain limited circumstances (such as redemptions of substantial amounts by shareholders that have consented to such in kind redemptions). If shares are redeemed in kind, the redeeming shareholder may incur brokerage or other costs in selling the securities. Each of Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund®/VA and Oppenheimer Global Strategic Income Fund/VA will value securities used to pay redemptions in kind using the same method it uses to value its portfolio securities described above under "Determination of Net Asset Values Per Share." That valuation will be made as of the time the redemption price is determined.

Distributions and Taxes

Dividends and Distributions. The Funds have no fixed dividend rate and there can be no assurance as to the payment of any dividends or the realization of any capital gains. The dividends and distributions paid by a class of shares will vary from time to time depending on market conditions, the composition of the Funds' portfolio, and expenses borne by the Fund or borne separately by a class (if more than one class of shares is outstanding). Dividends are calculated in the same manner, at the same time, and on the same day for each class of shares. Dividends on Service shares and Class 4 Shares are expected to be lower because of the additional expenses for those shares. Dividends will also differ in amount as a consequence of any difference in the net asset values of the different classes of shares.

Taxes. Each Fund is treated as a separate entity for federal income tax purposes. Each Fund intends to qualify as a "regulated investment company" under the provisions of Subchapter M of the Code. As a regulated investment company, each Fund is required to distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income, net short-term capital gain, and net gains from certain foreign currency transactions). To qualify for treatment as a regulated investment company, a Fund must meet certain income source, asset diversification and income distribution requirements. If each Fund qualifies as a "regulated investment company" and complies with the relevant provisions of the Code, each Fund will be relieved of federal income tax on the part of its net ordinary income and realized net capital gain which it distributes to the separate accounts. If a Fund fails to qualify as a regulated investment company, the Fund will be subject to federal, and possibly state, corporate taxes on its taxable income and gains. Furthermore, distributions to its shareholders will constitute ordinary dividend income to the extent of such Fund's available earnings and profits, and insurance policy and product holders could be subject to current tax on distributions received with respect to Fund shares.

Each Fund supports variable life insurance, variable annuity contracts and other insurance company separate accounts and therefore must, and intends to, comply with the diversification requirements imposed by section 817(h) of the Code and the regulations hereunder. These requirements place certain limitations on the proportion of each Fund's assets that may be represented by any single investment (which includes all securities of the issuer) and are in addition to the diversification requirements applicable to such Fund's status as a regulated investment company. For these purposes, each U.S. Government agency or instrumentality is treated as a separate issuer, while a particular foreign government and its agencies, instrumentalities, and political subdivisions are all considered the same issuer.

Generally, a regulated investment company must distribute substantially all of its ordinary income and capital gains in accordance with a calendar year distribution requirement in order to avoid a nondeductible 4% federal excise tax. However, the excise tax does not apply to a Fund whose only shareholders are certain tax-exempt trusts or segregated asset accounts of life insurance companies held in connection with variable contracts. The Funds intend to qualify for this exemption or to make distributions in accordance with the calendar year distribution requirements and therefore do not expect to be subject to this excise tax.

Foreign Taxes. Investment income received from sources within foreign countries may be subject to foreign income taxes. In this regard, withholding tax rates in countries with which the United States does not have a tax treaty are often as high as 30% or more. The United States has entered into tax treaties with many foreign countries that entitle certain investors to a reduced rate of tax (generally 10-15%) or to certain exemptions from tax. Each Fund will operate so as to qualify for such reduced tax rates or tax exemptions whenever possible. While insurance policy and product holders will bear the cost of any foreign tax withholding, they will not be able to claim a foreign tax credit or deduction for taxes paid by the Fund.

The Funds that may invest in foreign securities, may invest in securities of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the following tests: (1) at least 75% of the its gross income is passive; or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. A Fund investing in securities of PFICs may be subject to U.S. federal income taxes and interest charges, which would reduce the investment return of a Fund making such investments. The owners of variable annuities, variable life insurance products and other insurance company separate accounts investing in such Fund would effectively bear the cost of these taxes and interest charges. In certain cases, a Fund may be eligible to make certain elections with respect to securities of PFICs that could reduce taxes and interest charges payable by the Fund. However, no assurance can be given that such elections can or will be made.

This is a general and abbreviated summary of the applicable provisions of the Code and Treasury Regulations currently in effect as interpreted by the Courts and the Internal Revenue Service. For further information, consult the prospectus and/or statement of additional information for your particular insurance product, as well as your own tax advisor.

Additional Information About the Fund

The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is a division of the Manager. It is responsible for maintaining the Fund's shareholder registry and shareholder accounting records, and for paying dividends and distributions to shareholders. It also handles shareholder servicing and administrative functions. It serves as the Transfer Agent for an annual per account fee. It also acts as shareholder servicing agent for the other Oppenheimer funds. Shareholders should direct inquiries about their accounts to the Transfer Agent at the address and toll-free numbers shown on the back cover.

Information about your investment in the Funds through your variable annuity contract, variable life insurance policy or other plan can be obtained only from your participating insurance company or its servicing agent. The Funds' Transfer Agent does not hold or have access to those records. Instructions for buying or selling shares of the Funds should be given to your insurance company or its servicing agent, not directly to the Funds or its Transfer Agent.

The Custodian. JPMorgan Chase Bank is the custodian of the Fund's assets. The custodian's responsibilities include safeguarding and controlling the Fund's portfolio securities and handling the delivery of such securities to and from the Fund. It is the practice of the Fund to deal with the custodian in a manner uninfluenced by any banking relationship the custodian may have with the Manager and its affiliates. The Fund's cash balances with the custodian in excess of $250,000 are not protected by the federal deposit insurance corporation ("FDIC"). The FDIC protected amount will fall to $100,000 on January 1, 2014 unless the higher limit is extended by legislation. Those uninsured balances at times may be substantial.

Independent Registered Public Accounting Firm.  KPMG LLP serves as the independent registered public accounting firm for the Fund. KPMG LLP audits the Fund's financial statements and performs other related audit and tax services.  KPMG LLP also acts as the independent registered public accounting firm for the Manager and certain other funds advised by the Manager and its affiliates. Audit and non-audit services provided by KPMG LLP to the Fund must be pre-approved by the Audit Committee.

Appendix A

Major Shareholders. As of April 5, 2010, 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.

Oppenheimer Variable Account Funds (consisting of 11 separate Funds)
	Total Number of Shares in Fund	Name of Insurance Company	Number of Shares Owned by Insurance Co.	% Owned by Insurance Co.
Balanced Fund/VA - Non-Service Shares	14,987,449.474	Genworth Life and Annuity Insurance Company	2,080,114.942	13.88%
		Mass Mutual Life Insurance Company	4,787,038.618	31.94%
		Merrill Lynch Life Insurance Company	1,812,683.736	12.09%
		Nationwide Life Insurance Company	5,533,898.879	36.92%
Balanced Fund/VA - Service Shares	8,612,525.287	Allstate Life Insurance Company	1,712,710.375	19.99%
		Genworth Life Insurance Company of New York	640,057.131	7.43%
		Genworth Life and Annuity Insurance Company	3,846,366.911	44.66%
		Sun Life Assurance Company of Canada (U.S.)	1,283,506.704	14.90%
Capital Appreciation Fund/VA - Non-Service Shares	28,658,005.805	Mass Mutual Life Insurance Company	16,064,457.379	56.06%
		Nationwide Life Insurance Company	8,366,548.197	29.19%
Capital Appreciation Fund/VA - Service Shares	11,792,333.356	RiverSource Life Insurance Company	1,142,826.699	9.69%
		Allstate Life Insurance Company	1,185,048.646	10.05%
		Guardian Insurance & Annuity Co. Inc.	876,918.989	7.44%
		Hartford Life Insurance Company	1,277,715.190	10.84%
		Hartford Life & Annuity Insurance Company	2,857,235.367	24.23%
		Nationwide Life Insurance Company	1,326,628.210	11.25%
		Protective Life Insurance Company	882,286.930	7.48%
		Sun Life Assurance Company of Canada (U.S.)	718,470.768	6.09%
Core Bond Fund/VA - Non-Service Shares	18,971,727.816	Genworth Life and Annuity Insurance Company	3,107,682.181	16.38%
		Mass Mutual Life Insurance Company	7,426,098.889	39.14%
		Nationwide Life Insurance Company	6,826,698.011	35.98%
Core Bond Fund/VA - Service Shares	7,894,599.142	Allstate Life Insurance Company of New York	1,119,518.215	14.18%
		Allstate Life Insurance Company	5,127,680.414	64.95%
		Security Benefit Life Insurance Company	1,545,142.907	19.57%
Global Securities Fund/VA - Non-Service Shares	51,109,406.340	Allianz Life Insurance Company of North America	3,463,253.901	6.78%
		Mass Mutual Life Insurance Company	31,878,283.456	62.37%
		Nationwide Life Insurance Company	11,717,603.995	22.93%
Global Securities Fund/VA - Service Shares	37,489,583.346	Hartford Life Insurance Company	6,467,344.854	17.25%
		Hartford Life & Annuity Insurance Company	12,505,208.950	33.36%
		RiverSource Life Insurance Company	4,483,887.304	11.96%
		Genworth Life and Annuity Insurance Company	4,452,191.411	11.88%
Global Securities Fund/VA - Class 3 Shares	7,549,648.886	Nationwide Life Insurance Company	7,549,648.886	100%
Global Securities Fund/VA - Class 4 Shares	2,931,083.447	Nationwide Life Insurance Company	2,931,083.447	100%
Global Strategic Income Fund/VA - Non-Service Shares	149,837,005.041	Mass Mutual Life Insurance Company	137,797,295.855	91.97%
		Protective Life Insurance Company	7,961,388.868	5.31%
Global Strategic Income Fund/VA - Service Shares	735,012,636.626	RiverSource Life Insurance Company	627,953,141.555	85.43%
High Income Fund/VA - Non-Service Shares	30,518,291.608	Allianz Life Insurance Company of North America	3,305,279.906	10.83%
		Genworth Life and Annuity Insurance Company	4,612,272.628	15.11%
		Mass Mutual Life Insurance Company	17,156,401.848	56.22%
High Income Fund/VA - Service Shares	33,637,568.359	Allstate Life Insurance Company of New York	2,515,426.759	7.48%
		Commonwealth Annuity and Life Insurance Company	2,009,143.199	5.97%
		Allstate Life Insurance Company	8,208,032.895	24.40%
		Minnesota Life Insurance Company	15,954,459.315	47.43%
		Nationwide Life Insurance Company	1,848,465.276	5.50%
High Income Fund/VA - Class 3 Shares	2,747,994.375	Nationwide Life Insurance Company	2,747,994.375	100%
High Income Fund/VA - Class 4 Shares	3,359,215.892	Nationwide Life Insurance Company	3,359,215.892	100%
Main Street Fund/VA - Non-Service Shares	25,572,258.116	Allianz Life Insurance Company of North America	3,556,744.697	13.91%
		Mass Mutual Life Insurance Company	7,726,570.435	30.21%
		Nationwide Life Insurance Company	9,419,148.585	36.83%
Main Street Fund/VA - Service Shares	67,662,233.950	Allstate Life Insurance Company	3,622,020.362	5.35%
		Genworth Life and Annuity Insurance Company	11,122,343.988	16.44%
		Nationwide Life Insurance Company	18,025,245.689	26.64%
		Sun Life Assurance Company of Canada (U.S.)	26,363,319.742	38.96%
Main Street Small Cap Fund/VA - Non-Service Shares	5,930,010.445	ING Life Insurance and Annuity Company	2,076,123.977	35.01%
		CUNA Mutual Life Insurance Company	488,986.544	8.25%
		Lincoln Benefit Life Company	385,273.010	6.50%
		Mass Mutual Life Insurance Company	431,157.962	7.27%
		Nationwide Life Insurance Company	1,817,661.034	30.65%
Main Street Small Cap Fund/VA - Service Shares	46,238,693.131	Hartford Life Insurance Company	4,334,895.338	9.38%
		Hartford Life & Annuity Insurance Company	11,695,312.980	25.29%
		RiverSource Life Insurance Company	5,787,085.071	12.52%
		Lincoln Benefit Life Company	2,487,506.909	5.38%
		Genworth Life and Annuity Insurance Company	3,154,843.900	6.82%
		MetLife Investors Insurance Company	3,460,135.451	7.48%
		Nationwide Life Insurance Company	2,525,742.275	5.46%
		Phoenix Life Insurance Company	3,276,796.264	7.09%
Money Fund/VA - Non-Service Shares	170,047,128.320	Merrill Lynch Life Insurance Company	9,081,123.700	5.34%
		Mass Mutual Life Insurance Company	114,078,748.380	67.09%
		Protective Life Insurance Company	46,769,728.290	27.50%
Small- & Mid-Cap Growth Fund/VA - Non-Service Shares	14,543,955.703	Genworth Life and Annuity Insurance Company	825,248.974	5.67%
		MassMutual	10,774,083.983	74.08%
		Nationwide Life Insurance Company	2,371,718.102	16.31%
Small- & Mid-Cap Growth Fund/VA - Service Shares	724,598.218	Allstate Life Insurance Company of New York	66,131.628	9.13%
		Allstate Life Insurance Company	270,748.315	37.37%
		Hartford Life Insurance Company	57,923.678	7.99%
		Hartford Life & Annuity Insurance Company	103,460.237	14.28%
		Lincoln Benefit Life Company	52,130.212	7.19%
		Genworth Life and Annuity Insurance Company	76,264.307	10.53%
Value Fund/VA - Non-Service Shares	6,539.944	Lincoln Benefit Life Company	6,328.265	96.76%
Value Fund/VA - Service Shares	797,506.316	Hartford Life Insurance Company	168,309.856	21.10%
		RiverSource Life Insurance Company	509,026.281	63.83%
		RiverSource Life Insurance Company of NY	105,747.338	13.26%

Appendix B

Ratings Definitions

Below are summaries of the rating definitions used by the nationally recognized statistical rating organizations ("NRSROs") listed below. Those ratings represent the opinion of the NRSRO as to the credit quality of issues that they rate. The summaries below are based upon publicly available information provided by the NRSROs.

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" has 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" differs 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" is 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" 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.

BB, B, CCC, CC, and C: Obligations 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" is 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" is 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" is 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" is 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" 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.

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", and "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, and 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.

EX-99

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Balanced Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Balanced Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Balanced Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Shares		Value
Common Stocks—52.1%
Consumer Discretionary—4.0%
Media—4.0%
Jupiter Telecommunications Co. Ltd.		6,621	$	6,554,531
Liberty Global, Inc., Series A1		80,238		1,758,015
Liberty Global, Inc., Series C1		77,960		1,703,426
				10,015,972
Consumer Staples—6.2%
Beverages—0.4%
Molson Coors Brewing Co., Cl. B, Non-Vtg.		22,100		998,036
Food & Staples Retailing—1.8%
CVS Caremark Corp.		44,100		1,420,461
Kroger Co. (The)		89,600		1,839,488
Walgreen Co.		31,000		1,138,320
				4,398,269
Food Products—1.7%
Nestle SA		87,780		4,259,806
Tobacco—2.3%
Altria Group, Inc.		83,010		1,629,486
Lorillard, Inc.		50,660		4,064,452
				5,693,938
Energy—5.3%
Oil, Gas & Consumable Fuels—5.3%
Chevron Corp.		86,600		6,667,334
Exxon Mobil Corp.		96,370		6,571,470
				13,238,804
Financials—6.3%
Capital Markets—1.1%
Goldman Sachs Group, Inc. (The)		8,400		1,418,256
Morgan Stanley		46,300		1,370,480
				2,788,736
Diversified Financial Services—2.2%
JPMorgan Chase & Co.		132,900		5,537,943
Insurance—3.0%
Assurant, Inc.		51,500		1,518,220
Everest Re Group Ltd.		68,430		5,863,082
				7,381,302
Health Care—5.8%
Biotechnology—1.1%
Amgen, Inc.1		23,400		1,323,738
Genzyme Corp. (General Division)1		18,900		926,289
Vanda Pharmaceuticals, Inc.1		49,100		551,884
				2,801,911
Health Care Equipment & Supplies—1.8%
Beckman Coulter, Inc.		32,120		2,101,933
Covidien plc		46,700		2,236,463
				4,338,396
Health Care Providers & Services—1.1%
Aetna, Inc.		87,140		2,762,338
Pharmaceuticals—1.8%
Merck & Co., Inc.		88,927		3,249,393
Pfizer, Inc.		67,965		1,236,283
				4,485,676
Industrials—4.5%
Electrical Equipment—0.6%
General Cable Corp.1		50,500		1,485,710
Industrial Conglomerates—0.6%
Tyco International Ltd.		41,300		1,473,584
Machinery—2.6%
Joy Global, Inc.		57,780		2,980,870
Navistar International Corp.1		92,850		3,588,653
				6,569,523
Trading Companies & Distributors—0.7%
Aircastle Ltd.		168,100		1,655,785
Information Technology—17.6%
Communications Equipment—3.9%
Orbcomm, Inc.1		375		1,013
QUALCOMM, Inc.		113,360		5,244,034
Research in Motion Ltd.1		65,680		4,436,027
				9,681,074
Computers & Peripherals—0.8%
Dell, Inc.1		147,000		2,110,920
Electronic Equipment & Instruments—0.0%
CalAmp Corp.1		19		65
Internet Software & Services—4.6%
eBay, Inc.1		150,600		3,545,124
Google, Inc., Cl. A1		12,910		8,003,942
				11,549,066
Software—8.3%
Oracle Corp.		128,700		3,158,298
Synopsys, Inc.1		114,640		2,554,179
Take-Two Interactive Software, Inc.1		1,048,576		10,538,189
THQ, Inc.1		853,300		4,300,632
				20,551,298
Materials—1.8%
Chemicals—1.8%
Celanese Corp., Series A		28,200		905,220
Potash Corp. of Saskatchewan, Inc.		32,400		3,515,400
				4,420,620

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Telecommunication Services—0.0%
Diversified Telecommunication Services—0.0%
XO Holdings, Inc.1		85	$	50
Utilities—0.6%
Electric Utilities—0.6%
Edison International, Inc.		40,500		1,408,590
Total Common Stocks (Cost $123,200,811)				129,607,412
Preferred Stocks—3.6%
Bank of America Corp., 10% Cv., Series S1		235,500		3,513,660
Mylan, Inc., 6.50% Cv., Non-Vtg.		4,800		5,492,928
Total Preferred Stocks (Cost $6,579,607)				9,006,588
	Units
Rights, Warrants and Certificates—0.0%
XO Communications, Inc.:
Series A Wts., Strike Price $6.25, Exp. 1/16/101,2		171		—
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)				1
	Principal
	Amount
Asset-Backed Securities—3.8%
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.711%, 5/25/343	$	830,484		615,359
Bank of America Auto Trust, Automobile Asset-Backed Certificates, Series 2009-2A, Cl. A4, 3.03%, 10/15/164		1,025,000		1,040,022
Bank of America Credit Card Trust, Credit Card Asset-Backed Certificates, Series 2006-A16, Cl. A16, 4.72%, 5/15/13		265,000		273,215
Chase Issuance Trust, Credit Card Asset-Backed Certificates, Series 2007-A15, Cl. A, 4.96%, 9/17/12		665,000		685,187
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series 2003-C4, Cl. C4, 5%, 6/10/15		180,000		177,107
CNH Equipment Trust, Asset-Backed Certificates, Series 2009-B, Cl. A3, 2.97%, 3/15/13		465,000		471,971
Countrywide Home Loans, Asset-Backed Certificates:
Series 2002-4, Cl. A1, 0.971%, 2/25/333		18,836		14,930
Series 2005-16, Cl. 2AF2, 5.382%, 5/1/363		322,717		264,397
Series 2005-17, Cl. 1AF2, 5.362%, 5/1/363		183,447		151,263
CWABS Asset-Backed Certificates Trust 2006-25, Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.351%, 6/25/473		480,000		374,438
DT Auto Owner Trust, Automobile Receivables Nts., Series 2009-1, Cl. A1, 2.98%, 10/15/15		245,000		244,199
Ford Credit Auto Owner Trust, Automobile Receivables Nts.:
Series 2009-B, Cl. A2, 2.10%, 11/15/11		120,000		120,765
Series 2009-E, Cl. A2, 0.80%, 3/15/12		505,000		504,451
Harley-Davidson Motorcycle Trust 2009-2, Motorcycle Contract-Backed Nts., Series 2009-2, Cl. A2, 2%, 7/15/12		810,000		815,545
Honda Auto Receivables 2009-3 Owner Trust, Automobile Asset-Backed Nts., Series 2009-3, Cl. A2, 1.50%, 8/15/112		350,000		351,770
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2005-3, Cl. A1, 0.493%, 1/20/353		264,867		229,403
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.343%, 3/20/363		178,629		172,163
MBNA Credit Card Master Note Trust, Credit Card Receivables:
Series 2003-C7, Cl. C7, 1.583%, 3/15/163		1,710,000		1,535,037
Series 2005-A6, Cl. A6, 4.50%, 1/15/13		660,000		673,473
Option One Mortgage Loan Trust 2006-2, Asset-Backed Certificates, Series 2006-2, Cl. 2A2, 0.331%, 7/1/363		674,668		472,871
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass-Through Certificates, Series 2006-KS7, Cl. A2, 0.331%, 9/25/363		310,800		298,763
Structured Asset Investment Loan Trust, Mtg. Pass-Through Certificates, Series 2006-BNC3, Cl. A2, 0.271%, 9/25/363		39,188		38,880
Total Asset-Backed Securities (Cost $10,416,059)				9,525,209
Mortgage-Backed Obligations—28.8%
Government Agency—25.0%
FHLMC/FNMA/FHLB/Sponsored—23.5%
Federal Home Loan Bank, Mtg.-Backed Obligations, Series 5G-2012, Cl. 1, 4.97%, 2/24/12		583,063		606,821

	Principal
	Amount		Value
FHLMC/FNMA/FHLB/Sponsored Continued
Federal Home Loan Mortgage Corp.:
5.50%, 9/1/39	$	1,488,892	$	1,561,398
7%, 10/1/37		2,127,351		2,321,160
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 2006-11, Cl. PS, 23.719%, 3/25/363		279,764		374,303
Series 2426, Cl. BG, 6%, 3/15/17		580,844		624,316
Series 2427, Cl. ZM, 6.50%, 3/15/32		622,523		669,903
Series 2626, Cl. TB, 5%, 6/1/33		805,000		853,657
Series 2638, Cl. KG, 4%, 11/1/27		1,000,000		1,029,332
Series 2648, Cl. JE, 3%, 2/1/30		710,180		709,277
Series 2663, Cl. BA, 4%, 8/1/16		771,962		793,010
Series 2676, Cl. KB, 5%, 2/1/20		270,367		278,388
Series 2686, Cl. CD, 4.50%, 2/1/17		496,188		511,092
Series 2907, Cl. GC, 5%, 6/1/27		186,387		193,923
Series 2929, Cl. PC, 5%, 1/1/28		170,000		177,181
Series 2952, Cl. GJ, 4.50%, 12/1/28		100,691		103,507
Series 3019, Cl. MD, 4.75%, 1/1/31		472,722		491,630
Series 3025, Cl. SJ, 23.895%, 8/15/353		87,291		109,743
Series 3094, Cl. HS, 23.529%, 6/15/343		169,223		219,208
Series 3157, Cl. MC, 5.50%, 2/1/26		698,841		714,406
Series 3279, Cl. PH, 6%, 2/1/27		675,000		697,181
Series 3291, Cl. NA, 5.50%, 10/1/27		125,705		130,366
Series 3306, Cl. PA, 5.50%, 10/1/275		213,080		220,498
Series R001, Cl. AE, 4.375%, 4/1/15		153,928		157,945
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 176, Cl. IO, 14.56%, 6/1/266		146,195		32,706
Series 183, Cl. IO, 10.863%, 4/1/276		227,567		50,856
Series 184, Cl. IO, 18.537%, 12/1/266		250,964		55,709
Series 192, Cl. IO, 8.551%, 2/1/286		65,995		15,559
Series 2130, Cl. SC, 52.029%, 3/15/296		182,362		27,010
Series 224, Cl. IO, 0%, 3/1/336,7		374,527		83,129
Series 243, Cl. 6, 0%, 12/15/326,7		229,289		47,074
Series 2527, Cl. SG, 26.607%, 2/15/326		120,136		7,117
Series 2531, Cl. ST, 42.803%, 2/15/306		1,483,486		96,608
Series 2796, Cl. SD, 66.214%, 7/15/266		257,810		32,802
Series 2802, Cl. AS, 99.999%, 4/15/336		307,503		27,308
Series 2920, Cl. S, 78.194%, 1/15/356		1,470,342		171,178
Series 3000, Cl. SE, 99.999%, 7/15/256		1,331,239		124,242
Series 3045, Cl. DI, 40.74%, 10/15/356		1,199,158		142,362
Series 3110, Cl. SL, 99.999%, 2/15/266		206,137		18,332
Series 3146, Cl. SA, 49.975%, 4/15/366		1,425,942		218,664
Series 3399, Cl. SC, 19.734%, 12/15/376		1,044,911		114,626
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security, Series 176, Cl. PO, 4.474%, 6/1/268		64,339		52,584
Federal National Mortgage Assn.:
4.50%, 1/1/25-1/1/409		3,617,000		3,656,273
5%, 1/1/25-1/1/409		8,853,000		9,115,282
5.50%, 9/25/20		14,850		15,815
5.50%, 1/1/25-1/1/409		7,133,000		7,470,971
6%, 3/1/37		1,401,273		1,488,633
6%, 1/1/25-1/1/409		8,023,000		8,527,238
6.50%, 1/1/409		1,780,000		1,906,547
7%, 11/1/175		294,839		315,253
7.50%, 1/1/33		255,436		288,195
8.50%, 7/1/32		12,622		14,132
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Trust 1998-61, Cl. PL, 6%, 11/25/28		205,836		221,210
Trust 2004-101, Cl. BG, 5%, 1/25/20		1,000,000		1,061,358
Trust 2004-81, Cl. KC, 4.50%, 4/1/17		715,407		736,195
Trust 2005-104, Cl. MC, 5.50%, 12/25/25		700,000		739,672
Trust 2005-12, Cl. JC, 5%, 6/1/28		474,055		494,286
Trust 2005-22, Cl. EC, 5%, 10/1/28		170,000		177,515
Trust 2005-30, Cl. CU, 5%, 4/1/29		177,697		185,807
Trust 2005-57, Cl. PA, 5.50%, 5/1/27		364,138		368,334
Trust 2005-69, Cl. LE, 5.50%, 11/1/33		567,347		598,205
Trust 2006-46, Cl. SW, 23.351%, 6/25/363		208,596		276,226
Trust 2006-57, Cl. PA, 5.50%, 8/25/27		474,596		488,683
Trust 2009-37, Cl. HA, 4%, 4/1/19		832,166		862,157
Trust 2009-70, Cl. PA, 5%, 8/1/35		867,103		916,321
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-65, Cl. S, 45.005%, 11/25/316		599,206		94,102
Trust 2001-81, Cl. S, 36.86%, 1/25/326		137,579		21,324
Trust 2002-47, Cl. NS, 34.133%, 4/25/326		303,533		41,859
Trust 2002-51, Cl. S, 34.441%, 8/25/326		278,715		38,011
Trust 2002-52, Cl. SD, 41.084%, 9/25/326		331,085		45,068
Trust 2002-77, Cl. SH, 44.552%, 12/18/326		188,950		29,335
Trust 2002-84, Cl. SA, 46.329%, 12/25/326		534,541		69,738
Trust 2002-9, Cl. MS, 35.508%, 3/25/326		207,207		27,737
Trust 2003-33, Cl. SP, 56.243%, 5/25/336		617,100		87,120
Trust 2003-4, Cl. S, 44.252%, 2/25/336		354,454		50,581
Trust 2003-46, Cl. IH, 0%, 6/1/336,7		2,023,281		304,530
Trust 2003-89, Cl. XS, 60.423%, 11/25/326		292,556		36,326
Trust 2004-54, Cl. DS, 51.449%, 11/25/306		276,610		31,215
Trust 2005-14, Cl. SE, 43.129%, 3/25/356		219,879		24,588
Trust 2005-40, Cl. SA, 74.116%, 5/25/356		809,651		94,958
Trust 2005-6, Cl. SE, 85.79%, 2/25/356		1,089,463		120,666
Trust 2005-71, Cl. SA, 72.228%, 8/25/256		869,296		103,270
Trust 2005-87, Cl. SE, 44.143%, 10/25/356		1,023,347		116,218
Trust 2005-87, Cl. SG, 35.207%, 10/25/356		46,516		6,286
Trust 2006-60, Cl. DI, 40.539%, 4/25/356		140,544		17,419
Trust 2007-88, Cl. XI, 25.543%, 6/25/376		4,033,056		454,484
Trust 222, Cl. 2, 16.05%, 6/1/236		491,879		96,253
Trust 233, Cl. 2, 22.983%, 8/1/236		435,855		104,157
Trust 240, Cl. 2, 23.279%, 9/1/236		820,885		183,288
Trust 252, Cl. 2, 23.374%, 11/1/236		397,375		94,307
Trust 273, Cl. 2, 15.757%, 8/1/266		109,805		24,885
Trust 319, Cl. 2, 4.666%, 2/1/326		138,411		31,757
Trust 331, Cl. 9, 9.073%, 2/1/336		403,912		86,993
Trust 334, Cl. 17, 16.086%, 2/1/336		231,533		44,706

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
FHLMC/FNMA/FHLB/Sponsored Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Continued
Trust 339, Cl. 12, 0%, 7/1/336,7	$	402,150	$	75,631
Trust 339, Cl. 7, 0%, 7/1/336,7		1,439,957		234,567
Trust 343, Cl. 13, 8.301%, 9/1/336		350,612		58,790
Trust 345, Cl. 9, 2.695%, 1/1/346		586,687		105,364
Trust 351, Cl. 10, 1.924%, 4/1/346		57,043		11,006
Trust 351, Cl. 8, 2.248%, 4/1/346		176,893		34,099
Trust 356, Cl. 10, 0.169%, 6/1/356		146,330		27,644
Trust 356, Cl. 12, 0%, 2/1/356,7		78,187		14,652
Trust 362, Cl. 12, 0%, 8/1/356,7		946,130		181,151
Trust 362, Cl. 13, 0%, 8/1/356,7		520,060		99,653
Trust 364, Cl. 16, 0%, 9/1/356,7		411,302		69,332
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 1993-184, Cl. M, 5.28%, 9/25/238		179,542		140,183
				58,323,672
GNMA/Guaranteed—1.5%
Government National Mortgage Assn.:
4.50%, 1/1/409		3,340,000		3,343,133
8%, 4/15/23		78,859		90,578
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 2001-21, Cl. SB, 80.641%, 1/16/276		295,273		42,046
Series 2002-15, Cl. SM, 70.84%, 2/16/326		346,699		43,070
Series 2002-76, Cl. SY, 77.048%, 12/16/266		778,618		121,791
Series 2004-11, Cl. SM, 58.679%, 1/17/306		252,343		41,656
				3,682,274
Non-Agency—3.8%
Commerical—2.4%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2006-1, Cl. AM, 5.421%, 9/1/45		1,800,000		1,424,778
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates: Series 2008-C7, Cl. AM, 6.092%, 12/1/493		780,000		591,153
Deutsche Alt-A Securities, Inc., Mtg. Pass-Through Certificates, Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36		359,931		198,295
First Horizon Alternative Mortgage Securities Trust 2004-FA2, Mtg. Pass-Through Certificates, Series 2004-FA2, Cl. 3A1, 6%, 1/25/35		307,183		285,890
First Horizon Alternative Mortgage Securities Trust 2007-FA2, Mtg. Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37		312,188		221,879
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2005-C4, Cl. AM, 5.334%, 11/1/453		355,000		290,440
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations, Series 2001-LIBA, Cl. B, 6.733%, 2/10/164		290,000		307,185
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2005-LDP4, Cl. AM, 4.999%, 10/1/42		485,000		409,772
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		235,000		227,417
Series 2007-LD11, Cl. A2, 5.803%, 6/15/493		270,000		277,501
JPMorgan Mortgage Trust 2007-S3, Mtg. Pass-Through Certificates, Series 2007-S3, Cl. 1A90, 7%, 7/1/37		437,140		339,752
LB-UBS Commercial Mortgage Trust 2007-C1, Commercial Mtg. Pass-Through Certificates, Series 2007-C1, Cl. A2, 5.318%, 1/15/12		500,000		509,471
Mastr Adjustable Rate Mortgages Trust 2004-13, Mtg. Pass-Through Certificates, Series 2004-13, Cl. 2 A2, 3.023%, 4/1/343		283,891		269,142
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		613,780		527,969
				5,880,644
Multifamily—0.5%
Wells Fargo Mortgage-Backed Securities 2004-AA Trust, Mtg. Pass-Through Certificates, Series 2004-AA, Cl. 2A, 4.979%, 12/25/343		288,631		279,358
Wells Fargo Mortgage-Backed Securities 2004-S Trust, Mtg. Pass-Through Certificates, Series 2004-S, Cl. A1, 3.105%, 9/25/343		252,134		233,385
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 5A1, 5.589%, 7/1/363		387,350		302,062
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.096%, 3/25/363		713,431		578,468
				1,393,273

	Principal
	Amount		Value
Residential—0.9%
Banc of America Mortgage Securities, Inc., Mtg. Pass-Through Certificates, Series 2004-E, Cl. 2A6, 4.158%, 6/1/343	$	175,000	$	147,856
CHL Mortgage Pass-Through Trust 2006-6, Mtg. Pass-Through Certificates, Series 2006-6, Cl. A3, 6%, 4/1/36		390,017		333,702
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates: Series 2008-C7, Cl. A4, 6.092%, 12/1/493		300,000		270,128
Countrywide Alternative Loan Trust 2005-29CB, Mtg. Pass-Through Certificates, Series 2005-29CB, Cl. A4, 5%, 7/1/35		922,108		699,194
GSR Mortgage Loan Trust 2006-5F, Mtg. Pass-Through Certificates, Series 2006-5F, Cl. 2A1, 6%, 6/1/36		400,166		347,216
RALI Series 2003-QS1 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2003-QS1, Cl. A2, 5.75%, 1/25/33		200,576		199,043
RALI Series 2006-QS13 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		137,962		125,659
Wells Fargo Mortgage-Backed Securities 2004-R Trust, Mtg. Pass-Through Certificates, Series 2004-R, Cl. 2A1, 3.003%, 9/1/343		121,986		115,699
				2,238,497
Total Mortgage-Backed Obligations (Cost $71,280,986)				71,518,360
U.S. Government Obligations—0.6%
Federal Home Loan Mortgage Corp. Nts., 2.50%, 4/23/14		765,000		765,328
Federal National Mortgage Assn. Nts., 3%, 9/16/14		595,000		603,200
Total U.S. Government Obligations (Cost $1,362,160)				1,368,528
Non-Convertible Corporate Bonds and Notes—12.5%
Consumer Discretionary—1.5%
Automobiles—0.3%
Daimler Finance North America LLC, 6.50% Sr. Unsec. Unsub. Nts., 11/15/13		235,000		257,836
Ford Motor Credit Co. LLC, 9.75% Sr. Unsec. Nts., 9/15/10		465,000		479,890
				737,726
Hotels, Restaurants & Leisure—0.1%
Hyatt Hotels Corp., 5.75% Sr. Unsec. Unsub. Nts., 8/15/154		242,000		243,740
Household Durables—0.1%
Fortune Brands, Inc., 3% Sr. Unsec. Unsub. Bonds, 6/1/12		252,000		249,903
Leisure Equipment & Products—0.1%
Mattel, Inc., 6.125% Sr. Unsec. Nts., 6/15/11		230,000		242,584
Media—0.7%
CBS Corp., 8.875% Sr. Unsec. Nts., 5/15/19		222,000		266,024
Comcast Cable Communications Holdings, Inc., 9.455% Sr. Unsec. Nts., 11/15/22		115,000		148,206
DirecTV Holdings LLC/DirecTV Financing Co., Inc.:
5.875% Sr. Unsec. Unsub. Nts., 10/1/194		200,000		203,794
7.625% Sr. Unsec. Unsub. Nts., 5/15/162		182,000		199,089
DISH DBS Corp., 7.875% Sr. Unsec. Nts., 9/1/19		205,000		216,019
Grupo Televisa SA, 6.625% Sr. Unsec. Bonds, 1/15/404		200,000		198,785
Time Warner Cos., Inc., 9.125% Debs., 1/15/13		165,000		191,584
Time Warner Entertainment Co. LP, 8.375% Sr. Nts., 7/15/33		130,000		155,846
Viacom, Inc., 7.875% Sr. Unsec. Debs., 7/30/30		140,000		151,393
				1,730,740
Specialty Retail—0.2%
Home Depot, Inc. (The), 5.875% Sr. Unsec. Unsub. Nts., 12/16/36		212,000		205,312
Staples, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/1/11		350,000		376,226
				581,538
Consumer Staples—0.7%
Beverages—0.3%
Anheuser-Busch InBev Worldwide, Inc., 7.75% Sr. Unsec. Unsub. Nts., 1/15/194		374,000		438,610
Constellation Brands, Inc., 8.375% Sr. Nts., 12/15/142		220,000		235,400
				674,010
Food & Staples Retailing—0.0%
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31		95,000		121,955
Food Products—0.2%
Bunge Ltd. Finance Corp.:
5.35% Sr. Unsec. Unsub. Nts., 4/15/14		25,000		25,581
8.50% Sr. Unsec. Nts., 6/15/19		175,000		199,816

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Food Products Continued
Heinz (H.J.) Finance Co., 7.125% Sr. Unsec. Nts., 8/1/394	$	175,000	$	198,498
Sara Lee Corp., 6.25% Sr. Unsec. Unsub. Nts., 9/15/11		165,000		176,109
				600,004
Tobacco—0.2%
Altria Group, Inc., 9.70% Sr. Unsec. Nts., 11/10/18		405,000		501,430
Energy—1.7%
Energy Equipment & Services—0.2%
Pride International, Inc., 8.50% Sr. Nts., 6/15/19		275,000		319,000
Weatherford International Ltd., 6.50% Sr. Unsec. Bonds, 8/1/36		165,000		158,064
Weatherford International, Inc., 6.625% Sr. Unsec. Unsub. Nts., Series B, 11/15/11		42,000		44,962
				522,026
Oil, Gas & Consumable Fuels—1.5%
Anadarko Petroleum Corp., 6.45% Sr. Unsec. Nts., 9/15/36		203,000		212,695
Chesapeake Energy Corp., 6.875% Sr. Unsec. Nts., 1/15/16		220,000		221,100
DCP Midstream LLC, 6.75% Sr. Unsec. Nts., 9/15/374		37,000		36,693
Duke Energy Field Services LLC, 7.875% Unsec. Nts., 8/16/10		220,000		228,752
El Paso Corp., 8.25% Sr. Unsec. Nts., 2/15/16		250,000		268,125
Energy Transfer Partners LP, 7.50% Sr. Unsec. Unsub. Bonds, 7/1/38		94,000		103,313
Enterprise Products Operating LLP, 7.50% Sr. Unsec. Unsub. Nts., 2/1/11		195,000		206,670
Kaneb Pipe Line Operating Partnership LP, 5.875% Sr. Unsec. Nts., 6/1/13		440,000		455,663
Kerr-McGee Corp., 6.875% Sr. Unsec. Unsub. Nts., 9/15/11		173,000		186,073
Kinder Morgan Energy Partners LP, 9% Sr. Unsec. Nts., 2/1/19		207,000		255,128
Nexen, Inc., 6.40% Sr. Unsec. Unsub. Bonds, 5/15/37		235,000		237,531
Peabody Energy Corp., 6.875% Sr. Unsec. Nts., Series B, 3/15/13		235,000		238,819
Pipeline Funding Co. LLC, 7.50% Sr. Sec. Nts., 1/15/304		168,000		159,255
Plains All American Pipeline LP, 6.50% Sr. Unsec. Unsub. Nts., 5/1/18		272,000		291,343
Ras Laffan Liquefied Natural Gas Co. Ltd. III, 5.50% Sr. Sec. Nts., 9/30/144		140,000		147,370
Williams Cos., Inc. (The), 8.75% Unsec. Nts., 3/15/32		140,000		167,984
Woodside Finance Ltd., 4.50% Nts., 11/10/144		205,000		207,051
				3,623,565
Financials—3.7%
Capital Markets—0.6%
Blackstone Holdings Finance Co. LLC, 6.625% Sr. Unsec. Nts., 8/15/194		367,000		359,837
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34		440,000		413,179
Morgan Stanley:
5.55% Sr. Unsec. Unsub. Nts., Series F, 4/27/17		100,000		100,592
7.30% Sr. Unsec. Nts., 5/13/19		608,000		683,920
				1,557,528
Commercial Banks—0.9%
Barclays Bank plc, 6.278% Perpetual Bonds2,10		540,000		402,300
City National Capital Trust I, 9.625% Jr. Sub. Bonds, 2/1/40		250,000		266,208
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/353		390,000		323,700
PNC Funding Corp., 5.25% Gtd. Unsec. Sub. Nts., 11/15/15		270,000		278,007
Wachovia Corp., 5.625% Sub. Nts., 10/15/16		90,000		92,153
Wells Fargo & Co., 7.98% Jr. Sub. Perpetual Bonds, Series K10		770,000		775,775
				2,138,143
Consumer Finance—0.2%
Capital One Capital IV, 8.875% Jr. Sub. Nts., 5/15/40		420,000		450,450
Diversified Financial Services—1.1%
Citigroup, Inc., 8.125% Sr. Unsec. Nts., 7/15/39		620,000		701,873
JPMorgan Chase & Co., 7.90% Perpetual Bonds, Series 110		895,000		926,176
Merrill Lynch & Co., Inc., 7.75% Jr. Sub. Bonds, 5/14/38		900,000		991,862
				2,619,911
Insurance—0.7%
AXA SA, 6.379% Sub. Perpetual Bonds4,10		335,000		271,350
Hartford Financial Services Group, Inc. (The):
5.375% Sr. Unsec. Nts., 3/15/17		220,000		210,025
6% Sr. Unsec. Nts., 1/15/19		275,000		268,248
Lincoln National Corp.:
7% Jr. Sub. Bonds, 5/17/663		315,000		264,600
8.75% Sr. Unsec. Nts., 7/1/19		142,000		162,518

	Principal
	Amount		Value
Insurance Continued
Marsh & McLennan Cos., Inc., 5.15% Sr. Unsec. Nts., 9/15/10	$	235,000	$	240,953
Principal Life Global Funding I, 4.40% Sr. Sec. Nts., 10/1/104		232,000		236,755
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/234		185,000		198,448
				1,852,897
Real Estate Investment Trusts—0.2%
Simon Property Group LP, 5.375% Sr. Unsec. Unsub. Nts., 6/1/11		230,000		238,836
WEA Finance LLC/WT Finance Aust Pty Ltd., 5.75% Nts., 9/2/154		250,000		263,928
				502,764
Health Care—0.5%
Health Care Equipment & Supplies—0.2%
Boston Scientific Corp., 6% Sr. Unsec. Unsub. Nts., 1/15/20		379,000		387,980
Health Care Providers & Services—0.1%
WellPoint, Inc., 5% Sr. Unsec. Unsub. Nts., 1/15/11		220,000		227,528
Life Sciences Tools & Services—0.1%
Fisher Scientific International, Inc., 6.125% Sr. Unsec. Sub. Nts., 7/1/15		367,000		378,515
Pharmaceuticals—0.1%
Watson Pharmaceuticals, Inc., 6.125% Sr. Unsec. Nts., 8/15/19		240,000		248,079
Industrials—1.2%
Aerospace & Defense—0.4%
BAE Systems Holdings, Inc., 6.375% Nts., 6/1/194		230,000		247,845
L-3 Communications Corp., 5.875% Sr. Sub. Nts., 1/15/15		250,000		250,938
Meccanica Holdings USA, Inc.:
6.25% Sr. Unsec. Unsub. Nts., 7/15/194		130,000		138,961
6.25% Sr. Nts., 1/15/404		70,000		70,320
7.375% Sr. Unsec. Unsub. Nts., 7/15/394		220,000		247,782
				955,846
Commercial Services & Supplies—0.1%
Browning-Ferris Industries, Inc., 7.40% Sr. Unsec. Debs., 9/15/35		150,000		166,008
Republic Services, Inc., 6.75% Sr. Unsec. Unsub. Nts., 8/15/11		195,000		205,785
				371,793
Electrical Equipment—0.1%
Roper Industries, Inc., 6.25% Sr. Nts., 9/1/19		248,000		258,652
Industrial Conglomerates—0.3%
General Electric Capital Corp., 5.875% Unsec. Unsub. Nts., 1/14/38		180,000		167,207
Tyco International Ltd./Tyco International Finance SA, 6.875% Sr. Unsec. Unsub. Nts., 1/15/21		430,000		483,390
				650,597
Machinery—0.1%
SPX Corp., 7.625% Sr. Unsec. Nts., 12/15/14		265,000		274,275
Road & Rail—0.2%
CSX Corp., 7.375% Sr. Unsec. Nts., 2/1/19		355,000		406,244
Information Technology—0.3%
Electronic Equipment & Instruments—0.2%
Agilent Technologies, Inc., 5.50% Sr. Unsec. Unsub. Nts., 9/14/15		391,000		410,347
Software—0.1%
CA, Inc., 5.375% Sr. Unsec. Unsub. Nts., 12/1/19		295,000		297,220
Materials—1.0%
Chemicals—0.3%
Airgas, Inc., 4.50% Sr. Unsec. Unsub. Nts., 9/15/14		126,000		128,043
Terra Capital, Inc., 7.75% Sr. Nts., 11/1/194		320,000		344,000
Yara International ASA, 7.875% Nts., 6/11/194		209,000		239,037
				711,080
Containers & Packaging—0.1%
Ball Corp., 7.125% Sr. Unsec. Nts., 9/1/16		250,000		257,500
Metals & Mining—0.6%
Freeport-McMoRan Copper & Gold, Inc., 8.25% Sr. Unsec. Nts., 4/1/15		373,000		407,005
Teck Resources Ltd., 9.75% Sr. Sec. Nts., 5/15/14		275,000		318,656
Vale Overseas Ltd., 6.875% Sr. Unsec. Nts., 11/10/39		250,000		252,931
Xstrata Canada Corp.:5.375% Sr. Unsec. Unsub. Nts., 6/1/15		75,000		77,720
6% Sr. Unsec. Unsub. Nts., 10/15/15		132,000		141,144
Xstrata Finance Canada Ltd., 6.90% Nts., 11/15/374		233,000		238,343
				1,435,799
Telecommunication Services—1.1%
Diversified Telecommunication Services—1.0%
AT&T, Inc., 6.30% Sr. Unsec. Bonds, 1/15/38		280,000		285,346
British Telecommunications plc, 9.625% Bonds, 12/15/30		151,000		192,899
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		235,000		236,763

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Diversified Telecommunication Services Continued
Deutsche Telekom International Finance BV, 8.50% Unsub. Nts., 6/15/103	$	167,000	$	172,601
Embarq Corp., 6.738% Sr. Unsec. Nts., 6/1/13		223,000		242,471
Telecom Italia Capital SA, 4.875% Sr. Unsec. Unsub. Nts., 10/1/10		345,000		353,171
Telefonica Europe BV, 7.75% Unsec. Nts., 9/15/10		165,000		172,638
Telus Corp., 8% Nts., 6/1/11		265,000		286,986
Verizon Communications, Inc., 6.40% Sr. Unsec. Nts., 2/15/38		180,000		188,800
Windstream Corp., 8.625% Sr. Unsec. Unsub. Nts., 8/1/16		280,000		286,300
				2,417,975
Wireless Telecommunication Services—0.1%
American Tower Corp., 7% Sr. Unsec. Nts., 10/15/17		185,000		205,813
Rogers Wireless, Inc., 9.625% Sr. Sec. Nts., 5/1/11		92,000		100,980
				306,793
Utilities—0.8%
Electric Utilities—0.1%
Allegheny Energy Supply Co. LLC, 8.25% Bonds, 4/15/124		180,000		197,036
Exelon Corp., 5.625% Sr. Unsec. Bonds, 6/15/35		170,000		154,222
				351,258
Energy Traders—0.3%
Constellation Energy Group, Inc., 7.60% Unsec. Nts., 4/1/32		240,000		261,348
NRG Energy, Inc., 7.375% Sr. Nts., 2/1/16		235,000		235,881
Oncor Electric Delivery Co., 6.375% Sr. Sec. Nts., 1/15/15		303,000		330,881
				828,110
Multi-Utilities—0.4%
CMS Energy Corp., 6.55% Sr. Unsec. Unsub. Nts., 7/17/17		275,000		272,954
NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10		225,000		235,931
Sempra Energy:
6.50% Sr. Unsec. Nts., 6/1/16		100,000		108,594
9.80% Sr. Unsec. Nts., 2/15/19		200,000		250,020
				867,499
Total Non-Convertible Corporate Bonds and Notes (Cost $29,363,403)				30,994,004

	Shares
Investment Companies—12.3%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%11,12		326,558			326,558
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%11,13		30,151,515			30,151,515
Total Investment Companies (Cost $30,478,073)					30,478,073
Total Investments, at Value (Cost $272,681,099)		113.7	%		282,498,175
Liabilities in Excess of Other Assets		(13.7	)		(33,954,865	)
Net Assets		100.0	%	$	248,543,310

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $1,188,560, which represents 0.48% of the Fund’s net assets. See Note 6 of accompanying.
3.	Represents the current interest rate for a variable or increasing rate security.
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 $6,234,645 or 2.51% of the Fund’s net assets as of December 31, 2009.
5.	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 $535,751. See Note 5 of accompanying Notes.
6.	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 $4,906,915 or 1.97% of the Fund’s net assets as of December 31, 2009.
7.	The current amortization rate of the security’s cost basis exceeds the future interest payments currently estimated to be received. Both the amortization rate and interest payments are contingent on future mortgage pre-payment speeds and are therefore subject to change.
8.	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 $192,767 or 0.08% of the Fund’s net assets as of December 31, 2009.
9.	When-issued security or delayed delivery to be delivered and settled after December 31, 2009. 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.	Rate shown is the 7-day yield as of December 31, 2009.
12.	Interest rate is less than 0.0005%.
13.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
Oppenheimer Institutional Money Market Fund, Cl. E		8,646,429		210,207,912		188,702,826		30,151,515

	Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E	$	30,151,515	$	198,336

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)
2)	Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)
3)	Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

							Level 3—
	Level 1—			Level 2—			Significant
	Unadjusted			Other Significant			Unobservable
	Quoted Prices			Observable Inputs			Inputs		Value
Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	10,015,972		$	—		$	—	$	10,015,972
Consumer Staples		15,350,049			—			—		15,350,049
Energy		13,238,804			—			—		13,238,804
Financials		15,707,981			—			—		15,707,981
Health Care		14,388,321			—			—		14,388,321
Industrials		11,184,602			—			—		11,184,602
Information Technology		43,892,423			—			—		43,892,423
Materials		4,420,620			—			—		4,420,620
Telecommunication Services		50			—			—		50
Utilities		1,408,590			—			—		1,408,590
Preferred Stocks		9,006,588			—			—		9,006,588
Rights, Warrants and Certificates		1			—			—		1
Asset-Backed Securities		—			9,525,209			—		9,525,209
Mortgage-Backed Obligations		—			71,518,360			—		71,518,360
U.S. Government Obligations		—			1,368,528			—		1,368,528
Non-Convertible Corporate Bonds and Notes		—			30,994,004			—		30,994,004
Investment Companies		30,478,073			—			—		30,478,073
Total Investments, at Value		169,092,074			113,406,101			—		282,498,175
Other Financial Instruments:
Futures margins		15,620			—			—		15,620
Total Assets	$	169,107,694		$	113,406,101		$	—	$	282,513,795
Liabilities Table
Other Financial Instruments:
Depreciated swaps, at value	$	—		$	(35,332	)	$	—	$	(35,332	)
Futures margins		(54,918	)		—			—		(54,918	)
Total Liabilities	$	(54,918	)	$	(35,332	)	$	—	$	(90,250	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

Futures Contracts as of December 31, 2009 are as follows:

								Unrealized
		Number of		Expiration				Appreciation
Contract Description	Buy/Sell	Contracts		Date		Value		(Depreciation)
U.S. Long Bonds	Buy		51		3/22/10	$	5,884,125	$	(229,304	)
U.S. Treasury Nts., 2 yr.	Sell		32		3/31/10		6,920,500		41,212
U.S. Treasury Nts., 5 yr.	Sell		33		3/31/10		3,774,633		66,472
U.S. Treasury Nts., 10 yr.	Buy		79		3/22/10		9,120,797		(207,374	)
								$	(328,994	)

Credit Default Swap Contracts as of December 31, 2009 are as follows:

	Buy/Sell	Notional		Pay/
Reference Entity/	Credit	Amount		Receive			Termination					Unrealized
Swap Counterparty	Protection	(000’s)		Fixed Rate			Date		Value			Depreciation
Vale Inco Ltd.:
Morgan Stanley Capital Services, Inc.	Buy	$	545		0.70	%		3/20/17	$	(14,286	)	$	14,286
Morgan Stanley Capital Services, Inc.	Buy		550		0.63			3/20/17		(11,903	)		11,903
	Total		1,095							(26,189	)		26,189
Vale Overseas:
Morgan Stanley Capital Services, Inc.	Sell		545		1.17			3/20/17		(3,327	)		3,327
Morgan Stanley Capital Services, Inc.	Sell		550		1.10			3/20/17		(5,816	)		5,816
	Total		1,095							(9,143	)		9,143
Grand Total Buys										(26,189	)		26,189
Grand Total Sells										(9,143	)		9,143
Total Credit Default Swaps									$	(35,332	)	$	35,332

The table that follows shows the undiscounted maximum potential payment by the Fund related to selling credit protection in credit default swaps:

	Total Maximum Potential
Type of Reference Asset on which the Fund Sold	Payments for Selling Credit				Reference Asset
Protection	Protection (Undiscounted)		Amount Recoverable*		Rating Range**
Investment Grade Single Name Corporate Debt		$1,095,000		$—	BBB+

*	The Fund has no amounts recoverable from related purchased 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 period end reference asset security ratings, 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 credit event on the reference asset which would result in a related payment by the Fund.

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, 2009 is as follows:

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)		Value
Morgan Stanley Capital Services, Inc.:
	Credit Default Buy Protection	$	1,095	$	(26,189	)
	Credit Default Sell Protection		1,095		(9,143	)
				$	(35,332	)

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $242,529,584)	$	252,346,660
Affiliated companies (cost $30,151,515)		30,151,515
		282,498,175
Receivables and other assets:
Interest, dividends and principal paydowns		951,368
Futures margins		15,620
Other		13,752
Total assets		283,478,915
Liabilities
Depreciated swaps, at value		35,332
Payables and other liabilities:
Investments purchased on a when-issued or delayed delivery basis		34,401,962
Shares of beneficial interest redeemed		202,080
Futures margins		54,918
Distribution and service plan fees		53,777
Shareholder communications		33,382
Transfer and shareholder servicing agent fees		21,011
Trustees’ compensation		10,445
Other		122,698
Total liabilities		34,935,605
Net Assets	$	248,543,310
Composition of Net Assets
Par value of shares of beneficial interest	$	24,227
Additional paid-in capital		325,929,669
Accumulated net investment income		3,221,774
Accumulated net realized loss on investments and foreign currency transactions		(90,086,927	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		9,454,567
Net Assets	$	248,543,310
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 $159,796,672 and 15,515,263 shares of beneficial interest outstanding)	$	10.30
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $88,746,638 and 8,711,297 shares of beneficial interest outstanding)	$	10.19

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Interest (net of foreign withholding taxes of $189)	$	5,013,737
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $24,474)		2,568,963
Affiliated companies		198,336
Total investment income		7,781,036
Expenses
Management fees		1,759,787
Distribution and service plan fees—Service shares		191,645
Transfer and shareholder servicing agent fees:
Non-Service shares		111,060
Service shares		58,479
Shareholder communications:
Non-Service shares		73,071
Service shares		36,168
Trustees’ compensation		11,864
Custodian fees and expenses		4,250
Other		59,854
Total expenses		2,306,178
Less waivers and reimbursements of expenses		(695,204	)
Net expenses		1,610,974
Net Investment Income		6,170,062
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies		(25,783,290	)
Closing and expiration of option contracts written		279,815
Closing and expiration of futures contracts		50,329
Foreign currency transactions		(600,318	)
Short positions		3,103
Swap contracts		(4,840,574	)
Net realized loss		(30,890,935	)
Net change in unrealized appreciation (depreciation) on:
Investments		72,372,135
Translation of assets and liabilities denominated in foreign currencies		28,995
Futures contracts		(1,275,692	)
Swap contracts		(482,719	)
Net change in unrealized appreciation		70,642,719
Net Increase in Net Assets Resulting from Operations	$	45,921,846

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	6,170,062		$	12,177,619
Net realized loss		(30,890,935	)		(85,153,827	)
Net change in unrealized appreciation (depreciation)		70,642,719			(121,531,304	)
Net increase (decrease) in net assets resulting from operations		45,921,846			(194,507,512	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		—			(8,878,080	)
Service shares		—			(2,607,795	)
		—			(11,485,875	)
Distributions from net realized gain:
Non-Service shares		—			(21,412,945	)
Service shares		—			(7,011,379	)
		—			(28,424,324	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(40,306,895	)		(42,030,701	)
Service shares		4,509,086			7,520,395
		(35,797,809	)		(34,510,306	)
Net Assets
Total increase (decrease)		10,124,037			(268,928,017	)
Beginning of period		238,419,273			507,347,290
End of period (including accumulated net investment income of $3,221,774 and $657,969, respectively)	$	248,543,310		$	238,419,273

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	8.45		$	16.41		$	17.69		$	17.07		$	17.35
Income (loss) from investment operations:
Net investment income1		.25			.41			.43			.40			.33
Net realized and unrealized gain (loss)		1.60			(7.03	)		.19			1.38			.31
Total from investment operations		1.85			(6.62	)		.62			1.78			.64
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.39	)		(.46	)		(.36	)		(.30	)
Distributions from net realized gain		—			(.95	)		(1.44	)		(.80	)		(.62	)
Total dividends and/or distributions to shareholders		—			(1.34	)		(1.90	)		(1.16	)		(.92	)
Net asset value, end of period	$	10.30		$	8.45		$	16.41		$	17.69		$	17.07
Total Return, at Net Asset Value2		21.89	%		(43.47	)%		3.79	%		11.15	%		3.89	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	159,797		$	169,621		$	385,948		$	435,639		$	503,753
Average net assets (in thousands)	$	159,013		$	295,669		$	418,103		$	456,513		$	522,754
Ratios to average net assets:3
Net investment income		2.71	%		3.14	%		2.55	%		2.42	%		1.98	%
Total expenses		0.89	%4		0.76	%4		0.75	%4		0.75	%4		0.74	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.60	%		0.67	%		0.73	%		0.75	%		0.74	%
Portfolio turnover rate5		87	%		67	%		68	%		76	%		67	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.91	%
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, 2009	$	504,698,365	$	520,212,670
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

See accompanying Notes to Financial Statements.

Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	8.38		$	16.28		$	17.57		$	16.97		$	17.26
Income (loss) from investment operations:
Net investment income1		.22			.37			.38			.36			.29
Net realized and unrealized gain (loss)		1.59			(6.97	)		.19			1.37			.31
Total from investment operations		1.81			(6.60	)		.57			1.73			.60
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.35	)		(.42	)		(.33	)		(.27	)
Distributions from net realized gain		—			(.95	)		(1.44	)		(.80	)		(.62	)
Total dividends and/or distributions to shareholders		—			(1.30	)		(1.86	)		(1.13	)		(.89	)
Net asset value, end of period	$	10.19		$	8.38		$	16.28		$	17.57		$	16.97
Total Return, at Net Asset Value2		21.60	%		(43.62	)%		3.49	%		10.86	%		3.67	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	88,746		$	68,798		$	121,399		$	111,363		$	88,156
Average net assets (in thousands)	$	77,101		$	100,164		$	117,012		$	100,010		$	72,977
Ratios to average net assets:3
Net investment income		2.42	%		2.90	%		2.30	%		2.17	%		1.74	%
Total expenses		1.15	%4		1.01	%4		1.00	%4		1.01	%4		1.00	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.85	%		0.92	%		0.98	%		1.01	%		1.00	%
Portfolio turnover rate5		87	%		67	%		68	%		76	%		67	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.17	%
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, 2009	$	504,698,365	$	520,212,670
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

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 high total investment return, which includes current income and 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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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, 2009, 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		$34,401,962

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.

     Forward roll transactions may be deemed to entail embedded leverage since the Fund purchases mortgage-related securities with extended settlement dates rather than paying for the securities under a normal settlement cycle. This embedded leverage increases the Fund’s market value of investments relative to its net assets which can incrementally increase the volatility of the Fund’s performance. Forward roll transactions can be replicated over multiple settlement periods.

     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; and 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, 2009, the Fund held no securities sold short.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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
					Appreciation
					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
$3,195,760	$	—	$	89,253,655	$	8,657,747

1. As of December 31, 2009, the Fund had $89,130,813 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, 2009, details of the capital loss carryforwards were as follows:

Expiring
2016	$	44,402,106
2017		44,728,707
Total	$	89,130,813

2.	The Fund had $2,354 of post-October foreign currency losses which were deferred.
3.	The Fund had $120,488 of straddle losses which were deferred.
4.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
5.	During the fiscal year ended December 31, 2008, 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

Reduction	Reduction to Accumulated		Reduction to Accumulated Net
to Paid-in Capital	Net Investment Income		Realized Loss on Investments
$119	$	3,606,257	$	3,606,376

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	—	$	16,601,502
Long-term capital gain		—		23,308,697
Total	$	—	$	39,910,199

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, 2009 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	$	273,842,246
Federal tax cost of other investments		4,274,456
Total federal tax cost	$	278,116,702
Gross unrealized appreciation	$	28,597,222
Gross unrealized depreciation		(19,939,475	)
Net unrealized appreciation	$	8,657,747

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.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

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, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		484,890		$	4,273,547			908,475		$	11,841,885
Dividends and/or distributions reinvested		—			—			2,214,256			30,291,025
Redeemed		(5,041,004	)		(44,580,442	)		(6,571,367	)		(84,163,611	)
Net decrease		(4,556,114	)	$	(40,306,895	)		(3,448,636	)	$	(42,030,701	)
Service Shares
Sold		1,886,160		$	16,689,571			1,716,888		$	19,475,736
Dividends and/or distributions reinvested		—			—			707,292			9,619,174
Redeemed		(1,382,728	)		(12,180,485	)		(1,673,753	)		(21,574,515	)
Net increase		503,432		$	4,509,086			750,427		$	7,520,395

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 IMMF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	160,194,512	$	202,254,963
U.S. government and government agency obligations		1,986,590		619,823
To Be Announced (TBA) mortgage-related securities		504,698,365		520,212,670

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. For the year ended December 31, 2009, the Fund paid $150,248 to OFS for services to the Fund.

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 daily 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 has 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 annual net assets for Non-Service shares and 0.92% of average annual net assets for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed $342,968 and $169,984 for Non-Service and Service shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

     Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.08% of the Fund’s average annual net assets. During the year ended December 31, 2009, the Manager waived $145,024. This voluntary waiver will be applied after all other waivers and may be withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived fees and/or reimbursed the Fund $37,228 for IMMF management fees.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments

The Fund’s investment objectives not only permit the Fund to purchase investment securities, they also allow the Fund to enter into various types of derivatives contracts, including, but not limited to, futures contracts, forward foreign currency exchange contracts, credit default swaps, interest rate swaps, total return swaps, and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase, decrease, or change the level or types of exposure to market risk factors. Central to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity and debt securities: they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Fund to pursue its objectives more quickly and efficiently than if it were to make direct purchases or sales of securities capable of effecting a similar response to market factors.

Market Risk Factors. In accordance with its investment objectives, the Fund may use derivatives to increase or decrease its exposure to one or more of the following market risk factors defined below:

Commodity Risk. Commodity risk relates to the change in value of commodities or commodity indexes as they relate to increases or decreases in the commodities market. Commodities are physical assets that have tangible properties. Examples of these types of assets are crude oil, heating oil, metals, livestock, and agricultural products.

Credit Risk. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds.

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Foreign Exchange Rate Risk. Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency.

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

Volatility Risk. Volatility risk refers to the magnitude of the movement, but not the direction of the movement, in a financial instrument’s price over a defined time period. Large increases or decreases in a financial instrument’s price over a relative time period typically indicate greater volatility risk, while small increases or decreases in its price typically indicate lower volatility risk.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

     Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Fund to increase its market value exposure relative to its net assets and can substantially increase the volatility of the Fund’s performance.

     Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Typically, the associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Counterparty Credit Risk. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction. To reduce this risk the Fund has entered into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) master agreements, which allow the Fund to net unrealized appreciation and depreciation for positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty. In addition, the Fund may require that certain counterparties post cash and/or securities in collateral accounts to cover their net payment obligations for those derivative contracts subject to ISDA master agreements. If the counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Fund.

     As of December 31, 2009 the Fund has not required certain counterparties to post collateral.

Credit Related Contingent Features. The Fund has several credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s Net Asset Value or NAV. The contingent features are established within the Fund’s ISDA master agreements which govern positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty.

As of December 31, 2009, the aggregate fair value of derivative instruments with credit related contingent features in a net liability position was $35,332, for which collateral was not posted by the Fund. If a contingent feature would have been triggered as of December 31, 2009, the Fund could have been required to pay this amount in cash to its counterparties. If the Fund fails to perform under these contracts and agreements, the cash and/or securities posted as collateral will be made available to the counterparty. Cash posted as collateral for these contracts, if any, is reported on the Statement of Assets and Liabilities; securities posted as collateral, if any, are reported on the Statement of Investments.

Valuations of derivative instruments as of December 31, 2009 are as follows:

	Asset Derivatives				Liability Derivatives
	Statement				Statement
Derivatives not	of Assets				of Assets
Accounted for as	and Liabilities				and Liabilities
Hedging Instruments	Location	Value			Location	Value
Credit contracts					Depreciated swaps, at value	$	35,332
Interest rate contracts	Futures margins	$	15,620	*	Futures margins		54,918	*
Total		$	15,620			$	90,250

* Includes only the current day’s variation margin. Prior variation margin movements have been reflected in cash on the Statement of Assets and Liabilities upon receipt or payment.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

The effect of derivative instruments on the Statement of Operations is as follows::

Amount of Realized Gain or Loss Recognized on Derivatives

Derivatives not	Closing and		Closing and
Accounted for as	expiration of option		expiration of
Hedging Instruments	contracts written		futures contracts		Swap contracts			Total
Credit contracts	$	—	$	—	$	(5,425,208	)	$	(5,425,208	)
Equity contracts		279,815		—		—			279,815
Interest rate contracts		—		50,329		584,634			634,963
Total	$	279,815	$	50,329	$	(4,840,574	)	$	(4,510,430	)

Amount of Change in Unrealized Gain or Loss Recognized on Derivatives

Derivatives not
Accounted for as
Hedging Instruments	Futures contracts			Swap contracts			Total
Credit contracts	$	—		$	650,980		$	650,980
Interest rate contracts		(1,275,692	)		(1,133,699	)		(2,409,391	)
Total	$	(1,275,692	)	$	(482,719	)	$	(1,758,411	)

Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Foreign currency exchange contracts, if any, are reported on a schedule following the Statement of Investments. These contracts will be valued daily based upon the closing prices of the 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.

     The Fund has purchased and sold foreign currency exchange contracts of different currencies in order to acquire currencies to pay for related foreign securities purchase transactions, or to convert foreign currencies to U.S. dollars from related foreign securities sale transactions. These foreign currency exchange contracts are negotiated at the current spot exchange rate with settlement typically within two business days thereafter.

     Additional associated risk to the Fund includes counterparty credit risk. Counterparty 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, 2009, the Fund held no outstanding forward contracts.

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.

     The Fund has purchased futures contracts on various bonds and notes to increase exposure to interest rate risk.

     The Fund has sold futures contracts on various bonds and notes to decrease exposure to interest rate risk.

     Additional associated 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.

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 Fund has written put options on individual equity securities and, or, equity indexes to increase exposure to equity risk. A written put option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

     The Fund has written covered call options on individual equity securities and, or, equity indexes to decrease exposure to equity risk. A written covered call option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

     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.

     Additional associated risks to the Fund include counterparty credit risk for over-the-counter options and liquidity risk.

Written option activity for the year ended December 31, 2009 was as follows:

	Call Options						Put Options
	Number of			Amount of			Number of			Amount of
	Contracts			Premiums			Contracts			Premiums
Options outstanding as of December 31, 2008		—		$	—			—		$	—
Options written		1,056			102,429			988			177,386
Options closed or expired		(1,056	)		(102,429	)		(988	)		(177,386	)
Options outstanding as of December 31, 2009		—		$	—			—		$	—

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Swap Contracts

The Fund may enter into swap contract agreements with a counterparty to exchange a series of cash flows based on either specified reference rates, or the occurrence of a credit event, over a specified period. Such contracts may include interest rate, equity, debt, index, total return, credit and currency swaps.

     Swaps are marked to market daily using primarily quotations from pricing services, counterparties and brokers. Swap contracts are reported on a schedule following the Statement of Investments. The values of swap contracts are aggregated by positive and negative values and disclosed separately on the Statement of Assets and Liabilities by contracts in unrealized appreciation and depreciation positions. Upfront payments paid or received, if any, affect the value of the respective swap. Therefore, to determine the unrealized appreciation (depreciation) on swaps, upfront payments paid should be subtracted from, while upfront payments received should be added to, the value of contracts reported as an asset on the Statement of Assets and Liabilities. Conversely, upfront payments paid should be added to, while upfront payments received should be subtracted from the value of contracts reported as a liability. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is 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. The Fund also records any periodic payments received from (paid to) the counterparty, including at termination, under such contracts as realized gain (loss) on the Statement of Operations.

     Swap contract agreements are exposed to the market risk factor of the specific underlying reference asset. Swap contracts are typically more attractively priced compared to similar investments in related cash securities because they isolate the risk to one market risk factor and eliminate the other market risk factors. Investments in cash securities (for instance bonds) have exposure to multiple risk factors (credit and interest rate risk). Because swaps require little or no initial cash investment, they can expose the Fund to substantial risk in the isolated market risk factor.

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.

     The Fund has sold credit protection through credit default swaps to increase exposure to the credit risk of individual securities and, or, indexes that are either unavailable or considered to be less attractive in the bond market.

     The Fund has purchased credit protection through credit default swaps to decrease exposure to the credit risk of individual securities and, or, indexes.

     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.

     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.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

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.

     The Fund has entered into interest rate swaps in which it pays a floating interest rate and receives a fixed interest rate in order to increase exposure to interest rate risk. Typically, if relative interest rates rise, payments made by the Fund under a swap agreement will be greater than the payments received by the Fund.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

     As of December 31, 2009, the Fund had no such interest rate swap agreements outstanding.

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.

     Total return swap contracts are exposed to the market risk factor of the specific underlying financial instrument or index. Total return swaps are less standard in structure than other types of swaps and can isolate and, or, include multiple types of market risk factors including equity risk, credit risk, and interest rate risk.

     The Fund has entered into total return swaps to increase exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the Fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

     The Fund has entered into total return swaps to decrease exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

     As of December 31, 2009, the Fund had no such total return swap agreements outstanding.

6. Illiquid Securities

As of December 31, 2009, 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. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

NOTES TO FINANCIAL STATEMENTS Continued

8. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds. ther to renew the Fund’s investment advisory agreement (the “Agreement”). The Investment Company Act of 1940, as amended, requires that the Board request and evaluate, and that the Manager provide, such information as may be reasonably necessary to evaluate the terms of the Agreement. The Board employs an independent consultant to prepare a report that provides information, including comparative information that the Board requests for that purpose. In addition, the Board receives information throughout the year regarding Fund services, fees, expenses and performance.

     The Manager and the independent consultant provided information to the Board on the following factors: (i) the nature, quality and extent of the Manager’s services, (ii) the investment performance of the Fund and the Manager, (iii) the fees and expenses of the Fund, including comparative expense information, (iv) the profitability of the Manager and its affiliates, including an analysis of the cost of providing services, (v) whether economies of scale are realized as the Fund grows and whether fee levels reflect these economies of scale for Fund investors and (vi) other benefits to the Manager from its relationship with the Fund. The Board was aware that there are alternatives to retaining the Manager.

     Outlined below is a summary of the principal information considered by the Board as well as the Board’s conclusions.

     Nature, Quality and Extent of Services. The Board considered information about the nature, quality, and extent of the services provided to the Fund and information regarding the Manager’s key personnel who provide such services. The Manager’s duties include providing the Fund with the services of the portfolio managers and the Manager’s investment team, who provide research, analysis and other advisory services in regard to the Fund’s investments; securities trading services; oversight of third party service providers; monitoring compliance with applicable Fund policies and procedures and adherence to the Fund’s investment restrictions. The Manager is responsible for providing certain administrative services to the Fund as well. Those services include providing and supervising all administrative and clerical personnel who are necessary in order to provide effective corporate administration for the Fund; compiling and maintaining records with respect to the Fund’s operations; preparing and filing reports required by the Securities and Exchange Commission; preparing periodic reports regarding the operations of the Fund for its shareholders; preparing proxy materials for shareholder meetings; and preparing the registration statements required by Federal and state securities laws for the sale of the Fund’s shares. The Manager also provides the Fund with office space, facilities and equipment.

     The Board also considered the quality of the services provided and the quality of the Manager’s resources that are available to the Fund. The Board took account of the fact that the Manager has had over forty years of experience as an investment adviser and that its assets under management rank it among the top mutual fund managers in the United States. The Board evaluated the Manager’s advisory, administrative, accounting, legal and compliance services, and information the Board has received regarding the experience and professional qualifications of the Manager’s key personnel and the size and functions of its staff. In its evaluation of the quality of the portfolio management services provided, the Board considered the experience of Emmanuel Ferriera, Krishna Memani and Peter Strzalkowski, the portfolio managers for the Fund, and the Manager’s investment team and analysts. The Board members also considered the totality of their experiences with the Manager as directors or trustees of the Fund and other funds advised by the Manager. The Board considered information regarding the quality of services provided by affiliates of the Manager, which its members have become knowledgeable about in connection with the renewal of the Fund’s service agreements. The Board concluded, in light of the Manager’s experience, reputation, personnel, operations and resources that the Fund benefits from the services provided under the Agreement.

     Investment Performance of the Manager and the Fund. Throughout the year, the Manager provided information on the investment performance of the Fund and the Manager, including comparative performance information. The Board also reviewed information, prepared by the Manager and by the independent consultant, comparing the Fund’s historical performance to relevant market indices and to the performance of other mixed-asset target allocation moderate funds underlying variable insurance products. The Board noted that the Fund’s one-year, three-year, five-year and ten-year performance was below its peer group median. The Board considered the Manager’s assertion that the Fund’s under-performance in 2008 mainly reflects the challenges faced by its fixed income portfolio, which was managed by the Core Plus Team, and that the underperformance in 2008 was a combination of exposure to the commercial and residential mortgages and turbulent capital markets, which impacted the Fund’s longer term track record. The Board also noted the appointment of a new portfolio manager and a newly formed Investment Grade Fixed Income team on April 1, 2009 to oversee the Fund’s investments.

     Costs of Services by the Manager. The Board reviewed the fees paid to the Manager and the other expenses borne by the Fund. The Board also considered the comparability of the fees charged and the services provided to the Fund to the fees and services for other clients or accounts advised by the Manager. The independent consultant provided comparative data in regard to the fees and expenses of the Fund and other mixed-asset target allocation moderate funds underlying variable insurance products. The Board noted that the Fund’s total expenses were lower than its peer group median although actual management fees were higher its peer group median. In reviewing the fees and expenses charged to the VA Funds, the Board considered the Manager’s assertion that, because of the disparity among VA funds in how insurance companies may be compensated for the services they provide to shareholders, when comparing the expenses of the various VA funds it is most appropriate to focus on the total expenses rather than on the management fees. Accordingly, while the Board reviewed and considered all expenses in its consideration of the Advisory Agreement, it paid particular attention to total expenses. The Board noted that the Fund’s management fee schedule was equal to the management fee schedule for the Oppenheimer Balanced Fund. The Board also considered that, effective September 1, 2007, the Manager voluntarily undertook to waive a portion of the management fee so that annual total expenses, as a percentage of net assets, will not exceed 0.67% for Non-Service Shares and 0.92% for Service Shares. The Board also noted that the Manager has agreed to voluntarily waive 0.08% of its management fee effective April 1, 2009 through March 31, 2010. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time after March 31, 2010.

     Economies of Scale and Profits Realized by the Manager. The Board considered information regarding the Manager’s costs in serving as the Fund’s investment adviser, including the costs associated with the personnel and systems necessary to manage the Fund, and information regarding the Manager’s profitability from its relationship with the Fund. The Board reviewed whether the Manager may realize economies of scale in managing and supporting the Fund. The Board noted that the Fund currently has management fee breakpoints, which are intended to share with Fund shareholders economies of scale that may exist as the Fund’s assets grow.

     Other Benefits to the Manager. In addition to considering the profits realized by the Manager, the Board considered information that was provided regarding the direct and indirect benefits the Manager receives as a result of its relationship with the Fund, including compensation paid to the Manager’s affiliates and research provided to the Manager in connection with permissible brokerage arrangements (soft dollar arrangements). The Board also considered that the Manager must be able to pay and retain experienced professional personnel at competitive rates to provide quality services to the Fund.

     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 through August 31, 2010. 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

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Capital Appreciation Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Capital Appreciation Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Capital Appreciation Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Shares		Value
Common Stocks98.2%
Consumer Discretionary9.4%
Diversified Consumer Services1.1%
Apollo Group, Inc., Cl. A1		267,450	$	16,202,121
Hotels, Restaurants & Leisure0.6%
McDonalds Corp.		145,140		9,062,542
Internet & Catalog Retail1.2%
Amazon.com, Inc.1		133,073		17,900,980
Media2.5%
Cablevision Systems Corp. New York
Group, Cl. A		629,575		16,255,627
McGraw-Hill Cos., Inc. (The)		298,360		9,998,044
Walt Disney Co. (The)		350,670		11,309,108
				37,562,779
Specialty Retail1.4%
Bed Bath & Beyond, Inc.1		235,410		9,093,888
Staples, Inc.		502,050		12,345,410
				21,439,298
Textiles, Apparel & Luxury Goods2.6%
Coach, Inc.		543,300		19,846,749
Nike, Inc., Cl. B		169,440		11,194,901
Polo Ralph Lauren Corp., Cl. A		114,700		9,288,406
				40,330,056
Consumer Staples8.5%
Beverages1.8%
PepsiCo, Inc.		437,050		26,572,640
Food & Staples Retailing2.0%
Wal-Mart Stores, Inc.		438,700		23,448,515
Walgreen Co.		186,240		6,838,733
				30,287,248
Food Products2.9%
Cadbury plc		940,340		12,112,695
Nestle SA		591,921		28,724,863
Unilever NV CVA		116,900		3,812,485
				44,650,043
Household Products0.9%
Colgate-Palmolive Co.		166,370		13,667,296
Tobacco0.9%
Philip Morris International, Inc.		282,570		13,617,048
Energy8.0%
Energy Equipment & Services3.1%
Cameron International Corp.1		300,170		12,547,106
Halliburton Co.		467,140		14,056,243
Schlumberger Ltd.		324,410		21,115,847
				47,719,196
Oil, Gas & Consumable Fuels4.9%
Apache Corp.		151,080		15,586,924
Cobalt International Energy, Inc.1		312,110		4,319,602
EOG Resources, Inc.		66,900		6,509,370
Occidental Petroleum Corp.		353,410		28,749,904
Range Resources Corp.		211,720		10,554,242
Southwestern Energy Co.1		175,310		8,449,942
				74,169,984
Financials8.4%
Capital Markets3.8%
Charles Schwab Corp. (The)		718,990		13,531,392
Credit Suisse Group AG		299,181		14,735,005
Goldman Sachs Group, Inc. (The)		99,600		16,816,464
Julius Baer Group Ltd.		171,872		6,002,725
T. Rowe Price Group, Inc.		123,960		6,600,870
				57,686,456
Commercial Banks0.7%
Wells Fargo & Co.		368,080		9,934,479
Diversified Financial Services3.4%
BM&F BOVESPA SA		1,667,360		11,587,906
IntercontinentalExchange, Inc.1		190,370		21,378,551
JPMorgan Chase & Co.		230,100		9,588,267
MSCI, Inc., Cl. A1		291,913		9,282,833
				51,837,557
Real Estate Management & Development0.5%
Jones Lang LaSalle, Inc.		135,080		8,158,832
Health Care15.9%
Biotechnology3.9%
Amgen, Inc.1		229,240		12,968,107
Celgene Corp.1		344,260		19,168,397
Gilead Sciences, Inc.1		474,620		20,541,554
Vertex Pharmaceuticals, Inc.1		161,540		6,921,989
				59,600,047
Health Care Equipment & Supplies3.7%
Baxter International, Inc.		509,980		29,925,626
Dentsply International, Inc.		319,430		11,234,353
St. Jude Medical, Inc.1		167,350		6,155,133
Stryker Corp.		181,940		9,164,318
				56,479,430
Health Care Providers & Services3.3%
Express Scripts, Inc.1		308,660		26,683,657
Medco Health Solutions, Inc.1		210,720		13,467,115
Schein (Henry), Inc.1		191,130		10,053,438
				50,204,210

STATEMENT OF INVESTMENTS December 31, 2009 (continued)

	Shares			Value
Life Sciences Tools & Services—1.7%
Illumina, Inc.1		189,280		$	5,801,432
Thermo Fisher Scientific, Inc.1		409,700			19,538,593
					25,340,025
Pharmaceuticals—3.3%
Allergan, Inc.		282,530			17,802,215
Novo Nordisk AS, Cl. B		132,810			8,494,354
Roche Holding AG		85,146			14,470,169
Shire plc		473,370			9,251,481
					50,018,219
Industrials—5.9%
Aerospace & Defense—2.2%
General Dynamics Corp.		128,740			8,776,206
Goodrich Corp.		131,832			8,470,206
Lockheed Martin Corp.		208,480			15,708,968
					32,955,380
Construction & Engineering—0.5%
Quanta Services, Inc.1		383,870			7,999,851
Electrical Equipment—1.9%
ABB Ltd.		1,026,207			19,626,598
First Solar, Inc.1		67,260			9,107,004
					28,733,602
Machinery—0.7%
Joy Global, Inc.		186,007			9,596,101
Professional Services—0.3%
Verisk Analytics, Inc., Cl. A1		159,583			4,832,173
Road & Rail—0.3%
Union Pacific Corp.		78,270			5,001,453
Information Technology—35.0%
Communications Equipment—6.0%
F5 Networks, Inc.1		149,220			7,905,676
Juniper Networks, Inc.1		484,160			12,912,547
QUALCOMM, Inc.		1,072,590			49,618,013
Research in Motion Ltd.1		315,370			21,300,090
					91,736,326
Computers & Peripherals—7.1%
Apple, Inc.1		204,100			43,036,526
Dell, Inc.1		763,550			10,964,578
Hewlett-Packard Co.		735,100			37,865,001
NetApp, Inc.1		478,800			16,465,932
					108,332,037
Electronic Equipment & Instruments—0.5%
Corning, Inc.		382,050			7,377,386
Internet Software & Services—5.6%
eBay, Inc.1		844,530			19,880,236
Google, Inc., Cl. A1		103,900			64,415,922
					84,296,158
IT Services—5.3%
Accenture plc, Cl. A		281,800			11,694,700
MasterCard, Inc., Cl. A		111,830			28,626,243
Visa, Inc., Cl. A		367,197			32,115,050
Western Union Co.		416,900			7,858,565
					80,294,558
Semiconductors & Semiconductor Equipment—4.6%
Broadcom Corp., Cl. A1		588,940			18,522,163
MEMC Electronic Materials, Inc.1		824,000			11,222,880
NVIDIA Corp.1		1,294,180			24,175,282
Texas Instruments, Inc.		615,100			16,029,506
					69,949,831
Software—5.9%
Adobe Systems, Inc.1		624,930			22,984,925
Microsoft Corp.		682,350			20,804,852
Nintendo Co. Ltd.		42,800			10,128,437
Oracle Corp.		1,047,290			25,700,497
Salesforce.com, Inc.1		126,975			9,366,946
					88,985,657
Materials—4.7%
Chemicals—4.3%
Monsanto Co.		363,240			29,694,870
Potash Corp. of Saskatchewan, Inc.		143,210			15,538,285
Praxair, Inc.		245,642		19,727,509
					64,960,664
Metals & Mining—0.4%
Xstrata plc1		406,480			7,159,598
Telecommunication Services—2.4%
Wireless Telecommunication Services—2.4%
Crown Castle International Corp.1		531,080			20,733,363
NII Holdings, Inc.1		457,400			15,359,492
					36,092,855
Total Common Stocks (Cost $1,110,578,450)					1,490,744,116
Investment Companies—0.5%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%2,3		442,202			442,202
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%2,4		7,898,767			7,898,767
Total Investment Companies (Cost $8,340,969)					8,340,969
Total Investments, at Value (Cost $1,118,919,419)		98.7	%		1,499,085,085
Other Assets Net of Liabilities		1.3			19,274,845
Net Assets		100.0	%	$	1,518,359,930

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Rate shown is the 7-day yield as of December 31, 2009.
3.	Interest rate is less than 0.0005%.
4.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
Oppenheimer Institutional Money Market Fund, Cl. E		22,383,442		253,801,901		268,286,576		7,898,767
					Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E					$	7,898,767	$	130,800

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2)     Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3)     Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

						Level 3—
	Level 1—		Level 2—			Significant
	Unadjusted		Other Significant			Unobservable
	Quoted Prices		Observable Inputs			Inputs		Value
Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	142,497,776	$	—		$	—	$	142,497,776
Consumer Staples		128,794,275		—			—		128,794,275
Energy		121,889,180		—			—		121,889,180
Financials		95,291,688		32,325,636			—		127,617,324
Health Care		241,641,931		—			—		241,641,931
Industrials		69,491,962		19,626,598			—		89,118,560
Information Technology		530,971,953		—			—		530,971,953
Materials		64,960,664		7,159,598			—		72,120,262
Telecommunication Services		36,092,855		—			—		36,092,855
Investment Companies		8,340,969		—			—		8,340,969
Total Investments, at Value		1,439,973,253		59,111,832			—		1,499,085,085
Other Financial Instruments:
Foreign currency exchange contracts		—		13,611			—		13,611
Total Assets	$	1,439,973,253	$	59,125,443		$	—	$	1,499,098,696
Liabilities Table
Other Financial Instruments:
Foreign currency exchange contracts	$	—	$	(9,216	)	$	—	$	(9,216	)
Total Assets	$	—	$	(9,216	)	$	—	$	(9,216	)

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Foreign Currency Exchange Contracts as of December 31, 2009 are as follows:

		Contract
		Amount		Expiration				Unrealized		Unrealized
Counterparty/Contract Description	Buy/Sell	(000s)		Date		Value		Appreciation		Depreciation
Brown Brothers Harriman
Euro (EUR)	Buy	2,665	EUR		1/5/10	$	3,819,849	$	—	$	143
JP Morgan Chase:
British Pound Sterling (GBP)	Buy	4	GBP		1/4/10		6,482		92		—
British Pound Sterling (GBP)	Sell	213	GBP		1/4/10		344,257		—		4,876
Swiss Franc (CHF)	Sell	2,090	CHF		1/5/10		2,020,824		—		4,197
									92		9,073
UBS Investment Bank:
Danish Krone (DKK)	Sell	469	DKK		1/5/10		90,319		69		—
Japanese Yen (JPY)	Sell	144,114	JPY		1/5/10		1,547,410		13,450		—
									13,519		—
Total unrealized appreciation and depreciation								$	13,611	$	9,216

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $1,111,020,652)	$	1,491,186,318
Affiliated companies (cost $7,898,767)		7,898,767
		1,499,085,085
Unrealized appreciation on foreign currency exchange contracts		13,611
Receivables and other assets:
Investments sold		37,053,301
Dividends		2,266,109
Other		30,046
Total assets		1,538,448,152
Liabilities
Unrealized depreciation on foreign currency exchange contracts		9,216
Payables and other liabilities:
Investments purchased		11,710,320
Shares of beneficial interest redeemed		7,727,407
Distribution and service plan fees		268,064
Shareholder communications		183,899
Transfer and shareholder servicing agent fees		127,636
Trustees’ compensation		25,838
Other		35,842
Total liabilities		20,088,222
Net Assets	$	1,518,359,930
Composition of Net Assets
Par value of shares of beneficial interest	$	41,205
Additional paid-in capital		1,583,968,415
Accumulated net investment income		434,803
Accumulated net realized loss on investments and foreign currency transactions		(446,342,810	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		380,258,317
Net Assets	$	1,518,359,930
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 $1,074,190,198 and 29,082,392 shares of beneficial interest outstanding)	$	36.94
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $444,169,732 and 12,122,685 shares of beneficial interest outstanding)	$	36.64

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $261,942)	$	13,722,325
Affiliated companies		130,800
Interest		4,365
Total investment income		13,857,490
Expenses
Management fees		8,611,318
Distribution and service plan fees — Service shares		922,244
Transfer and shareholder servicing agent fees:
Non-Service shares		666,427
Service shares		269,819
Shareholder communications:
Non-Service shares		346,404
Service shares		138,166
Trustees’ compensation		44,550
Custodian fees and expenses		22,658
Other		70,132
Total expenses		11,091,718
Less waivers and reimbursements of expenses		(27,531	)
Net expenses		11,064,187
Net Investment Income		2,793,303
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments from unaffiliated companies		(40,506,486	)
Foreign currency transactions		(2,789,837	)
Net realized loss		(43,296,323	)
Net change in unrealized appreciation on:
Investments		510,382,835
Translation of assets and liabilities denominated in foreign currencies		10,917,248
Net change in unrealized appreciation		521,300,083
Net Increase in Net Assets Resulting from Operations	$	480,797,063

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	2,793,303		$	3,204,095
Net realized loss		(43,296,323	)		(264,875,837	)
Net change in unrealized appreciation (depreciation)		521,300,083			(676,764,840	)
Net increase (decrease) in net assets resulting from operations		480,797,063			(938,436,582	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(2,975,281	)		(1,851,681	)
Service shares		(24,236	)		—
		(2,999,517	)		(1,851,681	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(97,375,095	)		(114,814,298	)
Service shares		(5,924,734	)		20,286,295
		(103,299,829	)		(94,528,003	)
Net Assets
Total increase (decrease)		374,497,717			(1,034,816,266	)
Beginning of period		1,143,862,213			2,178,678,479
End of period (including accumulated net investment income of $434,803 and $1,288,398, respectively)	$	1,518,359,930		$	1,143,862,213

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	25.67		$	47.18		$	41.43		$	38.52		$	36.99
Income (loss) from investment operations:
Net investment income1		.09			.10			.07			.07			.18
Net realized and unrealized gain (loss)		11.27			(21.55	)		5.78			2.98			1.68
Total from investment operations		11.36			(21.45	)		5.85			3.05			1.86
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.09	)		(.06	)		(.10	)		(.14	)		(.33	)
Net asset value, end of period	$	36.94		$	25.67		$	47.18		$	41.43		$	38.52
Total Return, at Net Asset Value2		44.52	%		(45.52	)%		14.15	%		7.95	%		5.10	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,074,190		$	829,931		$	1,631,791		$	1,598,967		$	1,652,282
Average net assets (in thousands)	$	927,670		$	1,256,525		$	1,631,686		$	1,615,352		$	1,658,910
Ratios to average net assets:3
Net investment income		0.29	%		0.25	%		0.15	%		0.17	%		0.47	%
Total expenses		0.78	%4		0.66	%4		0.65	%4		0.67	%4		0.66	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.78	%		0.66	%		0.65	%		0.67	%		0.66	%
Portfolio turnover rate		46	%		67	%		59	%		47	%		70	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.78	%
Year Ended December 31, 2008	0.66	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.67	%

See accompanying Notes to Financial Statements.

Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	25.42		$	46.78		$	41.09		$	38.23		$	36.73
Income (loss) from investment operations:
Net investment income (loss)1		.01			—2			(.05	)		(.03	)		.08
Net realized and unrealized gain (loss)		11.21			(21.36	)		5.74			2.96			1.69
Total from investment operations		11.22			(21.36	)		5.69			2.93			1.77
Dividends and/or distributions to shareholders:
Dividends from net investment income		—2			—			—2			(.07	)		(.27	)
Net asset value, end of period	$	36.64		$	25.42		$	46.78		$	41.09		$	38.23
Total Return, at Net Asset Value3		44.15	%		(45.66	)%		13.86	%		7.68	%		4.87	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	444,170		$	313,931		$	546,887		$	463,140		$	381,852
Average net assets (in thousands)	$	368,634		$	454,558		$	510,874		$	426,539		$	301,780
Ratios to average net assets:4
Net investment income (loss)		0.03	%		0.00	%5		(0.10	)%		(0.08	)%		0.20	%
Total expenses		1.04	%6		0.91	%6		0.91	%6		0.92	%6		0.91	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.03	%		0.91	%		0.91	%		0.92	%		0.91	%
Portfolio turnover rate		46	%		67	%		59	%		47	%		70	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
3.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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.	Less than 0.005%.
6.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended December 31, 2009	1.04	%
Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.91	%
Year Ended December 31, 2006	0.92	%

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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

					Net Unrealized
					Appreciation
					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
$1,787,208	$	—	$	425,223,481	$	358,995,026

1. As of December 31, 2009, the Fund had $425,219,652 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, 2009, details of the capital loss carryforwards were as follows:

Expiring
2011	$	96,270,872
2013		34,677,838
2016		113,637,770
2017		180,633,172
Total	$	425,219,652

2. The Fund had $3,829 of post-October foreign currency losses which were deferred.

3. During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.

4. During the fiscal year ended December 31, 2008, 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

	Reduction
Reduction	to Accumulated Net
to Accumulated Net	Realized Loss
Investment Income	on Investments
$647,381	$	647,381

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	2,999,517	$	1,851,681

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, 2009 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	$	1,140,178,385
Federal tax cost of other investments		(176,547	)
Total federal tax cost	$	1,140,001,838
Gross unrealized appreciation	$	377,729,269
Gross unrealized depreciation		(18,734,243	)
Net unrealized appreciation	$	358,995,026

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.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		2,978,928		$	88,352,509			5,158,989		$	168,163,089
Dividends and/or distributions reinvested		134,506			2,975,281			45,642			1,851,681
Redeemed		(6,361,581	)		(188,702,885	)		(7,457,105	)		(284,829,068	)
Net decrease		(3,248,147	)	$	(97,375,095	)		(2,252,474	)	$	(114,814,298	)
Service Shares
Sold		2,097,785		$	61,332,284			2,605,573		$	92,870,576
Dividends and/or distributions reinvested		1,099			24,157			—			—
Redeemed		(2,325,106	)		(67,281,175	)		(1,946,810	)		(72,584,281	)
Net increase (decrease)		(226,222	)	$	(5,924,734	)		658,763		$	20,286,295

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 IMMF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	580,921,828	$	662,865,939

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. For the year ended December 31, 2009, the Fund paid $810,330 to OFS for services to the Fund.

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 daily 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 May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $5,625 and $3,973 for Non-Service and Service shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived $17,933 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Foreign currency exchange contracts, if any, are reported on a schedule following the Statement of Investments. These contracts will be valued daily based upon the closing prices of the 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.

     The Fund has purchased and sold foreign currency exchange contracts of different currencies in order to acquire currencies to pay for related foreign securities purchase transactions, or to convert foreign currencies to U.S. dollars from related foreign securities sale transactions. These foreign currency exchange contracts are negotiated at the current spot exchange rate with settlement typically within two business days thereafter.

     Additional associated risk to the Fund includes counterparty credit risk. Counterparty 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. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

7. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

NOTES TO FINANCIAL STATEMENTS Continued

7. Pending Litigation Continued

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff “) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Core Bond Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Core Bond Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Core Bond Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Principal
	Amount		Value
Asset-Backed Securities—8.1%
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.711%, 5/25/341	$	1,538,283	$	1,139,813
Argent Securities Trust 2006-M3, Asset-Backed Pass-Through Certificates, Series 2006-M3, Cl. A2B, 0.331%, 9/25/361		23,782		8,608
Bank of America Auto Trust, Automobile Asset-Backed Certificates, Series 2009-2A, Cl. A4, 3.03%, 10/15/162		2,025,000		2,054,678
Bank of America Credit Card Trust, Credit Card Asset-Backed Certificates, Series 2006-A16, Cl. A16, 4.72%, 5/15/13		730,000		752,631
Chase Issuance Trust, Credit Card Asset-Backed Certificates, Series 2007-A15, Cl. A, 4.96%, 9/17/12		1,730,000		1,782,517
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series 2003-C4, Cl. C4, 5%, 6/10/15		310,000		305,017
CNH Equipment Trust, Asset-Backed Certificates, Series 2009-B, Cl. A3, 2.97%, 3/15/13		900,000		913,492
Countrywide Home Loans, Asset-Backed Certificates:
Series 2002-4, Cl. A1, 0.971%, 2/25/331		35,747		28,335
Series 2005-16, Cl. 2AF2, 5.382%, 5/1/361		627,505		514,106
Series 2005-17, Cl. 1AF2, 5.362%, 5/1/361		351,607		289,921
CWABS Asset-Backed Certificates Trust 2006-25, Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.351%, 6/25/471		40,000		31,203
DT Auto Owner Trust, Automobile Receivables Nts., Series 2009-1, Cl. A1, 2.98%, 10/15/15		490,000		488,398
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through Certificates, Series 2006-FF10, Cl. A3, 0.321%, 7/25/361		32,854		31,363
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through Certificates, Series 2006-FF9, Cl. 2A2, 0.341%, 7/7/361,3		16,129		12,968
Ford Credit Auto Owner Trust, Automobile Receivables Nts.:
Series 2009-B, Cl. A2, 2.10%, 11/15/11		545,000		548,473
Series 2009-E, Cl. A2, 0.80%, 3/15/12		980,000		978,934
Harley-Davidson Motorcycle Trust 2009-2, Motorcycle Contract-Backed Nts., Series 2009-2, Cl. A2, 2%, 7/15/12		1,495,000		1,505,235
Honda Auto Receivables 2009-3 Owner Trust, Automobile Asset-Backed Nts., Series 2009-3, Cl. A2, 1.50%, 8/15/113		650,000		653,287
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2005-3, Cl. A1, 0.493%, 1/20/351		526,463		455,974
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.343%, 3/20/361		24,810		23,911
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35		96,284		95,581
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates, Series 2001-1A, Cl. A1, 8.33%, 4/25/313		637,827		638,962
Mastr Asset-Backed Securities Trust 2006-WMC3, Mtg. Pass-Through Certificates, Series 2006-WMC3, Cl. A3, 0.331%, 8/25/361		70,000		24,690
MBNA Credit Card Master Note Trust, Credit Card Receivables, Series 2005-A6, Cl. A6, 4.50%, 1/15/13		1,740,000		1,775,520
NC Finance Trust, Collateralized Mtg. Obligation Pass-Through Certificates, Series 1999-I, Cl. ECFD, 3.035%, 1/25/291,3		3,370,016		505,502
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass- Through Certificates, Series 2006-KS7, Cl. A2, 0.331%, 9/25/361		23,310		22,407
Structured Asset Investment Loan Trust, Mtg. Pass-Through Certificates, Series 2006-BNC3, Cl. A2, 0.271%, 9/25/361		79,540		78,915
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 0.331%, 7/25/361		7,317		7,251
Total Asset-Backed Securities (Cost $19,121,300)				15,667,692
Mortgage-Backed Obligations—75.3%
Government Agency—64.4%
FHLMC/FNMA/FHLB/Sponsored—60.3%
Federal Home Loan Bank, Mtg.-Backed Obligations, Series 5G-2012, Cl. 1, 4.97%, 2/24/12		434,695		452,407
Federal Home Loan Mortgage Corp.:
5%, 8/15/33-12/15/34		3,366,182		3,466,291
5.50%, 9/1/39		1,880,706		1,972,292
6%, 5/15/18-10/15/29		4,602,808		4,944,939

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
FHLMC/FNMA/FHLB/Sponsored Continued
Federal Home Loan Mortgage Corp.:
Continued
6.50%, 4/15/18-4/1/34	$	957,805	$	1,033,392
7%, 8/15/16-10/1/37		847,146		923,587
7%, 10/1/314		567,974		625,487
8%, 4/1/16		335,410		366,193
9%, 8/1/22-5/1/25		98,248		109,438
10.50%, 11/14/20		4,451		5,037
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 151, Cl. F, 9%, 5/15/21		21,429		23,528
Series 1674, Cl. Z, 6.75%, 2/15/24		71,978		78,494
Series 2006-11, Cl. PS, 23.719%, 3/25/361		537,910		719,682
Series 2034, Cl. Z, 6.50%, 2/15/28		9,519		10,316
Series 2042, Cl. N, 6.50%, 3/15/28		26,171		27,475
Series 2043, Cl. ZP, 6.50%, 4/15/28		854,288		910,163
Series 2046, Cl. G, 6.50%, 4/15/28		74,812		80,190
Series 2053, Cl. Z, 6.50%, 4/15/28		10,666		11,501
Series 2066, Cl. Z, 6.50%, 6/15/28		1,452,510		1,555,089
Series 2195, Cl. LH, 6.50%, 10/15/29		865,887		927,046
Series 2220, Cl. PD, 8%, 3/15/30		4,058		4,476
Series 2326, Cl. ZP, 6.50%, 6/15/31		263,516		283,534
Series 2435, Cl. EQ, 6%, 5/15/31		10,171		10,268
Series 2461, Cl. PZ, 6.50%, 6/15/32		1,285,415		1,395,828
Series 2470, Cl. LF, 1.233%, 2/15/321		12,278		12,354
Series 2500, Cl. FD, 0.733%, 3/15/321		232,548		231,027
Series 2526, Cl. FE, 0.633%, 6/15/291		349,480		344,552
Series 2538, Cl. F, 0.833%, 12/15/321		1,830,232		1,828,535
Series 2551, Cl. FD, 0.633%, 1/15/331		249,908		248,410
Series 2638, Cl. KG, 4%, 11/1/27		1,900,000		1,955,731
Series 2641, Cl. CE, 3.50%, 9/15/25		2,067		2,070
Series 2648, Cl. JE, 3%, 2/1/30		1,377,371		1,375,619
Series 2663, Cl. BA, 4%, 8/1/16		718,354		737,940
Series 2686, Cl. CD, 4.50%, 2/1/17		739,460		761,670
Series 2750, Cl. XG, 5%, 2/1/34		130,000		131,942
Series 2890, Cl. PE, 5%, 11/1/34		130,000		131,868
Series 2907, Cl. GC, 5%, 6/1/27		436,537		454,188
Series 2929, Cl. PC, 5%, 1/1/28		390,000		406,474
Series 2936, Cl. PE, 5%, 2/1/35		69,000		69,984
Series 2939, Cl. PE, 5%, 2/15/35		247,000		250,806
Series 2952, Cl. GJ, 4.50%, 12/1/28		229,647		236,068
Series 3019, Cl. MD, 4.75%, 1/1/31		717,525		746,224
Series 3025, Cl. SJ, 23.895%, 8/15/351		110,569		139,008
Series 3035, Cl. DM, 5.50%, 11/15/25		17,151		17,323
Series 3094, Cl. HS, 23.529%, 6/15/341		312,412		404,693
Series 3157, Cl. MC, 5.50%, 2/1/26		1,397,682		1,428,812
Series 3279, Cl. PH, 6%, 2/1/27		1,030,000		1,063,846
Series 3291, Cl. NA, 5.50%, 10/1/27		254,142		263,565
Series 3306, Cl. PA, 5.50%, 10/1/27		754,419		780,682
Series R001, Cl. AE, 4.375%, 4/1/15		476,768		489,210
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 176, Cl. IO, 14.65%, 6/1/265		56,871		12,723
Series 202, Cl. IO, 0%, 4/1/295,6		418,324		97,285
Series 205, Cl. IO, 8.946%, 9/1/295		29,947		6,718
Series 206, Cl. IO, 0%, 12/1/295,6		369,155		70,428
Series 2074, Cl. S, 51.416%, 7/17/285		6,030		1,010
Series 2079, Cl. S, 62.292%, 7/17/285		10,105		1,740
Series 2130, Cl. SC, 52.25%, 3/15/295		427,248		63,282
Series 224, Cl. IO, 0%, 3/1/335,6		732,771		162,644
Series 243, Cl. 6, 0%, 12/15/325,6		447,913		91,959
Series 2526, Cl. SE, 40.201%, 6/15/295		15,783		2,423
Series 2527, Cl. SG, 31.633%, 2/15/325		1,397,406		82,788
Series 2531, Cl. ST, 38.255%, 2/15/305		448,125		29,183
Series 2796, Cl. SD, 66.149%, 7/15/265		671,710		85,465
Series 2802, Cl. AS, 99.999%, 4/15/335		603,512		53,595
Series 2819, Cl. S, 54.304%, 6/15/345		136,664		16,276
Series 2920, Cl. S, 78.263%, 1/15/355		2,624,671		305,566
Series 3000, Cl. SE, 99.999%, 7/15/255		2,752,007		256,840
Series 3004, Cl. SB, 99.999%, 7/15/355		147,366		16,816
Series 3045, Cl. DI, 40.938%, 10/15/355		1,722,791		204,527
Series 3110, Cl. SL, 99.999%, 2/15/265		412,274		36,663
Series 3399, Cl. SC, 19.734%, 12/15/375		1,657,690		181,848
Federal Home Loan Mortgage Corp., Principal-Only Stripped Mtg.-Backed Security,
Series 176, Cl. PO, 4.464%, 6/1/267		160,849		131,461
Federal National Mortgage Assn.:
4.50%, 1/1/25-1/1/408		7,035,000		7,107,370
5%, 2/25/22-7/25/22		32,943		34,485
5%, 1/1/25-1/1/408		10,944,000		11,243,777
5.305%, 10/1/36		378,263		396,748
5.50%, 1/1/25-1/1/408		14,955,000		15,661,427
6%, 1/1/25-1/1/408		13,859,000		14,730,437
6.50%, 3/25/11-1/1/34		1,734,375		1,881,841
6.50%, 8/25/174		278,245		302,108
6.50%, 1/1/408		2,816,000		3,016,201
7%, 11/1/17-7/25/35		1,053,762		1,138,719
7.50%, 1/1/33		16,323		18,417
8.50%, 7/1/32		46,280		51,818
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Trust 1989-17, Cl. E, 10.40%, 4/25/19		24,754		27,549
Trust 1993-87, Cl. Z, 6.50%, 6/25/23		868,783		947,774
Trust 1998-58, Cl. PC, 6.50%, 10/25/28		729,840		789,351
Trust 1998-61, Cl. PL, 6%, 11/25/28		387,457		416,394
Trust 1999-54, Cl. LH, 6.50%, 11/25/29		575,444		619,261
Trust 2001-44, Cl. QC, 6%, 9/25/16		40,231		43,124
Trust 2001-51, Cl. OD, 6.50%, 10/25/31		43,599		46,923
Trust 2001-74, Cl. QE, 6%, 12/25/31		1,141,641		1,221,886
Trust 2002-12, Cl. PG, 6%, 3/25/17		20,349		21,849
Trust 2003-28, Cl. KG, 5.50%, 4/25/23		3,964,000		4,145,005
Trust 2004-101, Cl. BG, 5%, 1/25/20		1,975,000		2,096,182
Trust 2004-81, Cl. KC, 4.50%, 4/1/17		546,644		562,529
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25		1,160,000		1,208,312
Trust 2005-117, Cl. LA, 5.50%, 12/25/27		66,618		67,839

	Principal
	Amount		Value
FHLMC/FNMA/FHLB/Sponsored Continued
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Continued
Trust 2005-12, Cl. JC, 5%, 6/1/28	$	933,141	$	972,963
Trust 2005-22, Cl. EC, 5%, 10/1/28		345,000		360,250
Trust 2005-30, Cl. CU, 5%, 4/1/29		313,308		327,606
Trust 2005-57, Cl. PA, 5.50%, 5/1/27		565,787		572,306
Trust 2006-110, Cl. PW, 5.50%, 5/25/28		107,167		110,999
Trust 2006-46, Cl. SW, 23.351%, 6/25/361		406,529		538,332
Trust 2006-50, Cl. KS, 23.352%, 6/25/361		795,798		1,040,208
Trust 2006-57, Cl. PA, 5.50%, 8/25/27		1,006,087		1,035,952
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-61, Cl. SH, 48.054%, 11/18/315		46,532		7,175
Trust 2001-63, Cl. SD, 37.778%, 12/18/315		14,253		2,432
Trust 2001-65, Cl. S, 45.098%, 11/25/315		1,167,484		183,346
Trust 2001-68, Cl. SC, 29.533%, 11/25/315		9,817		1,506
Trust 2001-81, Cl. S, 37.157%, 1/25/325		311,287		48,248
Trust 2002-28, Cl. SA, 39.046%, 4/25/325		7,940		1,199
Trust 2002-38, Cl. SO, 59.356%, 4/25/325		18,593		2,547
Trust 2002-39, Cl. SD, 44.22%, 3/18/325		12,294		1,637
Trust 2002-47, Cl. NS, 34.189%, 4/25/325		790,082		108,956
Trust 2002-48, Cl. S, 36.323%, 7/25/325		13,330		1,801
Trust 2002-51, Cl. S, 34.498%, 8/25/325		725,298		98,917
Trust 2002-52, Cl. SD, 40.697%, 9/25/325		865,302		117,786
Trust 2002-52, Cl. SL, 36.797%, 9/25/325		8,206		1,114
Trust 2002-53, Cl. SK, 41.622%, 4/25/325		42,837		5,866
Trust 2002-56, Cl. SN, 39.068%, 7/25/325		18,175		2,461
Trust 2002-60, Cl. SM, 47.256%, 8/25/325		161,645		22,439
Trust 2002-7, Cl. SK, 47.997%, 1/25/325		75,985		9,667
Trust 2002-77, Cl. BS, 38.854%, 12/18/325		97,162		12,830
Trust 2002-77, Cl. IS, 52.089%, 12/18/325		31,677		4,317
Trust 2002-77, Cl. JS, 37.391%, 12/18/325		163,977		21,348
Trust 2002-77, Cl. SA, 38.553%, 12/18/325		154,576		20,451
Trust 2002-77, Cl. SH, 44.588%, 12/18/325		394,404		61,233
Trust 2002-84, Cl. SA, 46.464%, 12/25/325		1,043,696		136,164
Trust 2002-9, Cl. MS, 35.879%, 3/25/325		15,395		2,061
Trust 2002-90, Cl. SN, 49.355%, 8/25/325		83,158		11,786
Trust 2002-90, Cl. SY, 50.458%, 9/25/325		52,235		7,075
Trust 2003-26, Cl. DI, 11.083%, 4/25/335		32,789		6,267
Trust 2003-33, Cl. SP, 56.393%, 5/25/335		1,133,970		160,090
Trust 2003-4, Cl. S, 44.369%, 2/25/335		746,438		106,518
Trust 2003-89, Cl. XS, 70.432%, 11/25/325		858,405		106,586
Trust 2004-54, Cl. DS, 51.503%, 11/25/305		615,040		69,407
Trust 2005-14, Cl. SE, 43.159%, 3/25/355		524,451		58,646
Trust 2005-40, Cl. SA, 74.25%, 5/25/355		1,459,451		171,168
Trust 2005-40, Cl. SB, 87.935%, 5/25/355		66,424		7,831
Trust 2005-6, Cl. SE, 86.18%, 2/25/355		1,903,113		210,784
Trust 2005-71, Cl. SA, 72.441%, 8/25/255		1,794,163		213,142
Trust 2005-87, Cl. SE, 79.001%, 10/25/355		5,689,541		646,141
Trust 2005-87, Cl. SG, 93.949%, 10/25/355		3,933,904		531,616
Trust 2006-60, Cl. DI, 40.599%, 4/25/355		376,456		46,659
Trust 221, Cl. 2, 22.926%, 5/1/235		10,465		2,400
Trust 222, Cl. 2, 16.787%, 6/1/235		1,242,137		243,067
Trust 240, Cl. 2, 22.048%, 9/1/235		1,588,927		354,777
Trust 252, Cl. 2, 23.444%, 11/1/235		1,039,576		246,718
Trust 273, Cl. 2, 15.872%, 8/1/265		296,548		67,207
Trust 294, Cl. 2, 8.459%, 2/1/285		114,793		26,649
Trust 301, Cl. 2, 0%, 4/1/295,6		14,009		3,172
Trust 303, Cl. IO, 0%, 11/1/295,6		176,169		33,491
Trust 320, Cl. 2, 7.987%, 4/1/325		837,544		219,167
Trust 321, Cl. 2, 0%, 4/1/325,6		2,726,999		668,993
Trust 324, Cl. 2, 0%, 7/1/325,6		29,057		6,839
Trust 331, Cl. 5, 0%, 2/1/335,6		40,902		7,797
Trust 331, Cl. 9, 9.147%, 2/1/335		712,349		153,423
Trust 334, Cl. 12, 0%, 2/1/335,6		71,403		13,177
Trust 334, Cl. 17, 16.202%, 2/1/335		488,783		94,378
Trust 338, Cl. 2, 0%, 7/1/335,6		1,436,465		306,763
Trust 339, Cl. 12, 0%, 7/1/335,6		964,465		181,384
Trust 339, Cl. 7, 0%, 7/1/335,6		2,422,799		394,671

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
FHLMC/FNMA/FHLB/Sponsored Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security: Continued
Trust 343, Cl. 13, 8.30%, 9/1/335	$	836,548	$	140,270
Trust 343, Cl. 18, 4.244%, 5/1/345		248,676		45,899
Trust 345, Cl. 9, 2.736%, 1/1/345		1,115,482		200,330
Trust 351, Cl. 10, 1.924%, 4/1/345		345,428		66,649
Trust 351, Cl. 8, 2.248%, 4/1/345		538,506		103,806
Trust 356, Cl. 10, 0.169%, 6/1/355		461,985		87,275
Trust 356, Cl. 12, 0%, 2/1/355,6		234,561		43,956
Trust 362, Cl. 12, 0%, 8/1/355,6		1,398,445		267,754
Trust 362, Cl. 13, 0%, 8/1/355,6		768,683		147,294
Trust 364, Cl. 15, 0%, 9/1/355,6		51,299		9,356
Trust 364, Cl. 16, 0%, 9/1/355,6		987,603		166,476
Trust 365, Cl. 16, 10.067%, 3/1/365		1,665,759		308,752
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed Security, Trust 1993-184, Cl. M, 5.242%, 9/25/237		379,889		296,611
				117,254,154
GNMA/Guaranteed—4.1%
Government National Mortgage Assn.:
4.50%, 1/1/408		6,430,000		6,436,031
7%, 12/29/23-3/15/26		33,899		37,612
8.50%, 8/1/17-12/15/17		155,950		170,683
Government National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates, Series 1999-32, Cl. ZB, 8%, 9/16/29		97,330		106,974
Government National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2000-7, Cl. Z, 8%, 1/16/30		42,613		46,410
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 1998-19, Cl. SB, 49.191%, 7/16/285		20,618		3,550
Series 2001-21, Cl. SB, 81.024%, 1/16/275		761,971		108,503
Series 2002-15, Cl. SM, 70.84%, 2/16/325		803,758		99,849
Series 2004-11, Cl. SM, 58.689%, 1/17/305		576,225		95,121
Series 2006-47, Cl. SA, 81.998%, 8/16/365		7,042,279		783,958
				7,888,691
Non-Agency—10.9%
Commercial—7.9%
Asset Securitization Corp., Commercial Interest-Only Stripped Mtg.-Backed Security, Series 1997-D4, Cl. PS1, 0.608%, 4/14/295		8,660,993		342,105
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2006-1, Cl. AM, 5.421%, 9/1/45		4,070,000		3,221,582
Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed Pass-Through Certificates, Series 1997-CTL1, 0%, 6/22/245,6		7,319,719		299,450
CHL Mortgage Pass-Through Trust 2005-17, Mtg. Pass-Through Certificates, Series 2005-17, Cl. 1A8, 5.50%, 9/1/35		80,000		61,269
Citigroup Commercial Mortgage Trust 2008-C7, Commercial Mtg. Pass-Through Certificates, Series 2008-C7, Cl. AM, 6.092%, 12/1/491		1,920,000		1,455,147
Citigroup, Inc./Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-CD4, Cl. A2B, 5.205%, 12/11/49		380,000		388,490
CWALT Alternative Loan Trust 2007-8CB, Mtg. Pass-Through Certificates, Series 2007-8CB, Cl. A1, 5.50%, 5/25/37		116,628		84,936
First Horizon Alternative Mortgage Securities Trust 2004-FA2, Mtg. Pass-Through Certificates, Series 2004-FA2, Cl. 3A1, 6%, 1/25/35		634,845		590,840
First Horizon Mortgage Pass-Through Trust 2007-AR3, Mtg. Pass-Through Certificates, Series 2007-AR3, Cl. 1A1, 6.104%, 11/1/371		547,586		386,987
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2004-C3, Cl. A2, 4.433%, 7/10/39		21,171		21,213
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations, Series 2001-LIBA, Cl. B, 6.733%, 2/10/162		605,000		640,851
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2005-LDP4, Cl. AM, 4.999%, 10/1/42		1,110,000		937,829
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		3,950,000		3,822,538
JPMorgan Mortgage Trust 2007-S3, Mtg. Pass-Through Certificates, Series 2007-S3, Cl. 1A90, 7%, 7/1/37		849,995		660,628

	Principal
	Amount		Value
Commercial Continued
Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security, Series 1998-C1, Cl. IO, 0%, 2/18/305,6	$	4,052,832	$	124,101
Lehman Structured Securities Corp., Commercial Mtg. Pass-Through Certificates, Series 2002-GE1, Cl. A, 2.514%, 7/1/242		197,329		141,543
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		1,181,193		1,016,054
Salomon Brothers Mortgage Securities VII, Inc., Interest-Only Commercial Mtg. Pass-Through Certificates, Series 1999-C1, Cl. X, 0%, 5/18/325,6		56,213,297		279,689
Structured Asset Securities Corp., Mtg. Pass-Through Certificates, Series 2002-AL1, Cl. B2, 3.45%, 2/25/32		1,947,175		840,854
				15,316,106
Manufactured Housing—1.2%
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through Certificates, Series 2006-AR2, Cl. 2A5, 5.01%, 3/25/361		3,009,037		2,426,578
Multifamily—1.2%
Merrill Lynch Mortgage Investors Trust 2005-A2, Mtg. Pass-Through Certificates, Series 2005-A2, Cl. A2, 4.258%, 2/1/351		126,933		110,360
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 5A1, 5.589%, 7/1/361		715,108		557,652
Wells Fargo Mortgage-Backed Securities 2004-AA Trust, Mtg. Pass-Through Certificates, Series 2004-AA, Cl. 2A, 4.979%, 12/25/341		594,240		575,148
Wells Fargo Mortgage-Backed Securities 2004-S Trust, Mtg. Pass-Through Certificates, Series 2004-S, Cl. A1, 3.105%, 9/25/341		513,966		475,747
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.096%, 3/25/361		696,031		564,359
				2,283,266
Other—0.0%
Salomon Brothers Mortgage Securities VI, Inc., Interest-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. B, 47.878%, 10/23/175		1,606		137
Salomon Brothers Mortgage Securities VI, Inc., Principal-Only Stripped Mtg.-Backed Security, Series 1987-3, Cl. A, 3.994%, 10/23/177		2,377		2,248
				2,385
Residential—0.6%
CHL Mortgage Pass-Through Trust 2005-J4, Mtg. Pass-Through Certificates, Series 2005-J4, Cl. A7, 5.50%, 11/1/35		40,000		28,074
Merrill Lynch Mortgage Investors Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 6.064%, 10/25/361		72,867		62,469
RALI Series 2003-QS1 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2003-QS1, Cl. A2, 5.75%, 1/25/33		399,849		396,793
RALI Series 2006-QS13 Trust:
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A5, 6%, 9/25/36		81,025		53,434
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		10,918		9,944
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A28, 5.75%, 4/25/37		31,145		18,007
Structured Adjustable Rate Mortgage Loan Trust, Mtg. Pass-Through Certificates, Series 2004-5, Cl. 3 A1, 2.963%, 5/1/341		283,913		249,253
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates, Series 2007-HY1, Cl. 4A1, 5.387%, 2/1/371		74,119		52,519
Wells Fargo Mortgage-Backed Securities 2004-R Trust, Mtg. Pass-Through Certificates, Series 2004-R, Cl. 2A1, 3.003%, 9/1/341		329,691		312,700
				1,183,193
Total Mortgage-Backed Obligations (Cost $145,790,334)				146,354,373

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
U.S. Government Obligations—1.8%
Federal Home Loan Mortgage Corp. Nts., 2.50%, 4/23/14	$	2,020,000	$	2,020,867
Federal National Mortgage Assn. Nts., 3%, 9/16/14		1,555,000		1,576,431
Total U.S. Government Obligations (Cost $3,580,579)				3,597,298
Corporate Bonds and Notes—31.7%
Consumer Discretionary—3.8%
Automobiles—0.7%
Daimler Finance North America LLC, 6.50% Sr. Unsec. Unsub. Nts., 11/15/13		455,000		499,215
Ford Motor Credit Co. LLC, 9.75% Sr. Unsec. Nts., 9/15/10		880,000		908,179
				1,407,394
Hotels, Restaurants & Leisure—0.2%
Hyatt Hotels Corp., 5.75% Sr. Unsec. Unsub. Nts., 8/15/152		468,000		471,364
Household Durables—0.3%
Fortune Brands, Inc., 3% Sr. Unsec. Unsub. Bonds, 6/1/12		490,000		485,923
Leisure Equipment & Products—0.2%
Mattel, Inc., 6.125% Sr. Unsec. Nts., 6/15/11		455,000		479,894
Media—1.8%
CBS Corp., 8.875% Sr. Unsec. Nts., 5/15/19		425,000		509,280
Comcast Cable Communications Holdings, Inc., 9.455% Sr. Unsec. Nts., 11/15/22		290,000		373,737
DirecTV Holdings LLC/DirecTV Financing Co., Inc.:
5.875% Sr. Unsec. Unsub. Nts., 10/1/192		383,000		390,266
7.625% Sr. Unsec. Unsub. Nts., 5/15/163		350,000		382,863
DISH DBS Corp., 7.875% Sr. Unsec. Nts., 9/1/19		405,000		426,769
Grupo Televisa SA, 6.625% Sr. Unsec. Bonds, 1/15/402		393,000		390,613
Time Warner Cos., Inc., 9.125% Debs., 1/15/13		320,000		371,556
Time Warner Entertainment Co. LP, 8.375% Sr. Nts., 7/15/33		255,000		305,698
Viacom, Inc., 7.875% Sr. Unsec. Debs., 7/30/30		280,000		302,785
				3,453,567
Specialty Retail—0.6%
Home Depot, Inc. (The), 5.875% Sr. Unsec. Unsub. Nts., 12/16/36		413,000		399,971
Staples, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/1/11		680,000		730,953
				1,130,924
Consumer Staples—2.0%
Beverages—0.7%
Anheuser-Busch InBev Worldwide, Inc., 7.75% Sr. Unsec. Unsub. Nts., 1/15/192		725,000		850,246
Constellation Brands, Inc., 8.375% Sr. Nts., 12/15/143		445,000		476,150
				1,326,396
Food & Staples Retailing—0.2%
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31		250,000		320,935
Food Products—0.6%
Bunge Ltd. Finance Corp.:
5.35% Sr. Unsec. Unsub. Nts., 4/15/14		210,000		214,880
8.50% Sr. Unsec. Nts., 6/15/19		200,000		228,361
Heinz (H.J.) Finance Co., 7.125% Sr. Unsec. Nts., 8/1/392		345,000		391,325
Sara Lee Corp., 6.25% Sr. Unsec. Unsub. Nts., 9/15/11		420,000		448,277
				1,282,843
Tobacco—0.5%
Altria Group, Inc., 9.70% Sr. Unsec. Nts., 11/10/18		785,000		971,907
Energy—4.3%
Energy Equipment & Services—0.5%
Pride International, Inc., 8.50% Sr. Nts., 6/15/19		530,000		614,800
Weatherford International Ltd., 6.50% Sr. Unsec. Bonds, 8/1/36		320,000		306,548
Weatherford International, Inc., 6.625% Sr. Unsec. Unsub. Nts., Series B, 11/15/11		81,000		86,712
				1,008,060
Oil, Gas & Consumable Fuels—3.8%
Anadarko Petroleum Corp., 6.45% Sr. Unsec. Nts., 9/15/36		385,000		403,387
Chesapeake Energy Corp., 6.875% Sr. Unsec. Nts., 1/15/16		430,000		432,150
DCP Midstream LLC, 6.75% Sr. Unsec. Nts., 9/15/372		74,000		73,386
Duke Energy Field Services LLC, 7.875% Unsec. Nts., 8/16/10		425,000		441,907
El Paso Corp., 8.25% Sr. Unsec. Nts., 2/15/16		490,000		525,525

	Principal
	Amount		Value
Oil, Gas & Consumable Fuels Continued
Energy Transfer Partners LP, 7.50% Sr. Unsec. Unsub. Bonds, 7/1/38	$	184,000	$	202,229
Enterprise Products Operating LLP, 7.50% Sr. Unsec. Unsub. Nts., 2/1/11		515,000		545,821
Kaneb Pipe Line Operating Partnership LP, 5.875% Sr. Unsec. Nts., 6/1/13		840,000		869,902
Kerr-McGee Corp., 6.875% Sr. Unsec. Unsub. Nts., 9/15/11		343,000		368,919
Kinder Morgan Energy Partners LP, 9% Sr. Unsec. Nts., 2/1/19		400,000		493,000
Nexen, Inc., 6.40% Sr. Unsec. Unsub. Bonds, 5/15/37		450,000		454,847
Peabody Energy Corp., 6.875% Sr. Unsec. Nts., Series B, 3/15/13		450,000		457,313
Pipeline Funding Co. LLC, 7.50% Sr. Sec. Nts., 1/15/302		325,000		308,083
Plains All American Pipeline LP, 6.50% Sr. Unsec. Unsub. Nts., 5/1/18		550,000		589,112
Ras Laffan Liquefied Natural Gas Co. Ltd. III, 5.50% Sr. Sec. Nts., 9/30/142		270,000		284,214
Williams Cos., Inc. (The), 8.75% Unsec. Nts., 3/15/32		360,000		431,959
Woodside Finance Ltd., 4.50% Nts., 11/10/142		410,000		414,102
				7,295,856
Financials—9.3%
Capital Markets—1.6%
Blackstone Holdings Finance Co. LLC, 6.625% Sr. Unsec. Nts., 8/15/192		728,000		713,791
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34		890,000		835,749
Morgan Stanley:
5.55% Sr. Unsec. Unsub. Nts., Series F, 4/27/17		215,000		216,273
7.30% Sr. Unsec. Nts., 5/13/19		1,180,000		1,327,345
				3,093,158
Commercial Banks—2.2%
Barclays Bank plc, 6.278% Perpetual Bonds3,9		1,060,000		789,700
City National Capital Trust I, 9.625% Jr. Sub. Bonds, 2/1/40		490,000		521,767
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/351		890,000		738,700
PNC Funding Corp., 5.25% Gtd. Unsec. Sub. Nts., 11/15/15		535,000		550,865
Wachovia Corp., 5.625% Sub. Nts., 10/15/16		240,000		245,742
Wells Fargo & Co., 7.98% Jr. Sub. Perpetual Bonds, Series K9		1,415,000		1,425,613
				4,272,387
Consumer Finance—0.5%
Capital One Capital IV, 8.875% Jr. Sub. Nts., 5/15/40		815,000		874,088
Diversified Financial Services—2.6%
Citigroup, Inc., 8.125% Sr. Unsec. Nts., 7/15/39		1,215,000		1,375,444
JPMorgan Chase & Co., 7.90% Perpetual Bonds, Series 19		1,775,000		1,836,830
Merrill Lynch & Co., Inc., 7.75% Jr. Sub. Bonds, 5/14/38		1,730,000		1,906,579
				5,118,853
Insurance—1.9%
AXA SA, 6.379% Sub. Perpetual Bonds2,9		665,000		538,650
Hartford Financial Services Group, Inc. (The):
5.375% Sr. Unsec. Nts., 3/15/17		400,000		381,864
6% Sr. Unsec. Nts., 1/15/19		545,000		531,618
Lincoln National Corp.:
7% Jr. Sub. Bonds, 5/17/661		615,000		516,600
8.75% Sr. Unsec. Nts., 7/1/19		278,000		318,170
Marsh & McLennan Cos., Inc., 5.15% Sr. Unsec. Nts., 9/15/10		455,000		466,526
Principal Life Global Funding I, 4.40% Sr. Sec. Nts., 10/1/102		455,000		464,326
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/232		470,000		504,165
				3,721,919
Real Estate Investment Trusts—0.5%
Simon Property Group LP, 5.375% Sr. Unsec. Unsub. Nts., 6/1/11		447,000		464,173
WEA Finance LLC/WT Finance Aust Pty Ltd., 5.75% Nts., 9/2/152		485,000		512,020
				976,193
Health Care—1.2%
Health Care Equipment & Supplies—0.4%
Boston Scientific Corp., 6% Sr. Unsec. Unsub. Nts., 1/15/20		752,000		769,817
Health Care Providers & Services—0.2%
WellPoint, Inc., 5% Sr. Unsec. Unsub. Nts., 1/15/11		435,000		449,886
Life Sciences Tools & Services—0.4%
Fisher Scientific International, Inc., 6.125% Sr. Unsec. Sub. Nts., 7/1/15		705,000		727,119
Pharmaceuticals—0.2%
Watson Pharmaceuticals, Inc., 6.125% Sr. Unsec. Nts., 8/15/19		460,000		475,485
Industrials—2.9%
Aerospace & Defense—1.0%
BAE Systems Holdings, Inc., 6.375% Nts., 6/1/192		450,000		484,913

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Aerospace & Defense Continued
L-3 Communications Corp., 5.875% Sr. Sub. Nts., 1/15/15	$	485,000	$	486,819
Meccanica Holdings USA, Inc.:
6.25% Sr. Nts., 1/15/402		95,000		95,435
6.25% Sr. Unsec. Unsub. Nts., 7/15/192		265,000		283,266
7.375% Sr. Unsec. Unsub. Nts., 7/15/392		440,000		495,563
				1,845,996
Commercial Services & Supplies—0.4%
Browning-Ferris Industries, Inc., 7.40% Sr. Unsec. Debs., 9/15/35		375,000		415,021
Republic Services, Inc., 6.75% Sr. Unsec. Unsub. Nts., 8/15/11		295,000		311,315
				726,336
Electrical Equipment—0.2%
Roper Industries, Inc., 6.25% Sr. Nts., 9/1/19		475,000		495,401
Industrial Conglomerates—0.6%
General Electric Capital Corp., 5.875% Unsec. Unsub. Nts., 1/14/38		350,000		325,124
Tyco International Ltd./Tyco International Finance SA, 6.875% Sr. Unsec. Unsub. Nts., 1/15/21		820,000		921,813
				1,246,937
Machinery—0.3%
SPX Corp., 7.625% Sr. Unsec. Nts., 12/15/14		510,000		527,850
Road & Rail—0.4%
CSX Corp., 7.375% Sr. Unsec. Nts., 2/1/19		685,000		783,879
Information Technology—0.7%
Electronic Equipment & Instruments—0.4%
Agilent Technologies, Inc., 5.50% Sr. Unsec. Unsub. Nts., 9/14/15		759,000		796,556
Software—0.3%
CA, Inc., 5.375% Sr. Unsec. Unsub. Nts., 12/1/19		570,000		574,290
Materials—2.4%
Chemicals—0.7%
Airgas, Inc., 4.50% Sr. Unsec. Unsub. Nts., 9/15/14		242,000		245,925
Terra Capital, Inc., 7.75% Sr. Nts., 11/1/192		620,000		666,500
Yara International ASA, 7.875% Nts., 6/11/192		402,000		459,775
				1,372,200
Containers & Packaging—0.3%
Ball Corp., 7.125% Sr. Unsec. Nts., 9/1/16		480,000		494,400
Metals & Mining—1.4%
Freeport-McMoRan Copper & Gold, Inc., 8.25% Sr. Unsec. Nts., 4/1/15		725,000		791,095
Teck Resources Ltd., 9.75% Sr. Sec. Nts., 5/15/14		535,000		619,931
Vale Overseas Ltd., 6.875% Sr. Unsec. Nts., 11/10/39		495,000		500,803
Xstrata Canada Corp.:
5.375% Sr. Unsec. Unsub. Nts., 6/1/15		245,000		253,886
6% Sr. Unsec. Unsub. Nts., 10/15/15		347,000		371,038
Xstrata Finance Canada Ltd., 6.90% Nts., 11/15/372		231,000		236,297
				2,773,050
Telecommunication Services—3.0%
Diversified Telecommunication Services—2.7%
AT&T, Inc., 6.30% Sr. Unsec. Bonds, 1/15/38		540,000		550,310
British Telecommunications plc, 9.625% Bonds, 12/15/30		290,000		370,468
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		455,000		458,413
Deutsche Telekom International Finance BV, 8.50% Unsub. Nts., 6/15/101		427,000		441,322
Embarq Corp., 6.738% Sr. Unsec. Nts., 6/1/13		430,000		467,544
Telecom Italia Capital SA, 4.875% Sr. Unsec. Unsub. Nts., 10/1/10		880,000		900,841
Telefonica Europe BV, 7.75% Unsec. Nts., 9/15/10		420,000		439,441
Telus Corp., 8% Nts., 6/1/11		690,000		747,247
Verizon Communications, Inc., 6.40% Sr. Unsec. Nts., 2/15/38		350,000		367,111
Windstream Corp., 8.625% Sr. Unsec. Unsub. Nts., 8/1/16		530,000		541,925
				5,284,622
Wireless Telecommunication Services—0.3%
American Tower Corp., 7% Sr. Unsec. Nts., 10/15/17		360,000		400,500
Rogers Wireless, Inc., 9.625% Sr. Sec. Nts., 5/1/11		179,000		196,473
				596,973
Utilities—2.1%
Electric Utilities—0.4%
Allegheny Energy Supply Co. LLC, 8.25% Bonds, 4/15/122		350,000		383,125
Exelon Corp., 5.625% Sr. Unsec. Bonds, 6/15/35		325,000		294,836
				677,961

	Principal
	Amount			Value
Energy Traders—0.8%
Constellation Energy Group, Inc., 7.60% Unsec. Nts., 4/1/32	$	465,000		$	506,362
NRG Energy, Inc., 7.375% Sr. Nts., 2/1/16		455,000			456,706
Oncor Electric Delivery Co., 6.375% Sr. Sec. Nts., 1/15/15		589,000			643,198
					1,606,266
Multi-Utilities—0.9%
CMS Energy Corp., 6.55% Sr. Unsec. Unsub. Nts., 7/17/17		535,000			531,020
NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10		432,000			452,987
Sempra Energy:
6.50% Sr. Unsec. Nts., 6/1/16		250,000			271,484
9.80% Sr. Unsec. Nts., 2/15/19		390,000			487,546
					1,743,037
Total Corporate Bonds and Notes (Cost $58,331,451)					61,659,722
	Units			Value
Rights, Warrants and Certificates—0.0%
Pathmark Stores, Inc. Wts., Strike Price $22.31, Exp. 9/19/1010 (Cost $14,872)		5,408		$	—
	Shares
Investment Companies—12.7%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%11,12		795,482			795,482
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%11,13		23,853,396			23,853,396
Total Investment Companies (Cost $24,648,878)					24,648,878
Total Investments, at Value (Cost $251,487,414)		129.6	%		251,927,963
Liabilities in Excess of Other Assets		(29.6	)		(57,614,046	)
Net Assets		100.0	%	$	194,313,917

Footnotes to Statement of Investments

1.	Represents the current interest rate for a variable or increasing rate security.
2.	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 $12,248,497 or 6.30% of the Fund’s net assets as of December 31, 2009.
3.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $3,459,432, which represents 1.78% of the Fund’s net assets. See Note 6 of accompanying Notes.
4.	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 $699,315. See Note 5 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 $11,757,349 or 6.05% of the Fund’s net assets as of December 31, 2009.
6.	The current amortization rate of the security’s cost basis exceeds the future interest payments currently estimated to be received. Both the amortization rate and interest payments are contingent on future mortgage pre-payment speeds and are therefore subject to change.
7.	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 $430,320 or 0.22% of the Fund’s net assets as of December 31, 2009.
8.	When-issued security or delayed delivery to be delivered and settled after December 31, 2009. See Note 1 of accompanying Notes.
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.	Non-income producing security.
11.	Rate shown is the 7-day yield as of December 31, 2009.
12.	Interest rate is less than 0.0005%.
13.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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:

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

	Shares		Gross		Gross		Shares
	December 31, 2008		Additions		Reductions		December 31, 2009
OFI Liquid Assets Fund, LLC		—		810,000		810,000		—
Oppenheimer Institutional Money Market Fund, Cl. E		13,605,218		215,704,781		205,456,603		23,853,396

	Value		Income
OFI Liquid Assets Fund, LLC	$	—	$	1,106	a
Oppenheimer Institutional Money Market Fund, Cl. E		23,853,396		129,358
	$	23,853,396	$	130,464

a. Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)
2)	Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)
3)	Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

							Level 3–
	Level 1–			Level 2–			Significant
	Unadjusted			Other Significant			Unobservable
	Quoted Prices			Observable Inputs			Inputs		Value
Assets Table
Investments, at Value:
Asset-Backed Securities	$	—		$	15,667,692		$	—	$	15,667,692
Mortgage-Backed Obligations		—			146,354,373			—		146,354,373
U.S. Government Obligations		—			3,597,298			—		3,597,298
Corporate Bonds and Notes		—			61,659,722			—		61,659,722
Rights, Warrants and Certificates		—			—			—		—
Investment Companies		24,648,878			—			—		24,648,878
Total Investments, at Value		24,648,878			227,279,085			—		251,927,963
Other Financial Instruments:
Futures margins		38,427			—			—		38,427
Total Assets	$	24,687,305		$	227,279,085		$	—	$	251,966,390
Liabilities Table
Other Financial Instruments:
Depreciated swaps, at value	$	—		$	(65,987	)	$	—	$	(65,987	)
Futures margins		(105,716	)		—			—		(105,716	)
Total Liabilities	$	(105,716	)	$	(65,987	)	$	—	$	(171,703	)

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

Futures Contracts as of December 31, 2009 are as follows:

								Unrealized
		Number of		Expiration				Appreciation
Contract Description	Buy/Sell	Contracts		Date		Value		(Depreciation)
U.S. Long Bonds	Buy		125		3/22/10	$	14,421,875	$	(615,480	)
U.S. Treasury Nts., 2 yr.	Sell		101		3/31/10		21,842,828		113,868
U.S. Treasury Nts., 5 yr.	Sell		67		3/31/10		7,663,648		134,160
U.S. Treasury Nts., 10 yr.	Buy		118		3/22/10		13,623,469		(371,592	)
								$	(739,044	)

Credit Default Swap Contracts as of December 31, 2009 are as follows:

	Buy/Sell	Notional		Pay/
Reference Entity/	Credit	Amount		Receive			Termination					Unrealized
Swap Counterparty	Protection	(000’s)		Fixed Rate			Date		Value			Depreciation
Vale Inco Ltd.:
Morgan Stanley Capital Services, Inc.	Buy	$	1,030		0.70	%		3/20/17	$	(27,000	)	$	27,000
Morgan Stanley Capital Services, Inc.	Buy		1,015		0.63			3/20/17		(21,966	)		21,966
	Total		2,045							(48,966	)		48,966
Vale Overseas:
Morgan Stanley Capital Services, Inc.	Sell		1,030		1.17			3/20/17		(6,287	)		6,287
Morgan Stanley Capital Services, Inc.	Sell		1,015		1.10			3/20/17		(10,734	)		10,734
	Total		2,045							(17,021	)		17,021
	Grand Total Buys									(48,966	)		48,966
	Grand Total Sells									(17,021	)		17,021
	Total Credit Default Swaps								$	(65,987	)	$	65,987

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**
Investment Grade Single
Name Corporate Debt	$	2,045,000	$	—	BBB+

*	The Fund has no amounts recoverable from related purchased 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 period end reference asset security ratings, 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 credit event on the reference asset which would result in a related payment by the Fund.

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, 2009 is as follows:

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)		Value
Morgan Stanley
Capital Services, Inc.:
	Credit Default Buy Protection	$	2,045	$	(48,966	)
	Credit Default Sell Protection		2,045		(17,021	)
		Total Swaps		$	(65,987	)

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $227,634,018)	$	228,074,567
Affiliated companies (cost $23,853,396)		23,853,396
		251,927,963
Receivables and other assets:
Interest, dividends and principal paydowns		1,676,036
Shares of beneficial interest sold		89,102
Futures margins		38,427
Other		19,279
Total assets		253,750,807
Liabilities
Depreciated swaps, at value		65,987
Payables and other liabilities:
Investments purchased on a when-issued or delayed delivery basis		58,841,938
Futures margins		105,716
Shares of beneficial interest redeemed		61,349
Shareholder communications		35,619
Distribution and service plan fees		35,236
Transfer and shareholder servicing agent fees		16,557
Trustees’ compensation		12,758
Other		261,730
Total liabilities		59,436,890
Net Assets	$	194,313,917
Composition of Net Assets
Par value of shares of beneficial interest	$	27,582
Additional paid-in capital		316,302,733
Accumulated net investment income		3,511,374
Accumulated net realized loss on investments		(125,163,290	)
Net unrealized depreciation on investments		(364,482	)
Net Assets	$	194,313,917
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 $137,597,247 and 19,473,425 shares of beneficial interest outstanding)	$	7.07
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $56,716,670 and 8,108,411 shares of beneficial interest outstanding)	$	6.99

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Interest (net of foreign withholding taxes of $376)	$	13,270,100
Fee income		1,838,875
Dividends:
Unaffiliated companies		4,934
Affiliated companies		129,358
Income from investment of securities lending cash collateral, net—affliated companies		1,106
Total investment income		15,244,373
Expenses
Management fees		1,142,088
Distribution and service plan fees—Service shares		131,620
Transfer and shareholder servicing agent fees:
Non-Service shares		95,088
Service shares		38,325
Shareholder communications:
Non-Service shares		88,823
Service shares		34,552
Trustees’ compensation		12,855
Custodian fees and expenses		1,524
Other		25,249
Total expenses		1,570,124
Less waivers and reimbursements of expenses		(285,188	)
Net expenses		1,284,936
Net Investment Income		13,959,437
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investment from unaffiliated companies		(51,573,877	)
Closing and expiration of futures contracts		(1,374,632	)
Swap contracts		(16,366,593	)
Net realized loss		(69,315,102	)
Net change in unrealized appreciation (depreciation) on:
Investments		69,934,926
Futures contracts		(645,574	)
Swap contracts		596,596
Net change in unrealized depreciation		69,885,948
Net Increase in Net Assets Resulting from Operations	$	14,530,283

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	13,959,437		$	25,010,517
Net realized loss		(69,315,102	)		(108,962,092	)
Net change in unrealized depreciation		69,885,948			(67,980,167	)
Net increase (decrease) in net assets resulting from operations		14,530,283			(151,931,742	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		—			(12,773,902	)
Service shares		—			(4,423,158	)
		—			(17,197,060	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(29,962,563	)		(47,839,123	)
Service shares		(9,685,378	)		7,196,319
		(39,647,941	)		(40,642,804	)
Net Assets
Total decrease		(25,117,658	)		(209,771,606	)
Beginning of period		219,431,575			429,203,181
End of period (including accumulated net investment income (loss) of $3,511,374 and $(466,070), respectively)	$	194,313,917		$	219,431,575

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	6.45		$	11.06		$	11.16		$	11.19		$	11.50
Income (loss) from investment operations:
Net investment income1		.48			.66			.55			.53			.51
Net realized and unrealized gain (loss)		.14			(4.82	)		(.08	)		.03			(.23	)
Total from investment operations		.62			(4.16	)		.47			.56			.28
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.45	)		(.57	)		(.59	)		(.59	)
Net asset value, end of period	$	7.07		$	6.45		$	11.06		$	11.16		$	11.19
Total Return, at Net Asset Value2		9.61	%		(39.05	)%		4.39	%		5.28	%		2.59	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	137,597		$	156,339		$	325,661		$	367,106		$	430,642
Average net assets (in thousands)	$	137,631		$	271,355		$	345,723		$	391,750		$	466,033
Ratios to average net assets:3
Net investment income		7.40	%		6.76	%		5.07	%		4.83	%		4.56	%
Total expenses		0.75	%4	0.63		%4	0.68		%4	0.77		%4		0.76	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.61	%		0.62	%		0.68	%		0.77	%		0.76	%
Portfolio turnover rate5		143	%		51	%		89	%		114	%		111	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.76	%
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, 2009	$	977,840,247	$	1,009,549,121
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

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	6.41		$	10.98		$	11.10		$	11.15		$	11.47
Income (loss) from investment operations:
Net investment income1		.46			.63			.52			.49			.47
Net realized and unrealized gain (loss)		.12			(4.77	)		(.08	)		.03			(.22	)
Total from investment operations		.58			(4.14	)		.44			.52			.25
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.43	)		(.56	)		(.57	)		(.57	)
Net asset value, end of period	$	6.99		$	6.41		$	10.98		$	11.10		$	11.15
Total Return, at Net Asset Value2		9.05	%		(39.07	)%		4.09	%		4.93	%		2.33	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	56,717		$	63,093		$	103,542		$	41,191		$	11,110
Average net assets (in thousands)	$	52,648		$	101,597		$	70,116		$	21,265		$	7,213
Ratios to average net assets:3
Net investment income		7.16	%		6.55	%		4.85	%		4.56	%		4.29	%
Total expenses		1.01	%4	0.88		%4	0.92		%4		1.06	%4	1.03		%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.86	%		0.87	%		0.92	%		1.06	%		1.03	%
Portfolio turnover rate5		143	%		51	%		89	%		114	%		111	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.02	%
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:

	PurchaseTransactions		Sale Transactions
Year Ended December 31, 2009	$	977,840,247	$	1,009,549,121
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

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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

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 unadjusted 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.

     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, 2009, 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	$	58,841,938

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.

     Forward roll transactions may be deemed to entail embedded leverage since the Fund purchases mortgage-related securities with extended settlement dates rather than paying for the securities under a normal settlement cycle. This embedded leverage increases the Fund’s market value of investments relative to its net assets which can incrementally increase the volatility of the Fund’s performance. Forward roll transactions can be replicated over multiple settlement periods.

     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; and 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.

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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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.

Investment 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. When applicable, the Fund’s investment in LAF is included in the Statement of Investments. Shares of LAF are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

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.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

					Net Unrealized
					Appreciation 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
$3,458,140	$	—	$	125,758,383	$	296,600

1. As of December 31, 2009, the Fund had $125,312,251 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, 2009, details of the capital loss carryforwards were as follows:

Expiring
2010	$	29,885,554
2013		226,262
2014		6,107,275
2015		1,245,459
2016		12,777,851
2017		75,069,850
Total	$	125,312,251

2.	As of December 31, 2009, the Fund had $446,132 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2018.
3.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
4.	During the fiscal year ended December 31, 2008, 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

	Reduction		Reduction
	to Accumulated		to Accumulated Net
Increase	Net Investment		Realized Loss
to Paid-in Capital	Income		on Investments
$226,161	$	9,981,993	$	9,755,832
The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:
	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	—	$	17,197,060

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, 2009 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	$	251,631,364
Federal tax cost of other investments		(1,527,120	)
Total federal tax cost	$	250,104,244
Gross unrealized appreciation	$	9,214,141
Gross unrealized depreciation		(8,917,541	)
Net unrealized appreciation	$	296,600

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.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		1,228,549		$	7,870,664			1,056,698		$	9,889,610
Dividends and/or distributions reinvested		—			—			1,288,991			12,773,902
Acquisition-Note 10		—			—			1,626,777			17,178,762
Redeemed		(5,976,436	)		(37,833,227	)		(9,205,898	)		(87,681,397	)
Net decrease		(4,747,887	)	$	(29,962,563	)		(5,233,432	)	$	(47,839,123	)
Service Shares
Sold		1,841,099		$	11,758,361			4,464,539		$	42,884,220
Dividends and/or distributions reinvested		—			—			449,051			4,423,158
Redeemed		(3,581,065	)		(21,443,739	)		(4,496,387	)		(40,111,059	)
Net increase (decrease)		(1,739,966	)	$	(9,685,378	)		417,203		$	7,196,319

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 IMMF and LAF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	182,651,304	$	192,850,959
U.S. government and government agency obligations		17,713,548		14,516,064
To Be Announced (TBA) mortgage-related securities		977,840,247		1,009,549,121

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. For the year ended December 31, 2009, the Fund paid $118,576 to OFS for services to the Fund.

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 daily 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 May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.75% for Non-Service shares and 1.00% for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed $3,182 and $2,460 for Non-Service and Service shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

     Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.18% of the Fund’s average annual net assets. During the year ended December 31, 2009, the Manager waived $254,480. This voluntary waiver will be applied after all other waivers and may be withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived $25,066. for IMMF management fees.

5. Risk Exposures and the Use of Derivative Instruments

The Fund’s investment objectives not only permit the Fund to purchase investment securities, they also allow the Fund to enter into various types of derivatives contracts, including, but not limited to, futures contracts, forward foreign currency exchange contracts, credit default swaps, interest rate swaps, total return swaps, and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase, decrease, or change the level or types of exposure to market risk factors. Central to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity and debt securities: they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Fund to pursue its objectives more quickly and efficiently than if it were to make direct purchases or sales of securities capable of effecting a similar response to market factors.

Market Risk Factors. In accordance with its investment objectives, the Fund may use derivatives to increase or decrease its exposure to one or more of the following market risk factors defined below:

Commodity Risk. Commodity risk relates to the change in value of commodities or commodity indexes as they relate to increases or decreases in the commodities market. Commodities are physical assets that have tangible properties. Examples of these types of assets are crude oil, heating oil, metals, livestock, and agricultural products.

Credit Risk. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds.

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Foreign Exchange Rate Risk. Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency.

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Volatility Risk. Volatility risk refers to the magnitude of the movement, but not the direction of the movement, in a financial instrument’s price over a defined time period. Large increases or decreases in a financial instrument’s price over a relative time period typically indicate greater volatility risk, while small increases or decreases in its price typically indicate lower volatility risk.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

     Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Fund to increase its market value exposure relative to its net assets and can substantially increase the volatility of the Fund’s performance.

     Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Typically, the associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Counterparty Credit Risk. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction. To reduce this risk the Fund has entered into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) master agreements, which allow the Fund to net unrealized appreciation and depreciation for positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty. In addition, the Fund may require that certain counterparties post cash and/or securities in collateral accounts to cover their net payment obligations for those derivative contracts subject to ISDA master agreements. If the counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Fund.

     As of December 31, 2009 the Fund has not required certain counterparties to post collateral.

Credit Related Contingent Features. The Fund has several credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s Net Asset Value or NAV. The contingent features are established within the Fund’s ISDA master agreements which govern positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty.

     As of December 31, 2009, the aggregate fair value of derivative instruments with credit related contingent features in a net liability position was $65,987 for which collateral was not posted by the Fund. If a contingent feature would have been triggered as of December 31, 2009, the Fund could have been required to pay this amount in cash to its counter-parties. If the Fund fails to perform under these contracts and agreements, the cash and/or securities posted as collateral will be made available to the counterparty. Cash posted as collateral for these contracts, if any, is reported on the Statement of Assets and Liabilities; securities posted as collateral, if any, are reported on the Statement of Investments.

Valuations of derivative instruments as of December 31, 2009 are as follows:

	Asset Derivatives				Liability Derivatives
	Statement				Statement
Derivatives not	of Assets				of Assets
Accounted for as	and Liabilities				and Liabilities
Hedging Instruments	Location	Value			Location	Value
Credit contracts					Depreciated swaps, at value	$	65,987
Interest rate contracts	Futures margins	$	38,427	*	Futures margins		105,716	*
Total		$	38,427			$	171,703

*  Includes only the current day’s variation margin. Prior variation margin movements have been reflected in cash on the Statement of Assets and Liabilities upon receipt or payment.

The effect of derivative instruments on the Statement of Operations is as follows:

Amount of Realized Gain or Loss Recognized on Derivatives
Derivatives not	Closing and
Accounted for as	expiration of
Hedging Instruments	futures contracts			Swap contracts			Total
Credit contracts	$	—		$	(12,469,071	)	$	(12,469,071	)
Interest rate contracts		(1,374,632	)		(3,897,522	)		(5,272,154	)
Total	$	(1,374,632	)	$	(16,366,593	)	$	(17,741,225	)

Amount of Change in Unrealized Gain or Loss Recognized on Derivatives
Derivatives not
Accounted for as
Hedging Instruments	Futures contracts			Swap contracts			Total
Credit contracts	$	—		$	(458,039	)	$	(458,039	)
Interest rate contracts		(645,574	)		1,054,635			409,061
Total	$	(645,574	)	$	596,596		$	(48,978	)

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.

The Fund has purchased futures contracts on various bonds and notes to increase exposure to interest rate risk.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

     The Fund has sold futures contracts on various bonds and notes to decrease exposure to interest rate risk.

     Additional associated 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.

Swap Contracts

The Fund may enter into swap contract agreements with a counterparty to exchange a series of cash flows based on either specified reference rates, or the occurrence of a credit event, over a specified period. Such contracts may include interest rate, equity, debt, index, total return, credit and currency swaps.

     Swaps are marked to market daily using primarily quotations from pricing services, counterparties and brokers. Swap contracts are reported on a schedule following the Statement of Investments. The values of swap contracts are aggregated by positive and negative values and disclosed separately on the Statement of Assets and Liabilities by contracts in unrealized appreciation and depreciation positions. Upfront payments paid or received, if any, affect the value of the respective swap. Therefore, to determine the unrealized appreciation (depreciation) on swaps, upfront payments paid should be subtracted from, while upfront payments received should be added to, the value of contracts reported as an asset on the Statement of Assets and Liabilities. Conversely, upfront payments paid should be added to, while upfront payments received should be subtracted from the value of contracts reported as a liability. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is 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. The Fund also records any periodic payments received from (paid to) the counterparty, including at termination, under such contracts as realized gain (loss) on the Statement of Operations.

     Swap contract agreements are exposed to the market risk factor of the specific underlying reference asset. Swap contracts are typically more attractively priced compared to similar investments in related cash securities because they isolate the risk to one market risk factor and eliminate the other market risk factors. Investments in cash securities (for instance bonds) have exposure to multiple risk factors (credit and interest rate risk). Because swaps require little or no initial cash investment, they can expose the Fund to substantial risk in the isolated market risk factor.

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.

     The Fund has sold credit protection through credit default swaps to increase exposure to the credit risk of individual securities and, or, indexes that are either unavailable or considered to be less attractive in the bond market.

     The Fund has purchased credit protection through credit default swaps to decrease exposure to the credit risk of individual securities and, or, indexes.

     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.

     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.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

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.

     The Fund has entered into interest rate swaps in which it pays a floating interest rate and receives a fixed interest rate in order to increase exposure to interest rate risk. Typically, if relative interest rates rise, payments made by the Fund under a swap agreement will be greater than the payments received by the Fund.

     The Fund has entered into interest rate swaps in which it pays a fixed interest rate and receives a floating interest rate in order to decrease exposure to interest rate risk. Typically, if relative interest rates rise, payments received by the Fund under the swap agreement will be greater than the payments made by the Fund.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

     As of December 31, 2009, the Fund had no such interest rate swap agreements outstanding.

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.

     Total return swap contracts are exposed to the market risk factor of the specific underlying financial instrument or index. Total return swaps are less standard in structure than other types of swaps and can isolate and, or, include multiple types of market risk factors including equity risk, credit risk, and interest rate risk.

     The Fund has entered into total return swaps to increase exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the Fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

     The Fund has entered into total return swaps to decrease exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

     As of December 31, 2009, the Fund had no such total return swap agreements outstanding.

6. Illiquid Securities

As of December 31, 2009, 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.

NOTES TO FINANCIAL STATEMENTS Continued

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, 2009, the Fund had no securities on loan.

8. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

9. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

10. 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 exchange qualified as a tax-free reorganization for federal income tax purposes.

Details of the merger are shown in the following table:

	Exchange Ratio to One		Shares of Beneficial		Value of Issued		Combined
	Share of Government		Interest Issued by		Shares of		Net Assets on
	Securities Portfolio		the Fund		Beneficial Interest		April 30, 20081
Non-Service		0.0979		1,626,777	$	17,178,762	$	321,759,067

1. The net assets acquired included net unrealized appreciation of $284,900 and an unused capital loss carryforward of $194,746, potential utilization subject to tax limitations.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Global Securities Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Global Securities Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Global Securities Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp
Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Shares		Value
Common Stocks—98.7%
Consumer Discretionary—15.5%
Automobiles—1.1%
Bayerische Motoren Werke (BMW) AG		236,412	$	10,845,054
Bayerische Motoren Werke (BMW) AG, Preference		538,031		17,554,633
				28,399,687
Hotels, Restaurants & Leisure—3.3%
Carnival Corp.1		1,187,126		37,620,023
Lottomatica SpA		232,100		4,650,525
McDonald’s Corp.		620,700		38,756,508
Shuffle Master, Inc.1		597,400		4,922,576
				85,949,632
Household Durables—1.4%
Sony Corp.		1,327,800		38,488,246
Media—3.6%
Grupo Televisa SA, Sponsored GDR		1,543,096		32,034,673
Sirius XM Radio, Inc.1		12,973,910		7,784,346
Walt Disney Co. (The)		1,306,300		42,128,175
Wire & Wireless India Ltd.1		2,212,100		423,073
Zee Entertainment Enterprises Ltd.		2,140,210		11,763,554
				94,133,821
Specialty Retail—2.6%
Industria de Diseno Textil SA		521,200		32,295,426
Tiffany & Co.		842,400		36,223,200
				68,518,626
Textiles, Apparel & Luxury Goods—3.5%
Bulgari SpA		1,892,478		15,613,072
LVMH Moet Hennessy Louis Vuitton SA		510,030		57,307,727
Tod’s SpA		276,497		20,484,612
				93,405,411
Consumer Staples—11.5%
Beverages—3.5%
Companhia de Bebidas das Americas, Sponsored ADR, Preference		199,315		20,148,753
Diageo plc		802,645		13,997,581
Fomento Economico Mexicano SA de CV, UBD		7,658,100		36,739,211
Grupo Modelo SA de CV, Series C1		3,786,000		21,010,824
				91,896,369
Food & Staples Retailing—2.9%
Seven & I Holdings Co. Ltd.		420,453		8,533,975
Tesco plc		4,521,385		31,065,498
Wal-Mart Stores, Inc.		676,400		36,153,580
				75,753,053
Food Products—2.7%
Cadbury plc		2,089,801		26,919,116
Nestle SA		368,332		17,874,490
Unilever plc		875,503		28,024,056
				72,817,662
Household Products—2.4%
Colgate-Palmolive Co.		428,500		35,201,275
Reckitt Benckiser Group plc		508,418		27,559,291
				62,760,566
Energy—4.8%
Energy Equipment & Services—2.6%
Technip SA		521,580		36,548,996
Transocean Ltd.1		368,172		30,484,642
				67,033,638
Oil, Gas & Consumable Fuels—2.2%
Husky Energy, Inc.		682,830		19,639,075
Total SA		607,820		38,949,995
				58,589,070
Financials—14.5%
Capital Markets—3.7%
3i Group plc		2,497,728		11,291,137
Credit Suisse Group AG		1,185,416		58,383,087
UBS AG1		1,808,659		27,784,473
				97,458,697
Commercial Banks—3.3%
HDFC Bank Ltd.		137,100		4,988,086
HSBC Holdings plc		3,720,973		42,360,803
Societe Generale, Cl. A		310,782		21,503,738
Sumitomo Mitsui Financial Group, Inc.		637,100		18,163,465
				87,016,092
Consumer Finance—1.2%
SLM Corp.1		2,785,550		31,393,149
Diversified Financial Services—1.1%
Investor AB, B Shares		1,535,154		28,378,833
Insurance—5.2%
AFLAC, Inc.		673,000		31,126,250
Allianz SE		296,619		37,124,317
Fidelity National Financial, Inc., Cl. A		913,700		12,298,402
Prudential plc		2,790,297		28,424,844

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Insurance Continued
XL Capital Ltd., Cl. A		1,472,600	$	26,992,758
				135,966,571
Health Care—6.9%
Biotechnology—1.2%
Amylin Pharmaceuticals, Inc.1		360,968		5,122,136
Basilea Pharmaceutica AG1		29,923		1,849,494
InterMune, Inc.1		324,300		4,228,872
NicOx SA1		201,870		1,686,277
Regeneron Pharmaceuticals, Inc.1		200,802		4,855,392
Seattle Genetics, Inc.1		731,028		7,427,244
Theravance, Inc.1		551,800		7,212,026
				32,381,441
Health Care Providers & Services—2.4%
Aetna, Inc.		982,600		31,148,420
WellPoint, Inc.1		537,035		31,303,770
				62,452,190
Pharmaceuticals—3.3%
Bayer AG		143,664		11,529,539
Roche Holding AG		294,603		50,066,419
Sanofi-Aventis SA		307,205		24,080,756
				85,676,714
Industrials—13.6%
Aerospace & Defense—3.6%
Boeing Co. (The)		220,400		11,930,252
Empresa Brasileira de Aeronautica SA, ADR		873,583		19,314,920
European Aeronautic Defense & Space Co.		1,394,530		27,856,565
Lockheed Martin Corp.		179,900		13,555,465
Raytheon Co.		426,600		21,978,432
				94,635,634
Air Freight & Logistics—1.0%
TNT NV		907,427		27,775,249
Building Products—1.6%
Assa Abloy AB, Cl. B		2,149,185		41,155,018
Commercial Services & Supplies—0.7%
Secom Co. Ltd.		391,600		18,522,663
Electrical Equipment—1.1%
Emerson Electric Co.		465,900		19,847,340
Prysmian SpA		488,000		8,527,775
				28,375,115
Industrial Conglomerates—5.2%
3M Co.		468,500		38,730,895
Koninklijke (Royal) Philips Electronics NV		1,125,400		33,363,350
Siemens AG		691,081		63,545,844
				135,640,089
Machinery—0.4%
Fanuc Ltd.		126,300		11,744,046
Information Technology—28.7%
Communications Equipment—6.5%
Juniper Networks, Inc.1		1,987,600		53,009,292
Tandberg ASA		641,750		18,288,844
Telefonaktiebolaget LM Ericsson,B Shares		10,806,080		99,532,566
				170,830,702
Electronic Equipment & Instruments—5.1%
Corning, Inc.		1,640,800		31,683,848
Hoya Corp.		1,003,500		26,603,550
Keyence Corp.		92,374		19,043,118
Kyocera Corp.		156,800		13,828,747
Murata Manufacturing Co. Ltd.		562,300		27,772,373
Nidec Corp.		168,600		15,459,752
				134,391,388
Internet Software & Services—2.0%
eBay, Inc.1		2,278,400		53,633,536
IT Services—3.3%
Automatic Data Processing, Inc.		835,000		35,754,700
Infosys Technologies Ltd.		934,126		51,985,900
				87,740,600
Semiconductors & Semiconductor Equipment—4.4%
Altera Corp.		1,280,900		28,986,767
Linear Technology Corp.		231,296		7,063,780
Maxim Integrated Products, Inc.		1,301,365		26,417,710
MediaTek, Inc.		1,549,696		26,911,945
Taiwan Semiconductor Manufacturing Co. Ltd.		13,162,184		26,402,511
				115,782,713
Software—7.2%
Adobe Systems, Inc.1		944,363		34,733,671
Intuit, Inc.1		1,461,100		44,870,381
Microsoft Corp.		1,755,800		53,534,342
Nintendo Co. Ltd.		58,700		13,891,104
SAP AG		939,069		44,397,510
				191,427,008

	Shares			Value
Materials—0.3%
Chemicals—0.3%
Linde AG		59,430		$	7,143,664
Telecommunication Services—2.0%
Wireless Telecommunication Services—2.0%
KDDI Corp.		5,485			28,924,502
Vodafone Group plc		10,569,572			24,532,360
					53,456,862
Utilities—0.9%
Electric Utilities—0.9%
Fortum OYJ		910,500			24,666,340
Total Common Stocks (Cost $2,204,670,375)					2,595,390,095
	Principal
	Amount
Convertible Corporate Bonds and Notes—0.1%
Theravance, Inc., 3% Cv. Sub. Nts., 1/15/15 (Cost $2,882,889)	$	2,882,000		$	2,283,984
	Shares
Investment Company—1.2%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%2,3		396,461			396,461
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%2,4		30,907,869			30,907,869
Total Investment Companies (Cost $31,304,330)					31,304,330
Total Investments, at Value (Cost $2,238,857,594)		100.0	%	$	2,628,978,409
Other Assets Net of Liabilities		0.0			502,142
Net Assets		100.0	%	$	2,629,480,551

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Rate shown is the 7-day yield as of December 31, 2009.
3.	Interest rate is less than 0.0005%.
4.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
OFI Liquid Assets Fund, LLC		—		342,533,185		342,533,185		—
Oppenheimer Institutional Money Market Fund, Cl. E		24,247,807		375,467,281		368,807,219		30,907,869
					Value		Income
OFI Liquid Assets Fund, LLC					$	—	$	935,043	a
Oppenheimer Institutional Money Market Fund, Cl. E						30,907,869		132,230
					$	30,907,869	$	1,067,273

a. Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2)    Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3)    Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value
Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	301,213,060	$	107,682,363	$	—	$	408,895,423
Consumer Staples		221,606,540		81,621,110		—		303,227,650
Energy		50,123,717		75,498,991		—		125,622,708
Financials		101,810,559		278,402,783		—		380,213,342
Health Care		143,050,556		37,459,789		—		180,510,345
Industrials		167,248,429		190,599,385		—		357,847,814
Information Technology		563,675,784		190,130,163		—		753,805,947
Materials		7,143,664		—		—		7,143,664
Telecommunication Services		24,532,360		28,924,502		—		53,456,862
Utilities		—		24,666,340		—		24,666,340
Convertible Corporate Bonds and Notes		—		2,283,984		—		2,283,984
Investment Companies		31,304,330		—		—		31,304,330
Total Assets	$	1,611,708,999	$	1,017,269,410	$	—	$	2,628,978,409

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

Distribution of investments representing geographic holdings, as a percentage of total investments at value, is as follows:

Geographic Holdings	Value		Percent
United States	$	944,708,711		36.0	%
Japan		240,975,541		9.2
United Kingdom		234,174,686		8.9
France		207,934,054		7.9
Germany		192,140,561		7.3
Sweden		169,066,417		6.4
Switzerland		155,957,963		5.9
Mexico		89,784,708		3.4
India		69,160,613		2.6
The Netherlands		61,138,599		2.3
Taiwan		53,314,456		2.0
Italy		49,275,984		1.9
Brazil		39,463,673		1.5
Spain		32,295,426		1.2
Cayman Islands		26,992,758		1.0
Finland		24,666,340		1.0
Canada		19,639,075		0.8
Norway		18,288,844		0.7
Total	$	2,628,978,409		100.0	%

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $2,207,949,725)	$	2,598,070,540
Affiliated companies (cost $30,907,869)		30,907,869
		2,628,978,409
Cash—foreign currencies (cost$46)		46
Receivables and other assets:
Interest and dividends		3,386,479
Shares of beneficial interest sold		44,216
Other		211,314
Total assets		2,632,620,464
Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed		1,608,254
Distribution and service plan fees		651,168
Foreign capital gains tax		273,651
Shareholder communications		242,201
Transfer and shareholder servicing agent fees		223,182
Trustees’ compensation		40,309
Other		101,148
Total liabilities		3,139,913
Net Assets	$	2,629,480,551
Composition of Net Assets
Par value of shares of beneficial interest	$	99,512
Additional paid-in capital		2,319,628,804
Accumulated net investment income		30,325,856
Accumulated net realized loss on investments and foreign currency transactions		(110,598,803	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		390,025,182
Net Assets	$	2,629,480,551
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 $1,364,596,653 and 51,501,209 shares of beneficial interest outstanding)	$	26.50
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $980,484,749 and 37,307,622 shares of beneficial interest outstanding)	$	26.28
Class 3 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $206,356,296 and 7,737,375 shares of beneficial interest outstanding)	$	26.67
Class 4 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $78,042,853 and 2,965,387 shares of beneficial interest outstanding)	$	26.32

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $3,105,080)	$	50,162,670
Affiliated companies		132,230
Income from investment of securities lending cash collateral, net—affiliated companies		935,043
Interest		94,891
Total investment income		51,324,834
Expenses
Management fees		14,552,153
Distribution and service plan fees:
Service shares		2,073,540
Class 4 shares		166,600
Transfer and shareholder servicing agent fees:
Non-Service shares		865,222
Service shares		603,583
Class 3 shares		134,020
Class 4 shares		51,653
Shareholder communications:
Non-Service shares		313,432
Service shares		217,238
Class 3 shares		47,451
Class 4 shares		17,467
Custodian fees and expenses		215,032
Trustees’ compensation		50,856
Other		84,279
Total expenses		19,392,526
Less waivers and reimbursements of expenses		(21,125	)
Net expenses		19,371,401
Net Investment Income		31,953,433
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (net of foreign capital gains tax of $384,799)		(79,868,953	)
Foreign currency transactions		14,766,593
Net realized loss		(65,102,360	)
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $267,772)		779,227,777
Translation of assets and liabilities denominated in foreign currencies		27,371,041
Net change in unrealized appreciation		806,598,818
Net Increase in Net Assets Resulting from Operations	$	773,449,891

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	31,953,433		$	57,466,025
Net realized gain (loss)		(65,102,360	)		24,747,758
Net change in unrealized appreciation (depreciation)		806,598,818			(1,596,274,756	)
Net increase (decrease) in net assets resulting from operations		773,449,891			(1,514,060,973	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(27,800,589	)		(26,708,494	)
Service shares		(16,163,769	)		(13,401,398	)
Class 3 shares		(4,130,611	)		(4,326,225	)
Class 4 shares		(1,262,683	)		(1,190,079	)
		(49,357,652	)		(45,626,196	)
Distributions from net realized gain:
Non-Service shares		(26,507,538	)		(117,354,093	)
Service shares		(17,924,453	)		(71,861,924	)
Class 3 shares		(3,946,570	)		(19,045,871	)
Class 4 shares		(1,437,851	)		(6,614,741	)
		(49,816,412	)		(214,876,629	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(140,936,466	)		(78,197,928	)
Service shares		(37,527,816	)		71,375,736
Class 3 shares		(22,954,318	)		(30,841,100	)
Class 4 shares		(4,666,393	)		(6,272,856	)
		(206,084,993	)		(43,936,148	)
Net Assets
Total increase (decrease)		468,190,834			(1,818,499,946	)
Beginning of period		2,161,289,717			3,979,789,663
End of period (including accumulated net investment income of $30,325,856 and $47,532,805, respectively)	$	2,629,480,551		$	2,161,289,717

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares   Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	20.21		$	36.60		$	36.79		$	33.38		$	29.51
Income (loss) from investment operations:
Net investment income1		.33			.55			.45			.43			.32
Net realized and unrealized gain (loss)		6.94			(14.46	)		1.69			5.20			3.85
Total from investment operations		7.27			(13.91	)		2.14			5.63			4.17
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.50	)		(.46	)		(.50	)		(.36	)		(.30	)
Distributions from net realized gain		(.48	)		(2.02	)		(1.83	)		(1.86	)		—
Total dividends and/or distributions to shareholders		(.98	)		(2.48	)		(2.33	)		(2.22	)		(.30	)
Net asset value, end of period	$	26.50		$	20.21		$	36.60		$	36.79		$	33.38
Total Return, at Net Asset Value2		39.77	%		(40.19	)%		6.32	%		17.69	%		14.31	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,364,597		$	1,150,113		$	2,193,638		$	2,297,315		$	2,124,413
Average net assets (in thousands)	$	1,206,240		$	1,679,720		$	2,302,726		$	2,189,511		$	2,123,523
Ratios to average net assets:3
Net investment income		1.51	%		1.95	%		1.21	%		1.27	%		1.08	%
Total expenses		0.75	%4		0.65	%4		0.65	%4		0.66	%4		0.67	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.75	%		0.65	%		0.65	%		0.66	%		0.67	%
Portfolio turnover rate		11	%		19	%		18	%		21	%		35	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.75	%
Year Ended December 31, 2008	0.65	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

See accompanying Notes to Financial Statements.

Service Shares   Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	20.02		$	36.27		$	36.49		$	33.16		$	29.33
Income (loss) from investment operations:
Net investment income1		.27			.47			.33			.33			.24
Net realized and unrealized gain (loss)		6.90			(14.32	)		1.72			5.16			3.84
Total from investment operations		7.17			(13.85	)		2.05			5.49			4.08
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.43	)		(.38	)		(.44	)		(.30	)		(.25	)
Distributions from net realized gain		(.48	)		(2.02	)		(1.83	)		(1.86	)		—
Total dividends and/or distributions to shareholders		(.91	)		(2.40	)		(2.27	)		(2.16	)		(.25	)
Net asset value, end of period	$	26.28		$	20.02		$	36.27		$	36.49		$	33.16
Total Return, at Net Asset Value2		39.36	%		(40.33	)%		6.08	%		17.36	%		14.06	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	980,485		$	772,107		$	1,300,989		$	983,558		$	557,284
Average net assets (in thousands)	$	830,887		$	1,051,239		$	1,180,656		$	750,499		$	413,849
Ratios to average net assets:3
Net investment income		1.23	%		1.70	%		0.91	%		0.98	%		0.79	%
Total expenses		1.00	%4		0.90	%4		0.89	%4		0.91	%4		0.92	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.00	%		0.90	%		0.89	%		0.91	%		0.92	%
Portfolio turnover rate		11	%		19	%		18	%		21	%		35	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.00	%
Year Ended December 31, 2008	0.90	%
Year Ended December 31, 2007	0.89	%
Year Ended December 31, 2006	0.91	%

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Class 3 Shares   Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	20.34		$	36.82		$	36.99		$	33.55		$	29.65
Income (loss) from investment operations:
Net investment income1		.33			.56			.45			.43			.32
Net realized and unrealized gain (loss)		6.98			(14.56	)		1.71			5.23			3.88
Total from investment operations		7.31			(14.00	)		2.16			5.66			4.20
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.50	)		(.46	)		(.50	)		(.36	)		(.30	)
Distributions from net realized gain		(.48	)		(2.02	)		(1.83	)		(1.86	)		—
Total dividends and/or distributions to shareholders		(.98	)		(2.48	)		(2.33	)		(2.22	)		(.30	)
Net asset value, end of period	$	26.67		$	20.34		$	36.82		$	36.99		$	33.55
Total Return, at Net Asset Value2		39.70	%		(40.19	)%		6.34	%		17.69	%		14.34	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	206,356		$	175,971		$	361,621		$	395,901		$	346,064
Average net assets (in thousands)	$	182,553		$	269,650		$	391,270		$	369,406		$	296,252
Ratios to average net assets:3
Net investment income		1.49	%		1.95	%		1.22	%		1.26	%		1.06	%
Total expenses		0.75	%4		0.65	%4		0.65	%4		0.66	%4		0.67	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.75	%		0.65	%		0.65	%		0.66	%		0.67	%
Portfolio turnover rate		11	%		19	%		18	%		21	%		35	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.75	%
Year Ended December 31, 2008	0.65	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

See accompanying Notes to Financial Statements.

Class 4 Shares   Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	20.03		$	36.28		$	36.49		$	33.15		$	29.35
Income (loss) from investment operations:
Net investment income1		.27			.47			.34			.34			.24
Net realized and unrealized gain (loss)		6.92			(14.34	)		1.70			5.16			3.84
Total from investment operations		7.19			(13.87	)		2.04			5.50			4.08
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.42	)		(.36	)		(.42	)		(.30	)		(.28	)
Distributions from net realized gain		(.48	)		(2.02	)		(1.83	)		(1.86	)		—
Total dividends and/or distributions to shareholders		(.90	)		(2.38	)		(2.25	)		(2.16	)		(.28	)
Net asset value, end of period	$	26.32		$	20.03		$	36.28		$	36.49		$	33.15
Total Return, at Net Asset Value2		39.38	%		(40.35	)%		6.06	%		17.40	%		14.05	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	78,043		$	63,099		$	123,542		$	114,232		$	90,604
Average net assets (in thousands)	$	66,965		$	93,909		$	122,385		$	100,973		$	61,380
Ratios to average net assets:3
Net investment income		1.22	%		1.69	%		0.93	%		1.00	%		0.79	%
Total expenses		1.00	%4		0.91	%4		0.90	%4		0.91	%4		0.93	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.00	%		0.91	%		0.90	%		0.91	%		0.93	%
Portfolio turnover rate		11	%		19	%		18	%		21	%		35	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.00	%
Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.90	%
Year Ended December 31, 2006	0.91	%

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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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. When applicable, the Fund’s investment in LAF is included in the Statement of Investments. Shares of LAF are valued at their net asset value per share. 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
					Appreciation
					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
$34,903,868	$	—	$	79,276,953	$	354,165,473

1. As of December 31, 2009, the Fund had $79,199,153 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, 2009, details of the capital loss carryforward(s) were as follows:

Expiring
2017	$	79,199,153

2.	The Fund had $77,800 of post-October foreign currency losses which were deferred.
3.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
4.	During the fiscal year ended December 31, 2008, 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

Increase	Increase to
to Accumulated	Accumulated Net
Net Investment	Realized Loss
Income	on Investments
$197,270	$	197,270

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	49,392,293	$	52,262,946
Long-term capital gain		49,781,773		208,239,879
Total	$	99,174,066	$	260,502,825

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, 2009 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	$	2,274,717,303
Gross unrealized appreciation	$	563,157,124
Gross unrealized depreciation		(208,991,651	)
Net unrealized appreciation	$	354,165,473

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.

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, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		4,700,539		$	96,201,259			9,646,046		$	259,758,983
Dividends and/or distributions reinvested		3,644,841			54,308,127			4,840,813			144,062,587
Redeemed		(13,740,529	)		(291,445,852	)		(17,521,140	)		(482,019,498	)
Net decrease		(5,395,149	)	$	(140,936,466	)		(3,034,281	)	$	(78,197,928	)
Service Shares
Sold		2,545,715		$	56,464,839			6,325,047		$	162,252,325
Dividends and/or distributions reinvested		2,301,703			34,088,222			2,887,346			85,263,322
Redeemed		(6,110,959	)		(128,080,877	)		(6,514,971	)		(176,139,911	)
Net increase (decrease)		(1,263,541	)	$	(37,527,816	)		2,697,422		$	71,375,736
Class 3 Shares
Sold		250,961		$	5,397,159			277,654		$	8,012,360
Dividends and/or distributions reinvested		538,120			8,077,181			780,370			23,372,096
Redeemed		(1,702,099	)		(36,428,658	)1		(2,229,618	)		(62,225,556	)2
Net decrease		(913,018	)	$	(22,954,318	)		(1,171,594	)	$	(30,841,100	)
Class 4 Shares
Sold		131,734		$	2,846,292			101,469		$	2,904,870
Dividends and/or distributions reinvested		181,977			2,700,534			264,033			7,804,820
Redeemed		(497,765	)		(10,213,219	)1		(621,183	)		(16,982,546	)2
Net decrease		(184,054	)	$	(4,666,393	)		(255,681	)	$	(6,272,856	)

1.	Net of redemption fees of $5,426 and $4,411 for Class 3 and Class 4, respectively.
2.	Net of redemption fees of $7,921 and $5,109 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 IMMF and LAF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities		$258,561,763		$528,944,568

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. For the year ended December 31, 2009, the Fund paid $1,434,736 to OFS for services to the Fund.

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 daily 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 May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 1.00% for Non-Service and Class 3 shares and 1.25% for Service and Class 4 shares. This voluntary undertaking may be amended or withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived $21,125 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Foreign currency exchange contracts, if any, are reported on a schedule following the Statement of Investments. These contracts will be valued daily based upon the closing prices of the 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

NOTES TO FINANCIAL STATEMENTS Continued

5. Foreign Currency Exchange Contracts Continued

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.

     The Fund has purchased and sold foreign currency exchange contracts of different currencies in order to acquire currencies to pay for related foreign securities purchase transactions, or to convert foreign currencies to U.S. dollars from related foreign securities sale transactions. These foreign currency exchange contracts are negotiated at the current spot exchange rate with settlement typically within two business days thereafter.

     Additional associated risk to the Fund includes counterparty credit risk. Counterparty 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, 2009, the Fund held no outstanding forward contracts.

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, 2009, the Fund had no securities on loan.

7. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

8. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Strategic Bond Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Strategic Bond Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Strategic Bond Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 18, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Principal
	Amount		Value
Asset-Backed Securities—0.6%
AmeriCredit Prime Automobile Receivables Trust 2007-1, Automobile Receivables Nts., Series 2007-1, Cl. D, 5.62%, 9/8/14	$	1,319,000	$	1,175,662
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates, Series 2004-W8, Cl. A2, 0.711%, 5/25/341		924,857		685,286
Argent Securities Trust 2006-M3, Asset-Backed Pass-Through Certificates, Series 2006-M3, Cl. A2B, 0.331%, 9/25/361		420,140		152,072
Bank of America Credit Card Trust, Credit Card Asset-Backed Certificates, Series 2006-A16, Cl. A16, 4.72%, 5/15/13		1,805,000		1,860,958
Capital Auto Receivables Asset Trust 2007-1, Automobile Asset-Backed Securities, Series 2007-1, Cl. B, 5.15%, 9/17/12		262,000		268,007
Capital One Auto Finance Trust, Automobile Receivables, Series 2006-C, Cl. A4, 0.263%, 5/15/131		1,180,886		1,166,909
Citigroup Mortgage Loan Trust, Inc. 2006-WFH3, Asset-Backed Pass-Through Certificates, Series 2006-WFH3, Cl. A2, 0.331%, 10/25/361		255,141		243,071
CNH Equipment Trust, Asset-Backed Certificates, Series 2009-B, Cl. A3, 2.97%, 3/15/13		1,890,000		1,918,333
Countrywide Home Loans, Asset-Backed Certificates:
Series 2005-16, Cl. 2AF2, 5.382%, 5/1/361		1,371,546		1,123,689
Series 2005-17, Cl. 1AF2, 5.362%, 5/1/361		191,091		157,566
CWABS Asset-Backed Certificates Trust 2006-25,
Asset-Backed Certificates, Series 2006-25, Cl. 2A2, 0.351%, 6/25/471		1,050,000		819,083
CWHEQ Revolving Home Equity Loan Trust, Asset-Backed Certificates:
Series 2005-G, Cl. 2A, 0.463%, 12/15/351		218,912		62,143
Series 2006-H, Cl. 2A1A, 0.383%, 11/15/361		77,123		22,312
Embarcadero Aircraft Securitization Trust, Airplane Receivable Nts., Series 2000-A, Cl. B, 8/15/252,3,4		1,820,063		—
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through Certificates, Series 2006-FF10, Cl. A3, 0.321%, 7/25/361		657,087		627,267
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through Certificates, Series 2006-FF9, Cl. 2A2, 0.341%, 7/7/361,3		231,188		185,872
First Franklin Mortgage Loan Trust 2006-FFA, Mtg. Pass-Through Certificates, Series 2006-FFA, Cl. A3, 0.351%, 9/25/361		903,495		150,324
Ford Credit Auto Owner Trust, Automobile Receivables Nts., Series 2009-B, Cl. A2, 2.10%, 11/15/11		1,380,000		1,388,794
Home Equity Mortgage Trust 2005-1, Mtg. Pass-Through Certificates, Series 2005-1, Cl. M6, 5.363%, 6/1/35		1,046,000		243,557
Home Equity Mortgage Trust 2006-5, Mtg. Pass-Through Certificates, Series 2006-5, Cl. A1, 5.50%, 1/25/37		416,507		41,703
HSBC Home Equity Loan Trust 2005-3, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2005-3, Cl. A1, 0.493%, 1/20/351		212,547		184,089
HSBC Home Equity Loan Trust 2006-4, Closed-End Home Equity Loan Asset-Backed Certificates, Series 2006-4, Cl. A2V, 0.343%, 3/20/361		436,649		420,842
Ice Em CLO, Collateralized Loan Obligations:
Series 2007-1A, Cl. B, 2.551%, 8/15/221,3		7,870,000		4,722,000
Series 2007-1A, Cl. C, 3.851%, 8/15/221,3		5,270,000		2,635,000
Series 2007-1A, Cl. D, 5.851%, 8/15/221,3		5,270,000		2,108,000
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35		36,176		35,912

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Asset-Backed Securities Continued
Mastr Asset-Backed Securities Trust 2006-WMC3, Mtg. Pass-Through Certificates, Series 2006-WMC3, Cl. A3, 0.331%, 8/25/361	$	1,310,000	$	462,049
NC Finance Trust, Collateralized Mtg. Obligation Pass-Through Certificates, Series 1999-I, Cl. ECFD, 3.035%, 1/25/291,3		66,744		10,012
Option One Mortgage Loan Trust 2006-2, Asset-Backed Certificates, Series 2006-2, Cl. 2A2, 0.331%, 7/1/361		2,134,404		1,495,993
Popular ABS Mortgage Pass-Through Trust 2005-6, Mtg. Pass-Through Certificates, Series 2005-6, Cl. A3, 5.68%, 1/25/361		277,462		257,341
RASC Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed Pass-Through Certificates, Series 2006-KS7, Cl. A2, 0.331%, 9/25/361		512,819		492,958
Securitized Asset-Backed Receivables LLC Trust 2007-BR2, Asset-Backed Securities, Series 2007-BR2, Cl. A2, 0.461%, 2/25/371		656,382		290,905
SLM Student Loan Trust, Student Loan Receivables, Series 2005-B, Cl. B, 0.699%, 6/15/391		2,487,000		844,266
Start CLO Ltd., Asset-Backed Credit Linked Securities, Series 2006-3A, Cl. F, 17.255%, 6/7/111,3		1,630,000		1,445,549
Terwin Mortgage Trust, Home Equity Asset-Backed Securities, Series 2006-4SL, Cl. A1, 4.50%, 5/1/37		195,528		30,931
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 0.331%, 7/25/361		146,348		145,029
Total Asset-Backed Securities (Cost $41,704,856)				27,873,484
Mortgage-Backed Obligations—14.4%
Government Agency—6.9%
FHLMC/FNMA/FHLB/Sponsored—6.4%
Federal Home Loan Mortgage Corp.:
5%, 8/15/33-9/15/33		3,407,840		3,509,187
5.50%, 9/1/39		4,094,453		4,293,844
6%, 5/15/18-10/15/29		1,401,120		1,505,991
6.50%, 3/15/18-6/15/35		4,125,460		4,467,207
7%, 10/1/31-10/1/37		1,085,616		1,186,246
7.50%, 4/25/36		1,068,548		1,204,300
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 1360, Cl. PZ, 7.50%, 9/15/22		1,244,675		1,359,096
Series 151, Cl. F, 9%, 5/15/21		32,143		35,292
Series 1674, Cl. Z, 6.75%, 2/15/24		971,703		1,059,662
Series 1897, Cl. K, 7%, 9/15/26		2,278,499		2,513,269
Series 2006-11, Cl. PS, 23.719%, 3/25/361		623,111		833,674
Series 2043, Cl. ZP, 6.50%, 4/15/28		759,367		809,034
Series 2106, Cl. FG, 0.683%, 12/15/281		1,605,756		1,598,982
Series 2122, Cl. F, 0.683%, 2/15/291		51,808		51,590
Series 2135, Cl. OH, 6.50%, 3/15/29		973,743		1,054,539
Series 2148, Cl. ZA, 6%, 4/15/29		1,462,049		1,565,091
Series 2195, Cl. LH, 6.50%, 10/15/29		692,249		741,144
Series 2326, Cl. ZP, 6.50%, 6/15/31		101,352		109,051
Series 2344, Cl. FP, 1.183%, 8/15/311		494,913		498,274
Series 2368, Cl. PR, 6.50%, 10/15/31		449,043		485,110
Series 2412, Cl. GF, 1.183%, 2/15/321		1,058,651		1,063,781
Series 2415, Cl. ZA, 6.50%, 2/15/32		1,265,181		1,367,927
Series 2435, Cl. EQ, 6%, 5/15/31		305,128		308,034
Series 2449, Cl. FL, 0.783%, 1/15/321		638,399		637,297
Series 2451, Cl. FD, 1.233%, 3/15/321		346,795		349,423
Series 2453, Cl. BD, 6%, 5/15/17		174,092		186,886
Series 2461, Cl. PZ, 6.50%, 6/15/32		1,548,372		1,681,371
Series 2464, Cl. FI, 1.233%, 2/15/321		339,699		341,577
Series 2470, Cl. AF, 1.233%, 3/15/321		595,015		600,788
Series 2470, Cl. LF, 1.233%, 2/15/321		347,633		349,776
Series 2471, Cl. FD, 1.233%, 3/15/321		598,416		601,863
Series 2477, Cl. FZ, 0.783%, 6/15/311		1,318,140		1,313,887
Series 2500, Cl. FD, 0.733%, 3/15/321		39,057		38,802
Series 2517, Cl. GF, 1.233%, 2/15/321		302,249		304,014
Series 2526, Cl. FE, 0.633%, 6/15/291		77,224		76,135
Series 2551, Cl. FD, 0.633%, 1/15/331		38,663		38,431

	Principal
	Amount		Value
FHLMC/FNMA/FHLB/Sponsored Continued
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Continued
Series 2638, Cl. KG, 4%, 11/1/275	$	4,000,000	$	4,117,328
Series 2641, Cl. CE, 3.50%, 9/15/25		59,943		60,016
Series 2648, Cl. JE, 3%, 2/1/30		2,894,027		2,890,346
Series 2676, Cl. KY, 5%, 9/15/235		3,843,000		4,018,762
Series 2750, Cl. XG, 5%, 2/1/345		6,037,000		6,127,202
Series 2857, Cl. MG, 5%, 9/1/34		2,045,000		2,077,793
Series 2890, Cl. PE, 5%, 11/1/34		6,120,000		6,207,932
Series 2907, Cl. GC, 5%, 6/1/27		1,961,966		2,041,293
Series 2929, Cl. PC, 5%, 1/1/28		2,370,000		2,470,109
Series 2934, Cl. NA, 5%, 4/15/24		84,961		85,109
Series 2936, Cl. PE, 5%, 2/1/35		4,858,000		4,927,295
Series 2947, Cl. HE, 5%, 3/1/35		1,650,000		1,676,307
Series 2952, Cl. GJ, 4.50%, 12/1/28		2,049,159		2,106,455
Series 3019, Cl. MD, 4.75%, 1/1/31		1,688,294		1,755,820
Series 3025, Cl. SJ, 23.895%, 8/15/351		739,064		929,158
Series 3035, Cl. DM, 5.50%, 11/15/25		723,767		731,043
Series 3094, Cl. HS, 23.529%, 6/15/341		416,549		539,590
Series 3157, Cl. MC, 5.50%, 2/1/26		2,699,524		2,759,649
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed Security:
Series 177, Cl. IO, 14.232%, 7/1/266		139,599		29,922
Series 192, Cl. IO, 8.449%, 2/1/286		35,465		8,362
Series 205, Cl. IO, 8.868%, 9/1/296		185,009		41,501
Series 2074, Cl. S, 50.008%, 7/17/286		46,226		7,741
Series 2079, Cl. S, 60.657%, 7/17/286		75,972		13,084
Series 2136, Cl. SG, 91.764%, 3/15/296		2,139,556		257,839
Series 224, Cl. IO, 0%, 3/1/336,7		1,246,253		276,615
Series 2399, Cl. SG, 77.791%, 12/15/266		1,234,814		197,910
Series 243, Cl. 6, 0%, 12/15/326,7		543,894		111,664
Series 2437, Cl. SB, 91.269%, 4/15/326		3,621,764		539,016
Series 2526, Cl. SE, 38.874%, 6/15/296		96,953		14,882
Series 2802, Cl. AS, 99.999%, 4/15/336		790,313		70,184
Series 2920, Cl. S, 77.953%, 1/15/356		855,358		99,581
Series 3000, Cl. SE, 99.999%, 7/15/256		871,923		81,375
Series 3045, Cl. DI, 39%, 10/15/356		3,945,230		468,371
Series 3110, Cl. SL, 99.999%, 2/15/266		522,884		46,500
Federal National Mortgage Assn.:
4.50%, 1/1/25-1/1/408		8,180,000		8,344,397
5%, 11/25/21-1/1/24		536,224		562,509
5%, 8/25/335		6,367,222		6,561,555
5%, 1/1/25-1/1/408		30,145,000		31,238,802
5%, 7/25/339		3,436,210		3,541,086
5.305%, 10/1/36		8,757,668		9,185,659
5.50%, 4/25/21-7/1/22		663,774		703,703
5.50%, 1/1/25-1/1/408		28,383,000		29,733,614
6%, 10/25/16-9/25/21		1,561,672		1,672,527
6%, 1/1/25-1/1/408		30,790,000		32,698,189
6.50%, 3/25/17-1/1/34		7,823,524		8,483,601
7%, 11/1/17-6/25/34		8,108,982		8,988,461
7.50%, 2/25/27-3/25/33		3,861,739		4,356,424
8.50%, 7/1/32		6,778		7,589
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Trust 1999-54, Cl. LH, 6.50%, 11/25/29		692,881		745,641
Trust 2001-44, Cl. QC, 6%, 9/25/16		1,202,211		1,288,632
Trust 2001-51, Cl. OD, 6.50%, 10/25/31		370,593		398,842
Trust 2001-69, Cl. PF, 1.231%, 12/25/311		783,995		789,865
Trust 2001-74, Cl. QE, 6%, 12/25/315		3,970,183		4,249,247
Trust 2001-80, Cl. ZB, 6%, 1/25/32		848,262		910,899
Trust 2002-12, Cl. PG, 6%, 3/25/17		551,447		592,117
Trust 2002-29, Cl. F, 1.231%, 4/25/321		381,692		384,583
Trust 2002-56, Cl. KW, 6%, 4/25/23		1,153,963		1,170,001
Trust 2002-60, Cl. FH, 1.231%, 8/25/321		792,155		797,192
Trust 2002-64, Cl. FJ, 1.231%, 4/25/321		117,535		117,808
Trust 2002-68, Cl. FH, 0.733%, 10/18/321		262,206		261,262
Trust 2002-71, Cl. UB, 5%, 11/25/15		44,454		44,440
Trust 2002-84, Cl. FB, 1.231%, 12/25/321		1,556,002		1,567,874
Trust 2002-9, Cl. PC, 6%, 3/25/17		563,475		605,247
Trust 2002-9, Cl. PR, 6%, 3/25/17		689,948		741,096
Trust 2002-90, Cl. FH, 0.731%, 9/25/321		870,588		864,536
Trust 2003-11, Cl. FA, 1.231%, 9/25/321		1,556,038		1,567,884
Trust 2003-116, Cl. FA, 0.631%, 11/25/331		109,233		108,596
Trust 2004-101, Cl. BG, 5%, 1/25/20		1,825,000		1,936,978
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25		571,000		594,781

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
FHLMC/FNMA/FHLB/Sponsored Continued
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates: Continued
Trust 2005-109, Cl. AH, 5.50%, 12/25/25	$	2,160,000	$	2,252,854
Trust 2005-12, Cl. JC, 5%, 6/1/28		2,065,884		2,154,045
Trust 2005-22, Cl. EC, 5%, 10/1/28		2,000,000		2,088,408
Trust 2005-25, Cl. PS, 27.143%, 4/25/351		646,455		885,901
Trust 2005-30, Cl. CU, 5%, 4/1/29		3,605,375		3,769,918
Trust 2005-31, Cl. PB, 5.50%, 4/25/35		560,000		573,691
Trust 2005-71, Cl. DB, 4.50%, 8/25/25		480,000		491,748
Trust 2006-46, Cl. SW, 23.351%, 6/25/361		1,071,638		1,419,079
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 2001-61, Cl. SH, 46.78%, 11/18/316		427,519		65,924
Trust 2001-63, Cl. SD, 36.795%, 12/18/316		102,363		17,469
Trust 2001-68, Cl. SC, 29.217%, 11/25/316		70,356		10,794
Trust 2001-81, Cl. S, 37.132%, 1/25/326		84,686		13,126
Trust 2002-28, Cl. SA, 38.673%, 4/25/326		50,441		7,617
Trust 2002-38, Cl. SO, 58.867%, 4/25/326		261,737		35,857
Trust 2002-48, Cl. S, 35.969%, 7/25/326		80,492		10,874
Trust 2002-52, Cl. SL, 36.513%, 9/25/326		50,685		6,882
Trust 2002-56, Cl. SN, 38.683%, 7/25/326		110,607		14,978
Trust 2002-77, Cl. IS, 50.989%, 12/18/326		445,923		60,766
Trust 2002-77, Cl. SH, 44.553%, 12/18/326		113,256		17,583
Trust 2002-9, Cl. MS, 35.592%, 3/25/326		108,180		14,481
Trust 2003-117, Cl. KS, 56.31%, 8/25/336		8,416,674		1,236,694
Trust 2003-13, Cl. IO, 10.462%, 3/25/336		844,996		172,156
Trust 2003-26, Cl. DI, 11.185%, 4/25/336		664,977		127,104
Trust 2003-33, Cl. SP, 56.422%, 5/25/336		738,947		104,322
Trust 2003-38, Cl. SA, 40.283%, 3/25/236		1,281,310		162,054
Trust 2003-4, Cl. S, 44.351%, 2/25/336		223,097		31,836
Trust 2005-14, Cl. SE, 43.159%, 3/25/356		2,838,877		317,452
Trust 2005-40, Cl. SA, 74.229%, 5/25/356		2,376,956		278,775
Trust 2005-40, Cl. SB, 98.037%, 5/25/356		3,795,082		447,434
Trust 2005-63, Cl. SA, 89.64%, 10/25/316		170,696		20,560
Trust 2005-71, Cl. SA, 72.42%, 8/25/256		571,592		67,904
Trust 2005-85, Cl. SA, 99.999%, 10/25/356		9,101,265		987,801
Trust 2005-87, Cl. SE, 61.053%, 10/25/356		29,095,826		3,304,308
Trust 2005-87, Cl. SG, 85.069%, 10/25/356		3,063,395		413,978
Trust 2006-60, Cl. DI, 40.599%, 4/25/356		2,655,272		329,100
Trust 2006-90, Cl. SX, 99.999%, 9/25/366		2,361,741		304,655
Trust 2007-88, Cl. XI, 25.543%, 6/25/376		9,917,351		1,117,584
Trust 214, Cl. 2, 26.406%, 3/1/236		558,641		126,561
Trust 221, Cl. 2, 22.794%, 5/1/236		62,697		14,381
Trust 240, Cl. 2, 27.47%, 9/1/236		120,091		26,814
Trust 254, Cl. 2, 17.134%, 1/1/246		1,026,894		244,370
Trust 2682, Cl. TQ, 99.999%, 10/15/336		914,207		108,643
Trust 2981, Cl. BS, 99.999%, 5/15/356		1,624,165		192,366
Trust 301, Cl. 2, 0%, 4/1/296,7		256,590		58,097
Trust 313, Cl. 2, 28.167%, 6/1/316		2,850,800		627,913
Trust 319, Cl. 2, 4.592%, 2/1/326		82,526		18,935
Trust 321, Cl. 2, 4.104%, 4/1/326		331,745		81,384
Trust 324, Cl. 2, 0%, 7/1/326,7		354,741		83,495
Trust 328, Cl. 2, 0%, 12/1/326,7		4,579,657		1,015,940
Trust 331, Cl. 5, 0%, 2/1/336,7		1,337,937		255,045
Trust 334, Cl. 12, 0%, 2/1/336,7		1,147,053		211,677
Trust 339, Cl. 15, 7.447%, 7/1/336		3,256,623		563,786
Trust 339, Cl. 7, 0%, 7/1/336,7		5,512,698		898,011
Trust 345, Cl. 9, 2.695%, 1/1/346		1,561,804		280,486
Trust 351, Cl. 10, 1.924%, 4/1/346		678,181		130,851
Trust 351, Cl. 8, 2.248%, 4/1/346		1,097,363		211,535
Trust 351, Cl. 9, 0%, 10/1/346,7		13,395,770		2,379,827
Trust 356, Cl. 10, 0.169%, 6/1/356		944,874		178,499
Trust 356, Cl. 12, 0%, 2/1/356,7		480,851		90,110
Trust 362, Cl. 12, 0%, 8/1/356,7		898,148		171,964
Trust 362, Cl. 13, 0%, 8/1/356,7		531,273		101,802
				283,150,170
GNMA/Guaranteed—0.5%
Government National Mortgage Assn.:
4.125%, 12/9/251		6,252		6,392
4.50%, 1/1/408		17,650,000		17,666,556
7%, 3/29/28-7/29/28		291,170		324,052
7.50%, 3/1/27		14,745		16,593
8%, 11/29/25-5/29/26		99,162		113,709

	Principal
	Amount		Value
GNMA/Guaranteed Continued
Government National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 1999-32, Cl. ZB, 8%, 9/16/29	$	1,228,790	$	1,350,546
Series 2000-12, Cl. ZA, 8%, 2/16/30		2,869,104		3,125,066
Government National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Series 1998-19, Cl. SB, 47.847%, 7/16/286		154,809		26,656
Series 1998-6, Cl. SA, 68.192%, 3/16/286		95,374		13,772
Series 2001-21, Cl. SB, 80.768%, 1/16/276		713,353		101,580
Series 2006-47, Cl. SA, 73.774%, 8/16/366		3,450,796		384,148
				23,129,070
Non-Agency—7.5%
Commercial—2.7%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates:
Series 2007-1, Cl. AMFX, 5.482%, 1/1/49		4,159,386		2,929,091
Series 2008-1, Cl. A4, 6.166%, 12/1/171		3,670,000		3,306,280
Series 2008-1, Cl. AM, 6.209%, 2/10/511		3,415,000		2,372,705
CHL Mortgage Pass-Through Trust 2005-17, Mtg. Pass-Through Certificates, Series 2005-17, Cl. 1A8, 5.50%, 9/1/35		3,740,000		2,864,338
CHL Mortgage Pass-Through Trust 2005-HYB8, Mtg. Pass-Through Certificates, Series 2005-HYB8, Cl. 4A1, 5.492%, 12/20/351		196,126		148,799
Citigroup Commercial Mortgage Trust 2006-C4, Commercial Mtg. Pass-Through Certificates, Series 2006-C4, Cl. A3, 5.913%, 3/1/491		3,050,000		2,927,032
Citigroup, Inc./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		9,374,882
Credit Suisse Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-C3, Cl. A4, 5.912%, 6/1/391		1,560,000		1,251,896
CWALT Alternative Loan Trust 2007-8CB, Mtg. Pass-Through Certificates, Series 2007-8CB, Cl. A1, 5.50%, 5/25/37		4,153,238		3,024,673
Deutsche Alt-A Securities, Inc., Mtg. Pass-Through Certificates:
Series 2006-AB1, Cl. A2A, 5.50%, 2/25/36		211,283		205,589
Series 2006-AB2, Cl. A1, 5.888%, 6/25/36		758,812		717,129
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36		986,843		543,677
Series 2007-RS1, Cl. A2, 0.731%, 1/27/371,13		1,529,415		463,604
First Horizon Alternative Mortgage Securities Trust 2007-FA2, Mtg. Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37		851,903		605,466
First Horizon Mortgage Pass-Through Trust 2007-AR3, Mtg. Pass-Through Certificates, Series 2007-AR3, Cl. 1A1, 6.104%, 11/1/371		4,789,725		3,384,973
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations, Series 2004-C3, Cl. A2, 4.433%, 7/10/39		903,984		905,778
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg. Pass-Through Certificates, Series 1998-C1, Cl. F, 6.984%, 5/15/301,3		1,567,000		1,573,108
Greenwich Capital Commercial Funding Corp./Commercial Mortgage Trust 2007-GG11, Commercial Mtg. Pass-Through Certificates, Series 2007-GG11, Cl. A4, 5.736%, 8/1/17		7,325,000		6,519,397
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations, Series 2006-GG8, Cl. A4, 5.56%, 11/1/39		1,960,000		1,720,656
Indymac Index Mortgage Loan Trust 2005-AR31, Mtg. Pass-Through Certificates, Series 2005-AR31, Cl. 2 A2, 5.236%, 1/1/361		541,502		93,890
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates:
Series 2007-CB18, Cl. A4, 5.44%, 6/1/47		5,600,000		4,891,463
Series 2007-CB18, Cl. AM, 5.466%, 6/1/47		6,400,000		4,611,036

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Commercial Continued
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates: Continued
Series 2007-LD12, Cl. A2, 5.827%, 2/15/51	$	5,682,000	$	5,831,079
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49		2,380,000		2,303,200
Series 2007-LDPX, Cl. A3, 5.42%, 1/15/49		4,410,000		3,730,769
Series 2008-C2, Cl. A4, 6.068%, 2/1/51		8,390,000		6,622,978
Series 2008-C2, Cl. AM, 6.579%, 2/1/511		4,990,000		2,780,081
JPMorgan Mortgage Trust 2006-A2, Mtg. Pass-Through Certificates, Series 2006-A2, Cl. 3A4, 5.673%, 4/1/361		2,427,435		713,400
JPMorgan Mortgage Trust 2006-A7, Mtg. Pass-Through Certificates, Series 2006-A7, Cl. 2A2, 5.762%, 1/1/371		760,535		563,651
LB-UBS Commercial Mortgage Trust 2008-C1, Commercial Mtg. Pass-Through Certificates, Series 2008-C1, Cl. AM, 6.149%, 4/11/411		2,610,000		1,977,766
Lehman Structured Securities Corp., Mtg.-Backed Security, 6%, 5/1/29		128,361		34,674
Mastr Alternative Loan Trust 2004-6, Mtg. Pass-Through Certificates, Series 2004-6, Cl. 10A1, 6%, 7/25/34		338,767		291,405
Morgan Stanley Capital I Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-IQ16, Cl. A4, 5.809%, 12/1/49		3,420,000		2,922,659
Morgan Stanley Capital I, Commercial Mtg. Pass-Through Certificates, Series 2006-HQ10, Cl. AM, 5.36%, 11/1/41		8,500,000		7,018,814
RALI Series 2005-QA4 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2005-QA4, Cl. A32, 5.358%, 4/25/351		143,882		30,473
Residential Asset Securitization Trust 2006-A12, Mtg. Pass-Through Certificates, Series 2006-A12, Cl. 1A, 6.25%, 11/1/36		980,712		633,433
STARM Mortgage Loan Trust 2007-1, Mtg. Pass-Through Certificates, Series 2007-1, Cl. 2A1, 5.828%, 2/1/371		12,625,973		9,163,120
Structured Asset Mortgage Investments, Inc., Mtg. Pass-Through Certificates, Series 2002-AR3, Cl. A2, 0.733%, 9/19/321		655,292		290,376
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial Mtg. Pass-Through Certificates, Series 2006-C29, Cl. A2, 5.275%, 11/15/48		2,997,000		3,056,518
Wachovia Bank Commercial Mortgage Trust 2007-C33, Commercial Mtg. Pass-Through Certificates, Series 2007-C33, Cl. A4, 5.902%, 2/1/511		5,790,000		4,770,384
Wachovia Bank Commercial Mortgage Trust 2007-C34, Commercial Mtg. Pass-Through Certificates, Series 2007-C34, Cl. AJ, 5.952%, 5/1/461		2,610,000		1,302,805
WaMu Mortgage Pass-Through Certificates 2006-AR15 Trust, Mtg. Pass-Through Certificates, Series 2006-AR15, Cl. 1A, 1.384%, 11/1/461		1,418,206		710,664
WaMu Mortgage Pass-Through Certificates 2007-OA3 Trust, Mtg. Pass-Through Certificates, Series 2007-OA3, Cl. 5A, 1.481%, 4/1/471		1,009,393		490,243
Wells Fargo Mortgage-Backed Securities 2004-W Trust, Mtg. Pass-Through Certificates, Series 2004-W, Cl. B2, 2.995%, 11/1/341		1,101,019		358,283
Wells Fargo Mortgage-Backed Securities 2005-AR1 Trust, Mtg. Pass-Through Certificates, Series 2005-AR1, Cl. 1A1, 4.233%, 2/1/351		4,989,539		4,474,176
Wells Fargo Mortgage-Backed Securities 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 1A3, 3.212%, 4/25/361		3,157,180		2,546,545
				117,052,958
Manufactured Housing—0.1%
Wells Fargo Mortgage-Backed Securities 2006-AR12 Trust, Mtg. Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 6.10%, 9/25/361		5,205,005		4,358,178

	Principal
	Amount		Value
Manufactured Housing Continued
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through Certificates, Series 2006-AR2, Cl. 2A5, 5.01%, 3/25/361	$	1,604,820	$	1,294,175
				5,652,353
Multifamily—0.2%
Merrill Lynch Mortgage Investors Trust 2005-A2, Mtg. Pass-Through Certificates, Series 2005-A2, Cl. A2, 4.258%, 2/1/351		1,157,041		1,005,973
Wells Fargo Mortgage Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 5A1, 5.589%, 7/1/361		2,175,119		1,696,192
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 2A1, 5.605%, 7/25/361		4,076,887		2,744,228
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg. Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.096%, 3/25/361		4,541,599		3,682,444
				9,128,837
Residential—4.5%
Banc of America Commercial Mortgage, Inc., Commercial Mtg. Pass-Through Certificates, Series 2007-4, Cl. AM, 5.811%, 8/1/171		6,560,000		4,753,678
Bear Stearns ARM Trust 2004-2, Mtg. Pass-Through Certificates, Series 2004-2, Cl. 12A2, 3.916%, 5/1/341		4,280,831		3,438,029
Bear Stearns ARM Trust 2004-9, Mtg. Pass-Through Certificates, Series 2004-9, Cl. 23A1, 4.983%, 11/1/341		1,937,691		1,781,875
Chase Mortgage Finance Trust 2006-S3, Multiclass Mtg. Pass-Through Certificates, Series 2006-S3, Cl. 1A2, 6%, 11/1/36		4,210,000		3,168,014
Chase Mortgage Finance Trust 2007-A1, Multiclass Mtg. Pass-Through Certificates, Series 2007-A1, Cl. 9A1, 4.559%, 2/1/371		2,793,850		2,573,882
CHL Mortgage Pass-Through Trust 2005-26, Mtg. Pass-Through Certificates, Series 2005-26, Cl. 1A8, 5.50%, 11/1/35		3,158,353		2,900,213
CHL Mortgage Pass-Through Trust 2005-27, Mtg. Pass-Through Certificates, Series 2005-27, Cl. 2A1, 5.50%, 12/1/353		2,904,955		2,319,406
CHL Mortgage Pass-Through Trust 2005-31, Mtg. Pass-Through Certificates, Series 2005-31, Cl. 2A4, 5.418%, 1/1/361		1,263,247		281,882
CHL Mortgage Pass-Through Trust 2005-J4, Mtg. Pass-Through Certificates, Series 2005-J4, Cl. A7, 5.50%, 11/1/35		2,110,000		1,480,889
CHL Mortgage Pass-Through Trust 2006-6, Mtg. Pass-Through Certificates, Series 2006-6, Cl. A3, 6%, 4/1/36		1,525,068		1,304,859
CHL Mortgage Pass-Through Trust 2007-HY3, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 1A1, 5.638%, 6/1/471,3		2,668,532		1,758,096
CHL Mortgage Pass-Through Trust 2007-HY4, Mtg. Pass-Through Certificates:
Series 2007-HY4, Cl. 1A1, 6.049%, 9/1/471		15,454,659		10,787,607
Series 2007-HY4, Cl. 1A2, 6.049%, 9/1/471,3		3,333,652		600,057
Series 2007-HY4, Cl. 2A2, 6.214%, 11/1/371,3		734,945		132,290
Series 2007-HY4, Cl. 3A2, 6.393%, 11/1/371,3		812,525		122,641
CHL Mortgage Pass-Through Trust 2007-HY5, Mtg. Pass-Through Certificates:
Series 2007-HY5, Cl. 1A2, 5.905%, 9/1/371,3		3,662,451		937,237
Series 2007-HY5, Cl. 2A2, 5.95%, 9/1/371,3		992,451		175,166
Series 2007-HY5, Cl. 3A2, 6.129%, 9/1/371,3		2,496,539		570,416
Citigroup Commercial Mortgage Trust 2007-C6, Commercial Mtg. Pass-Through Certificates, Series 2007-C6, Cl. A2, 5.70%, 8/1/121		1,110,000		1,129,820

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Residential Continued
Citigroup Mortgage Loan Trust, Inc. 2005-2, Mtg. Pass-Through Certificates, Series 2005-2, Cl. 1A3, 4.952%, 5/1/351	$	3,420,583	$	2,810,138
Citigroup Mortgage Loan Trust, Inc. 2005-3, Mtg. Pass-Through Certificates, Series 2005-3, Cl. 2A4, 5.194%, 8/1/351		6,965,663		4,254,229
Citigroup Mortgage Loan Trust, Inc. 2006-AR1, Mtg.-Backed Nts., Series 2006-AR1, Cl. 3A2, 5.50%, 3/1/361		3,792,030		837,694
Citigroup Mortgage Loan Trust, Inc. 2006-AR2, Mtg. Pass-Through Certificates:
Series 2006-AR2, Cl. 1A2, 5.528%, 3/1/361		8,207,410		6,468,830
Series 2006-AR2, Cl. 1AB, 5.591%, 3/1/36		3,343,023		874,089
Citigroup, Inc./Deutsche Bank 2007-CD4 Commercial Mortgage Trust, Commercial Mtg. Pass-Through Certificates, Series 2007-CD4, Cl. AMFX, 5.366%, 12/1/49		5,700,000		3,774,396
CitiMortgage Alternative Loan Trust 2006-A5, Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series 2006-A5, Cl. 2A1, 5.50%, 10/1/21		2,569,868		2,206,866
CWALT Alternative Loan Trust 2006-43CB, Mtg. Pass-Through Certificates, Series 2006-43CB, Cl. 1A10, 6%, 2/1/37		12,765,670		8,304,720
GSR Mortgage Loan Trust 2004-5, Mtg. Pass-Through Certificates, Series 2004-5, Cl. 2A1, 3.761%, 5/1/341		3,270,032		2,686,533
GSR Mortgage Loan Trust 2005-AR6, Mtg. Pass-Through Certificates:
Series 2005-AR6, Cl. 1A4, 3.262%, 9/1/351		8,738,084		7,823,604
Series 2005-AR6, Cl. 3A1, 4.555%, 9/25/351		3,909,979		3,350,469
GSR Mortgage Loan Trust 2005-AR7, Mtg. Pass-Through Certificates, Series 2005-AR7, Cl. 4A1, 5.335%, 11/1/351		4,180,925		3,235,714
GSR Mortgage Loan Trust 2006-5F, Mtg. Pass-Through Certificates, Series 2006-5F, Cl. 2A1, 6%, 6/1/36		2,499,740		2,168,973
GSR Mortgage Loan Trust 2007-AR1, Mtg. Pass-Through Certificates, Series 2007-AR1, Cl. 4A1, 5.809%, 3/1/371		3,264,840		2,451,836
JPMorgan Mortgage Trust 2007-A1, Mtg. Pass-Through Certificates, Series 2007-A1, Cl. 7A1, 5.291%, 7/1/351		5,133,163		4,670,011
JPMorgan Mortgage Trust 2007-A3, Mtg. Pass-Through Certificates, Series 2007-A3, Cl. 3A3, 6.002%, 5/1/371,3		1,514,821		333,261
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		7,681,768
Mastr Adjustable Rate Mortgages Trust 2006-2, Mtg. Pass-Through Certificates, Series 2006-2, Cl. 1A1, 4.035%, 4/1/361		2,824,194		1,838,550
Merrill Lynch Mortgage Investors Trust 2006-3, Mtg. Pass-Through Certificates, Series 2006-3, Cl. 2A1, 6.064%, 10/25/361		4,599,375		3,943,039
RALI Series 2006-QS13 Trust:
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A5, 6%, 9/25/36		2,841,295		1,873,750
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36		218,357		198,885
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates, Series 2007-QS6, Cl. A28, 5.75%, 4/25/37		1,214,637		702,260
Residential Asset Securitization Trust 2005-A14, Mtg. Pass-Through Certificates, Series 2005-A14, Cl. A1, 5.50%, 12/1/35		3,720,000		2,684,509
Residential Asset Securitization Trust 2005-A6CB, Mtg. Pass-Through Certificates, Series 2005-A6CB, Cl. A7, 6%, 6/1/35		5,562,894		4,119,705

	Principal
	Amount		Value
Residential Continued
Residential Funding Mortgage Securities I, Inc., Mtg. Pass-Through Certificates, 5.738%, 7/1/371,3	$	2,273,381	$	196,420
WaMu Mortgage Pass-Through Certificates 2005-AR12 Trust, Mtg. Pass-Through Certificates, Series 2007-AR12, Cl. 1A8, 4.826%, 10/1/351		3,206,468		2,567,570
WaMu Mortgage Pass-Through Certificates 2006-AR10 Trust, Mtg. Pass-Through Certificates, Series 2006-AR10, Cl. 1A2, 5.92%, 9/1/361		3,294,951		2,735,087
WaMu Mortgage Pass-Through Certificates 2007-HY1 Trust, Mtg. Pass-Through Certificates:
Series 2007-HY1, Cl. 4A1, 5.387%, 2/1/371		17,284,500		12,247,334
Series 2007-HY1, Cl. 5A1, 5.737%, 2/1/371		10,311,405		7,020,704
WaMu Mortgage Pass-Through Certificates 2007-HY2 Trust, Mtg. Pass-Through Certificates, Series 2007-HY2, Cl. 1A1, 5.565%, 12/1/361		12,544,822		8,396,094
WaMu Mortgage Pass-Through Certificates 2007-HY3 Trust, Mtg. Pass-Through Certificates, Series 2007-HY3, Cl. 4A1, 5.314%, 3/1/371		10,705,383		8,534,506
WaMu Mortgage Pass-Through Certificates 2007-HY4 Trust, Mtg. Pass-Through Certificates, Series 2007-HY4, Cl. 4A1, 5.512%, 9/25/361		9,906,407		7,001,497
WaMu Mortgage Pass-Through Certificates 2007-HY6 Trust, Mtg. Pass-Through Certificates, Series 2007-HY6, Cl. 2A1, 5.668%, 6/25/371		5,182,706		3,651,183
WaMu Mortgage Pass-Through Certificates 2007-HY7 Trust, Mtg. Pass-Through Certificates, Series 2007-HY7, Cl. 2A1, 5.792%, 7/1/371		2,791,878		1,893,104
Wells Fargo Mortgage-Backed Securities 2005-AR16 Trust, Mtg. Pass-Through Certificates, Series 2005-AR16, Cl. 2A1, 3.363%, 10/1/351		1,978,516		1,674,107
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg. Pass-Through Certificates:
Series 2006-AR10, Cl. 2A2, 5.605%, 7/1/361,3		2,111,031		459,663
Series 2006-AR10, Cl. 3A2, 4.306%, 7/1/361,3		795,007		179,265
Series 2006-AR10, Cl. 4A2, 5.556%, 7/1/361,3		2,963,484		592,697
Series 2006-AR10, Cl. 5A3, 5.589%, 7/1/361		1,373,546		1,057,046
Series 2006-AR10, Cl. 5A6, 5.589%, 7/1/361		15,273,918		11,693,147
Wells Fargo Mortgage-Backed Securities 2006-AR13 Trust, Mtg. Pass-Through Certificates, Series 2006-AR13, Cl. A4, 5.753%, 9/1/361		11,440,000		7,231,623
Wells Fargo Mortgage-Backed Securities 2006-AR8 Trust, Mtg. Pass-Through Certificates, Series 2006-AR8, Cl. 2A1, 5.24%, 4/1/361		2,247,653		1,821,079
				198,462,012
Total Mortgage-Backed Obligations (Cost $695,555,125)				636,575,400
U.S. Government Obligations—2.1%
Federal Home Loan Bank Unsec. Bonds, 3.625%, 10/18/13		9,795,000		10,269,715
Federal Home Loan Mortgage Corp. Nts., 2.50%, 4/23/1410		18,400,000		18,407,894
Federal National Mortgage Assn. Nts.:
3%, 9/16/1410		15,625,000		15,840,344
4.375%, 10/15/1510		5,570,000		5,933,181
5.375%, 7/15/16		2,950,000		3,288,985
U.S. Treasury Bills, 0.07%, 1/14/1011		35,800,000		35,799,030
U.S. Treasury Bonds:
STRIPS, 4.201%, 2/15/1112		900,000		893,219
STRIPS, 4.833%, 2/15/1612		2,116,000		1,735,109
Total U.S. Government Obligations (Cost $91,593,047)				92,167,477
Foreign Government Obligations—42.6%
Argentina—0.6%
Argentina (Republic of) Bonds:
0.943%, 8/3/121		5,203,125		4,777,252
2.50%, 12/31/381		4,540,000		1,600,350
Series GDP, 2.724%, 12/15/351		7,580,000		525,294
Series V, 7%, 3/28/11		4,090,000		3,993,771
Series VII, 7%, 9/12/13		1,505,000		1,331,716
Argentina (Republic of) Sr. Unsec. Nts., 7%, 10/3/15		18,040,000		15,188,444
				27,416,827

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Australia—0.1%
New South Wales Treasury Corp. Bonds:
Series 12, 6%, 5/1/12		1,230,000	AUD	$	1,128,697
Series 14, 5.50%, 8/1/14		1,795,000	AUD		1,608,064
					2,736,761
Belgium—0.1%
Belgium (Kingdom of) Bonds, Series 44, 5%, 3/28/35		2,395,000	EUR		3,691,411
Brazil—5.4%
Banco Nacional de Desenvolvimento Economico e Social Nts., 6.369%, 6/16/1813		3,550,000			3,820,688
Brazil (Federal Republic of) Bonds:
6%, 1/17/17		19,770,000			21,450,450
8%, 1/15/18		10,903,611			12,495,538
8.875%, 10/14/19		4,610,000			5,969,950
Brazil (Federal Republic of) Nota Do Tesouro Nacional Nts.:
10%, 1/10/10		3,322,000	BRR		1,902,304
10%, 1/1/12		82,581,000	BRR		45,874,244
10%, 1/1/14		8,370,000	BRR		4,416,923
10%, 1/1/17		274,031,000	BRR		135,228,083
10.95%, 5/15/45		4,545,000	BRR		4,621,891
Brazil (Federal Republic of) Nts., 7.875%, 3/7/15		130,000			152,620
Brazil (Federal Republic of) Sr. Nts., 5.875%, 1/15/19		2,680,000			2,867,600
					238,800,291
Canada—0.2%
Canada Housing Trust Sec. Bonds, 4.10%, 12/15/18		5,245,000	CAD		5,112,753
Quebec (Province of) Nts., 4.50%, 12/1/18		5,285,000	CAD		5,167,915
					10,280,668
Colombia—0.9%
Bogota Distrio Capital Sr. Bonds, 9.75%, 7/26/2813		3,058,000,000	COP		1,605,558
Colombia (Republic of) Bonds:
7.375%, 9/18/37		2,845,000			3,115,275
12%, 10/22/15		37,816,000,000	COP		22,778,992
Colombia (Republic of) Sr. Nts., 7.375%, 3/18/19		4,330,000			4,925,375
Colombia (Republic of) Sr. Unsec. Bonds, 6.125%, 1/18/41		5,350,000			4,988,875
Colombia (Republic of) Unsec. Nts., 7.375%, 1/27/17		2,690,000			3,046,425
Colombia (Republic of) Unsec. Unsub. Bonds, 9.85%, 6/28/27		1,002,000,000	COP		569,983
					41,030,483
Denmark—0.1%
Denmark (Kingdom of) Bonds, 4%, 11/15/17		18,290,000	DKK		3,656,259
Egypt—0.9%
Egypt (The Arab Republic of) Treasury Bills:
9.758%, 2/2/1012		8,900,000	EGP		1,609,659
9.817%, 2/2/1012		27,650,000	EGP		5,000,795
Series 91, 9.656%, 3/9/103,12		17,750,000	EGP		3,183,495
Series 182, 9.699%, 1/19/1012		38,850,000	EGP		7,052,464
Series 273, 9.839%, 1/12/1012		54,520,000	EGP		9,908,679
Series 273, 9.78%, 2/9/1012		8,725,000	EGP		1,574,835
Series 273, 9.912%, 2/16/1012		17,900,000	EGP		3,223,322
Series 273, 9.878%, 2/23/1012		13,125,000	EGP		2,360,454
Egypt (The Arab Republic of) Unsec. Unsub. Bonds, 8.75%, 7/15/1213		22,870,000	EGP		4,253,138
					38,166,841
France—4.8%
France (Government of) Bonds:
3.75% 10/25/19		5,185,000	EUR		7,499,099
4%, 10/25/38		5,170,000	EUR		7,128,111
France (Government of) Treasury Bills:
0.350%, 2/18/1012		25,900,000	EUR		37,113,185
0.415%, 3/4/1012		100,000,000	EUR		142,974,182
France (Government of) Treasury Nts., 1.50%, 9/12/11		11,865,000	EUR		17,092,781
					211,807,358
Germany—9.1%
Germany (Federal Republic of) Bonds:
3.50%, 7/4/19		17,690,000	EUR		25,741,274
Series 03, 3.75%, 7/4/13		4,256,000	EUR		6,461,174
Series 08, 4.75%, 7/4/40		5,415,000	EUR		8,613,271
Germany (Federal Republic of) Treasury Bills:
Series 011, 0.475%, 1/27/1012		31,350,000	EUR		44,937,771
Series 26, 0.497%, 1/13/1012		221,700,000	EUR		317,801,994
					403,555,484
Ghana—0.1%
Ghana (Republic of) Bonds, 8.50%, 10/4/1713		3,735,000			3,837,713
Hungary—2.1%
Hungary (Republic of) Bonds:
Series 10/C, 6.75%, 4/12/10		345,000,000	HUF		1,834,129
Series 11/B, 6%, 10/12/11		94,000,000	HUF		492,974
Series 11/C, 6.75%, 4/22/11		5,231,900,000	HUF		27,808,493
Series 11/A, 7.50%, 2/12/11		47,000,000	HUF		252,402
Series 12/C, 6%, 10/24/12		4,045,000,000	HUF		20,851,911
Series 12/B, 7.25%, 6/12/12		1,000,000,000	HUF		5,328,869
Series 13/D, 6.75%, 2/12/13		560,000,000	HUF		2,927,303
Series 14/C, 5.50%, 2/12/14		503,700,000	HUF		2,491,997

	Principal
	Amount			Value
Hungary Continued
Hungary (Republic of) Bonds: Continued
Series 15/A, 8%, 2/12/15		3,991,000,000	HUF	$	21,456,958
Series 17/B, 6.75%, 2/24/17		235,700,000	HUF		1,163,106
Series 19/A, 6.50%, 6/24/19		1,410,000,000	HUF		6,778,419
					91,386,561
Indonesia—0.8%
Indonesia (Republic of) Nts.:
6.875%, 1/17/1813		9,000,000			9,945,000
7.25%, 4/20/1513		3,385,000			3,808,125
Indonesia (Republic of) Sr. Unsec. Nts.:
7.75%, 1/17/3813		4,875,000			5,533,125
10.375%, 5/4/1413		3,050,000			3,774,375
11.625%, 3/4/1913		2,410,000			3,470,400
Indonesia (Republic of) Unsec. Nts., 8.50%, 10/12/3513		6,920,000			8,355,900
					34,886,925
Israel—0.5%
Israel (State of) Bonds:
5.50%, 2/28/17		37,270,000	ILS		10,687,232
6%, 2/28/19		16,250,000	ILS		4,830,381
Series 2682, 7.50%, 3/31/14		25,080,000	ILS		7,862,561
					23,380,174
Italy—1.7%
Italy (Repubic of) Treasury Bonds, 5%, 9/1/40		24,070,000	EUR		35,723,093
Italy (Republic of) Treasury Bonds:
Buoni del Tesoro Poliennali, 3.75%, 12/15/13		20,557,000	EUR		30,638,055
Buoni del Tesoro Poliennali, 5.25%, 8/1/11		7,420,000	EUR		11,254,824
					77,615,972
Japan—2.9%
Japan (Government of) Bonds:
2 yr., 0.20%, 10/15/11		797,000,000	JPY		8,568,381
5 yr., Series 72, 1.50%, 6/20/13		3,026,000,000	JPY		33,841,652
10 yr., Series 284, 1.70%, 12/20/16		2,996,000,000	JPY		34,177,079
10 yr., Series 301, 1.50%, 6/20/19		1,979,000,000	JPY		21,799,003
20 yr., Series 112, 2.10%, 6/20/29		2,781,000,000	JPY		30,076,723
					128,462,838
Mexico—2.7%
United Mexican States Bonds:
5.625%, 1/15/17		8,220,000			8,610,450
Series A, 6.375%, 1/16/13		2,230,000			2,475,300
Series M10, 7.75%, 12/14/171		191,930,000	MXN		14,612,619
Series MI10, 8%, 12/19/13		453,000,000	MXN		35,690,804
Series M10, 8%, 12/17/15		94,000,000	MXN		7,313,706
Series MI10, 9.50%, 12/18/141		84,600,000	MXN		7,021,761
Series M20, 10%, 12/5/241		457,500,000	MXN		40,160,470
United Mexican States Sr. Unsec. Bonds, 6.05%, 1/11/40		790,000			763,377
United Mexican States Sr. Unsec. Nts., 5.875%, 2/17/14		2,045,000			2,234,163
					118,882,650
Norway—0.0%
Norway (Kingdom of) Bonds, 6.50%, 5/15/13		6,375,000	NOK		1,217,483
Panama—0.4%
Panama (Republic of) Bonds:
7.25%, 3/15/15		6,970,000			7,963,225
8.875%, 9/30/27		1,375,000			1,794,375
9.375%, 4/1/29		2,860,000			3,818,100
Panama (Republic of)
Unsec. Bonds, 7.125%, 1/29/26		2,275,000			2,576,438
					16,152,138
Peru—1.2%
Peru (Republic of) Bonds:
7.35%, 7/21/25		5,380,000			6,187,000
7.84%, 8/12/20		38,180,000	PEN		15,232,617
9.91%, 5/5/15		22,090,000	PEN		9,631,576
Series 7, 8.60%, 8/12/17		42,800,000	PEN		18,100,148
Peru (Republic of) Sr. Nts., 4.533%, 2/28/1612		363,871			290,296
Peru (Republic of) Sr. Unsec. Nts., 7.125%, 3/30/19		2,670,000			3,083,850
					52,525,487
Philippines—0.2%
Philippines (Republic of the) Bonds, 8%, 1/15/16		1,760,000			2,050,400
Philippines (Republic of the) Unsec. Bonds, 7.75%, 1/14/31		4,710,000			5,334,075
					7,384,475
Poland—0.4%
Poland (Republic of) Bonds:
Series 0414, 5.75%, 4/25/1413		25,085,000	PLZ		8,786,369
Series 0511, 4.25%, 5/24/11		23,900,000	PLZ		8,310,466
					17,096,835
Portugal—0.1%
Portugal (Republic of) Obrigacoes Do Tesouro Bonds, 5%, 6/15/12		2,720,000	EUR		4,164,317
South Africa—0.7%
South Africa (Republic of) Bonds:
7.50%, 1/15/14		50,790,000	ZAR		6,654,103
Series R157, 13.50%, 9/15/15		153,140,000	ZAR		25,485,775
					32,139,878

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Spain—0.3%
Spain (Government of) Bonos Y Oblig Del Estado, 4.25% 1/31/14		8,075,000	EUR	$	12,217,679
Sweden—0.1%
Sweden (Kingdom of) Bonds, Series 1050, 3%, 7/12/16		19,420,000	SEK		2,718,786
The Netherlands—0.1%
Netherlands (Kingdom of the) Bonds, 5%, 7/15/11		3,730,000	EUR		5,657,904
Turkey—4.3%
Turkey (Republic of) Bonds:
6.75%, 4/3/18		6,790,000			7,401,100
7%, 9/26/16		6,480,000			7,192,800
7%, 3/11/19		2,710,000			2,967,450
10.622%, 8/6/14		19,170,000	TRY		13,114,525
10.673%, 5/11/1112		21,580,000	TRY		12,924,740
12.032%, 2/2/1112		4,115,000	TRY		2,530,885
16%, 3/7/121		160,285,000	TRY		120,847,245
Series CPI, 10%, 2/15/121		6,810,000	TRY		6,343,019
Series CPI, 12%, 8/14/131		6,930,000	TRY		6,266,206
Turkey (Republic of) Nts.:
7.25%, 3/15/15		3,180,000			3,577,500
7.50%, 7/14/17		3,480,000			3,967,200
Turkey (Republic of) Sr. Unsec. Nts., 7.50%, 11/7/19		4,220,000			4,779,150
					191,911,820
Ukraine—0.2%
Ukraine (Republic of) Sr. Unsec. Nts., 6.75%, 11/14/1713		2,710,000			2,086,700
Ukraine (Republic of) Unsec. Bonds, 6.385%, 6/26/1213		7,200,000			6,192,000
					8,278,700
United Arab Emirates—0.1%
Dubai DOF Sukuk Ltd. Sr. Unsec. Unsub. Nts., 6.396%, 11/3/14		3,020,000			2,884,100
United Kingdom—0.7%
United Kingdom Treasury Bonds:
2.25%, 3/7/14		5,620,000	GBP		8,920,597
4.25%, 3/7/11		5,375,000	GBP		9,030,333
4.75%, 12/7/38		6,950,000	GBP		11,837,889
					29,788,819
Uruguay—0.3%
Uruguay (Oriental Republic of) Bonds, 7.625%, 3/21/36		3,445,000			3,746,438
Uruguay (Oriental Republic of) Sr. Nts., 6.875%, 9/28/25		3,850,000			4,061,750
Uruguay (Oriental Republic of) Unsec. Bonds, 8%, 11/18/22		6,875,000			7,906,250
					15,714,438
Venezuela—0.5%
Venezuela (Republic of) Bonds, 9%, 5/7/23		3,495,000			2,367,863
Venezuela (Republic of) Nts., 8.50%, 10/8/14		3,740,000			2,963,950
Venezuela (Republic of) Unsec. Bonds, 7.65%, 4/21/25		12,685,000			7,515,863
Venezuela (Republic of) Unsec. Nts.:
6%, 12/9/20		7,040,000			3,889,600
13.625%, 8/15/1813		5,080,000			4,629,150
					21,366,426
Total Foreign
Government Obligations (Cost $1,836,184,447)					1,880,814,501
Loan Participations—2.1%
Bayerische Hypo-und Vereinsbank AG for the City of Kiev, Ukraine Nts., 8.625%, 7/15/1113		5,520,000			4,457,400
CIT Group, Inc., Sr. Sec. Credit Facilities Term Loan, 7.50%, 1/18/121,8		6,305,000			6,478,388
Credit Suisse First Boston International:
Export-Import Bank of Ukraine, 7.65% Sr. Sec. Bonds, 9/7/11		1,400,000			1,190,000
Export-Import Bank of Ukraine, 8.40% Sec. Nts., 2/9/16		4,610,000			3,411,400
Gaz Capital SA:
6.212% Sr. Unsec. Unsub. Nts., 11/22/1613		3,760,000			3,619,000
7.288% Sr. Sec. Nts., 8/16/3713		10,140,000			9,404,850
8.125% Nts., 7/31/1413		3,030,000			3,226,950
8.146% Sr. Sec. Nts., 4/11/1813		5,280,000			5,590,200
8.625% Sr. Sec. Nts., 4/28/3413		3,330,000			3,654,675
9.25% Sr. Unsec. Unsub. Nts., 4/23/1913		1,510,000			1,691,200
Kuznetski Capital SA/Bank of Moscow, 7.375% Nts., 11/26/1013		1,510,000			1,574,175
Nuveen Investments, Inc., Sr. Sec. Credit Facilities 2nd Lien Term Loan, 12.50%, 7/20/151,3		6,840,000			7,156,350
RSHB Capital SA/OJSC Russian Agricultural Bank, 7.75% Nts., 5/29/1813		2,250,000			2,470,500
Steel Capital SA for OAO Severstal, 9.75% Sec. Nts., 7/29/1313		6,030,000			6,105,375
TransCapitalInvest Ltd. for OJSC AK Transneft:
5.67% Sec. Bonds, 3/5/1413		2,760,000			2,783,344
8.70% Sec. Nts., 8/7/1813		1,500,000			1,721,534

	Principal
	Amount		Value
Loan Participations Continued
VIP Finance Ireland Ltd., 9.125% Bonds, 4/30/1813	$	8,290,000	$	8,891,025
VTB Capital SA:
6.25% Sr. Nts., 6/30/3513		760,000		712,500
6.315% Sub. Unsec. Nts., 2/4/15		16,470,000		16,416,258
6.875% Sr. Sec. Nts., 5/29/1813		3,030,000		3,030,000
Total Loan Participations (Cost $93,029,860)				93,585,124
Corporate Bonds and Notes—24.1%
Consumer Discretionary—4.1%
Auto Components—0.2%
Allison Transmission, Inc., 11% Sr. Nts., 11/1/1513		5,245,000		5,533,475
American Axle & Manufacturing Holdings, Inc., 9.25% Sr. Sec. Nts., 1/15/1713		3,460,000		3,529,200
Goodyear Tire & Rubber Co. (The), 9% Sr. Unsec. Nts., 7/1/15		1,225,000		1,280,125
				10,342,800
Automobiles—0.3%
Case New Holland, Inc., 7.125% Sr. Unsec. Nts., 3/1/14		4,420,000		4,508,400
Ford Motor Co., 7.45% Bonds, 7/16/31		5,680,000		5,048,100
Ford Motor Credit Co. LLC:
7.50% Sr. Unsec. Unsub. Nts., 8/1/12		3,150,000		3,178,473
8.125% Sr. Unsec. Nts., 1/15/20		2,435,000		2,396,904
				15,131,877
Diversified Consumer
Services—0.1%
Service Corp. International:
6.75% Sr. Unsec. Nts., 4/1/15		1,720,000		1,694,200
7% Sr. Unsec. Unsub. Nts., 6/15/17		840,000		819,000
StoneMor Operating LLC/Cornerstone Family Service of West Virginia, Inc./Osiris Holdings of Maryland Subsidiary, Inc., 10.25% Sr. Nts., 12/1/1713		1,875,000		1,917,188
				4,430,388
Hotels, Restaurants & Leisure—1.1%
CCM Merger, Inc., 8% Unsec. Nts., 8/1/1313		1,725,000		1,408,031
Greektown Holdings, Inc., 10.75% Sr. Nts., 12/1/132,13		4,560,000		712,500
Harrah’s Operating Co., Inc., 10% Sr. Sec. Nts., 12/15/1813		5,887,000		4,753,753
Harrah’s Operating Escrow LLC/Harrah’s Escrow Group, 11.25% Sr. Sec. Nts., 6/1/1713		1,610,000		1,692,513
Isle of Capri Casinos, Inc., 7% Sr. Unsec. Sub. Nts., 3/1/14		2,890,000		2,586,550
Landry’s Restaurant, Inc., 11.625% Sr. Sec. Nts., 12/1/1513		2,500,000		2,662,500
Las Vegas Sands Corp., 6.375% Sr. Unsec. Nts., 2/15/15		3,295,000		2,932,550
Mashantucket Pequot Tribe, 8.50% Bonds, Series A, 11/15/152,13		7,090,000		1,772,500
MGM Mirage, Inc.:
6.75% Sr. Unsec. Nts., 4/1/13		1,135,000		984,613
8.50% Sr. Unsec. Nts., 9/15/10		845,000		845,000
Mohegan Tribal Gaming Authority:
6.125% Sr. Unsec. Sub. Nts., 2/15/13		1,630,000		1,314,188
11.50% Sr. Sec. Nts., 11/1/1713		2,580,000		2,644,500
Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 3/15/10		2,900,000		2,900,000
Peninsula Gaming LLC:
8.375% Sr. Sec. Nts., 8/15/1513		460,000		461,150
10.75% Sr. Unsec. Nts., 8/15/1713		1,150,000		1,161,500
Penn National Gaming, Inc., 8.75% Sr. Unsec. Sub. Nts., 8/15/1913		2,825,000		2,902,688
Pinnacle Entertainment, Inc.:
8.25% Sr. Unsec. Sub. Nts., 3/15/12		1,198,000		1,203,990
8.625% Sr. Nts., 8/1/1713		455,000		466,375
Pokagon Gaming Authority, 10.375% Sr. Nts., 6/15/1413		1,795,000		1,875,775
Premier Cruise Ltd., 11% Sr. Nts., 3/15/082,3,4		250,000		—
Station Casinos, Inc., 6.50% Sr. Unsec. Sub. Nts., 2/1/142		10,465,000		104,650
Travelport LLC, 11.875% Sr. Unsec. Sub. Nts., 9/1/16		3,845,000		4,094,925
Wendy’s/Arby’s Restaurants LLC, 10% Sr. Unsec. Unsub. Nts., 7/15/1613		4,060,000		4,445,700
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14		3,410,000		3,311,963
				47,237,914
Household Durables—0.3%
Beazer Homes USA, Inc.:
8.375% Sr. Nts., 4/15/12		675,000		637,875
8.625% Sr. Unsec. Nts., 5/15/11		1,425,000		1,396,500

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Household Durables Continued
Jarden Corp., 7.50% Sr. Unsec. Sub. Nts., 5/1/17	$	4,695,000	$	4,706,738
K. Hovnanian Enterprises, Inc.:
7.75% Sr. Unsec. Sub. Nts., 5/15/13		1,005,000		768,825
8.875% Sr. Sub. Nts., 4/1/12		3,325,000		2,809,625
Lennar Corp., 12.25% Sr. Unsec. Unsub. Nts., 6/1/173		915,000		1,107,150
				11,426,713
Internet & Catalog Retail—0.0%
NetFlix, Inc., 8.50% Sr. Unsec. Nts., 11/15/1713		990,000		1,032,075
Leisure Equipment & Products—0.1%
Colt Defense LLC, 8.75% Sr. Unsec. Nts., 11/15/1713		2,750,000		2,853,125
Easton-Bell Sports, Inc., 9.75% Sr. Sec. Nts., 12/1/1613		500,000		520,625
				3,373,750
Media—1.5%
Allbritton Communications Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/12		3,905,000		3,861,069
AMC Entertainment, Inc., 8% Sr. Unsec. Sub. Nts., 3/1/14		3,415,000		3,278,400
American Media Operations, Inc.:
9% Sr. Unsec. Nts., 5/1/1313,14		309		199
12.02% Sr. Sub. Nts., 11/1/1313,14		8,628,552		5,565,416
Belo Corp., 7.75% Sr. Unsec. Unsub. Debs., 6/1/27		2,260,000		1,819,300
Cequel Communications Holdings I LLC, 8.625% Sr. Unsec. Nts., 11/15/1713		2,480,000		2,517,200
Charter Communications, Inc., 13.50% Sr. Nts., 11/30/16		1,349,415		1,595,683
Clear Channel Worldwide Holdings, Inc.:
9.25% Sr. Nts., 12/15/1713		780,000		807,300
9.25% Sr. Unsec. Nts., 12/15/1713		195,000		199,875
Fisher Communications, Inc., 8.625% Sr. Unsec. Nts., 9/15/14		670,000		645,713
Lin Television Corp., 6.50% Sr. Sub. Nts., 5/15/13		7,735,000		7,502,950
Marquee Holdings, Inc., 9.505% Sr. Nts., 8/15/141		1,615,000		1,350,544
Mediacom LLC/Mediacom Capital Corp., 9.125% Sr. Nts., 8/15/1913		4,925,000		5,048,125
MediaNews Group, Inc.:
6.375% Sr. Sub. Nts., 4/1/142,3		1,330,000		3,458
6.875% Sr. Unsec. Sub. Nts., 10/1/132,3		2,870,000		7,462
News America, Inc., 6.15% Sr. Unsec. Unsub. Nts., 3/1/37		1,451,000		1,448,317
NTL Cable plc, 9.125% Sr. Nts., 8/15/16		2,150,000		2,276,313
Radio One, Inc., 6.375% Sr. Unsec. Sub. Nts., 2/15/13		705,000		520,819
Reynolds Group, 7.75% Sr. Sec. Nts., 10/15/1613		2,935,000		3,015,713
Salem Communications Corp., 9.625% Sr. Sec. Nts., 12/15/1613		1,000,000		1,052,500
Sinclair Broadcast Group, Inc., 8% Sr. Unsec. Sub. Nts., 3/15/12		6,250,000		6,125,000
Sinclair Television Group, Inc., 9.25% Sr. Sec. Nts., 11/1/1713		675,000		705,375
Time Warner Cable, Inc., 8.75% Sr. Unsub. Nts., 2/14/19		993,000		1,212,228
Time Warner, Inc., 6.50% Sr. Unsec. Debs., 11/15/36		2,193,000		2,297,214
TL Acquisitions, Inc., 10.50% Sr. Nts., 1/15/1513		3,505,000		3,369,181
Valassis Communications, Inc., 8.25% Sr. Unsec. Unsub. Nts., 3/1/15		4,325,000		4,335,813
Virgin Media Finance plc, 8.75% Sr. Unsec. Nts., 4/15/14		209,000		216,838
Warner Music Group Corp., 7.375% Sr. Sub. Bonds, 4/15/14		4,260,000		4,137,525
				64,915,530
Multiline Retail—0.1%
Bon-Ton Stores, Inc. (The), 10.25% Sr. Unsec. Unsub. Nts., 3/15/14		3,620,000		3,357,550
Specialty Retail—0.3%
Burlington Coat Factory Warehouse Corp., 11.125% Sr. Unsec. Nts., 4/15/14		3,315,000		3,439,313
Home Depot, Inc. (The), 5.875% Sr. Unsec. Unsub. Nts., 12/16/36		2,664,000		2,579,959
Leslie’s Poolmart, Inc., 7.75% Sr. Unsec. Nts., 2/1/13		2,430,000		2,454,300
Michaels Stores, Inc., 10% Sr. Unsec. Unsub. Nts., 11/1/14		5,115,000		5,319,600
Sally Holdings LLC, 10.50% Sr. Unsec. Sub. Nts., 11/15/16		1,280,000		1,382,400
				15,175,572

	Principal
	Amount			Value
Textiles, Apparel & Luxury
Goods—0.1%
Levi Strauss & Co., 9.75% Sr. Unsec. Unsub. Nts., 1/15/15	$	3,765,000		$	3,972,075
Consumer Staples—1.2%
Beverages—0.1%
AmBev International Finance Co. Ltd., 9.50% Sr. Unsec. Unsub. Nts., 7/24/171,13		4,470,000	BRR		2,516,140
Cott Beverages, Inc., 8.375% Sr. Nts., 11/15/1713		2,850,000			2,949,750
					5,465,890
Food & Staples Retailing—0.3%
Albertson’s, Inc., 8% Sr. Unsec. Debs., 5/1/31		4,505,000			4,110,813
Pantry, Inc. (The), 7.75% Sr. Unsec. Sub. Nts., 2/15/14		1,805,000			1,741,825
Real Time Data Co., 11% Nts., 5/31/092,3,4,14		142,981			—
Rite Aid Corp.:
7.50% Sr. Sec. Nts., 3/1/17		5,620,000			5,310,900
9.50% Sr. Unsec. Unsub. Nts., 6/15/17		1,990,000			1,741,250
					12,904,788
Food Products—0.6%
ASG Consolidated LLC/Finance, Inc., 11.50% Sr. Unsec. Nts., 11/1/11		5,130,000			5,168,475
Bumble Bee Foods LLC, 7.75% Sr. Sec. Nts., 12/15/1513		1,220,000			1,226,100
Chiquita Brands International, Inc.:
7.50% Sr. Unsec. Nts., 11/1/14		890,000			885,550
8.875% Sr. Unsec. Unsub. Nts., 12/1/15		2,255,000			2,311,375
Dean Foods Co., 7% Sr. Unsec. Unsub. Nts., 6/1/16		3,060,000			3,014,100
JBS USA LLC/JBS USA Finance, Inc., 11.625% Sr. Nts., 5/1/143		2,730,000			3,105,375
MHP SA, 10.25% Sr. Sec. Sub. Bonds, 11/30/1113		1,500,000			1,380,000
Pinnacle Foods Finance LLC, 9.25% Sr. Unsec. Nts., 4/1/1513		975,000			994,500
Pinnacle Foods Finance LLC/Pinnacle Foods Finance Corp., 10.625% Sr. Sub. Nts., 4/1/17		6,610,000			6,907,450
Smithfield Foods, Inc., 7% Sr. Nts., 8/1/11		4,515,000			4,526,288
					29,519,213
Personal Products—0.1%
Elizabeth Arden, Inc., 7.75% Sr. Unsec. Sub. Nts., 1/15/14		2,725,000			2,697,750
Revlon Consumer Products Corp., 9.75% Sr. Sec. Nts., 11/15/1513		1,000,000			1,037,500
					3,735,250
Tobacco—0.1%
Altria Group, Inc., 9.70% Sr. Unsec. Nts., 11/10/18		2,248,000			2,783,244
Energy—3.6%
Energy Equipment & Services—0.2%
Helix Energy Solutions Group, Inc., 9.50% Sr. Unsec. Nts., 1/15/1613		3,490,000			3,594,700
Key Energy Services, Inc., 8.375% Sr. Unsec. Nts., 12/1/14		2,830,000			2,851,225
North American Energy Alliance LLC, 10.875% Sr. Sec. Nts., 6/1/1613		1,600,000			1,708,000
					8,153,925
Oil, Gas & Consumable
Fuels—3.4%
Alon Refining Krotz Springs, Inc., 13.50% Sr. Sec. Nts., 10/15/1413		3,665,000			3,435,938
Antero Resources Finance Corp., 9.375% Sr. Nts., 12/7/1713		2,130,000			2,183,250
Arch Coal, Inc., 8.75% Sr. Nts., 8/1/1613		4,810,000			5,110,625
Atlas Energy Resources LLC, 10.75% Sr. Unsec. Nts., 2/1/18		4,650,000			5,161,500
Atlas Pipeline Partners LP, 8.125% Sr. Unsec. Nts., 12/15/15		2,285,000			2,033,650
Berry Petroleum Co.:
8.25% Sr. Sub. Nts., 11/1/16		1,940,000			1,920,600
10.25% Sr. Unsec. Nts., 6/1/14		2,485,000			2,714,863
Bill Barrett Corp., 9.875% Sr. Nts., 7/15/16		2,365,000			2,530,550
Bumi Capital Pte. Ltd., 12% Sr. Sec. Nts., 11/10/1613		2,700,000			2,720,250
Canadian Natural Resources Ltd., 6.75% Sr. Unsec. Unsub. Nts., 2/1/39		1,663,000			1,844,344
Chesapeake Energy Corp., 6.875% Sr. Unsec. Nts., 1/15/16		1,780,000			1,788,900

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Oil, Gas & Consumable Fuels Continued
Cimarex Energy Co., 7.125% Sr. Nts., 5/1/17	$	1,260,000		$	1,278,900
Cloud Peak Energy Resources LLC, 8.25% Sr. Unsec. Nts., 12/15/1713		3,505,000			3,522,525
Concho Resources, Inc., 8.625% Sr. Unsec. Nts., 10/1/17		2,635,000			2,779,925
Continental Resources, Inc., 8.25% Sr. Unsec. Nts., 10/1/1913		1,415,000			1,492,825
Denbury Resources, Inc., 7.50% Sr. Sub. Nts., 12/15/15		2,670,000			2,676,675
Enterprise Products Operating LLP, 8.375% Jr. Sub. Nts., 8/1/661		5,385,000			5,256,875
Forest Oil Corp.:
7.25% Sr. Unsec. Nts., 6/15/1913		1,900,000			1,885,750
8.50% Sr. Nts., 2/15/1413		4,790,000			5,029,500
Kazmunaigaz Finance Sub BV:
9.125% Nts., 7/2/1813		5,330,000			5,942,950
11.75% Sr. Unsec. Nts., 1/23/1513		16,600,000			20,086,000
Kinder Morgan Energy Partners LP, 6% Sr. Unsec. Nts., 2/1/17		2,121,000			2,230,072
Mariner Energy, Inc., 11.75% Sr. Unsec. Nts., 6/30/16		3,045,000			3,410,400
Murray Energy Corp., 10.25% Sr. Sec. Nts., 10/15/1513		3,490,000			3,490,000
Nak Naftogaz Ukraine, 9.50% Unsec. Nts., 9/30/14		2,570,000			2,184,474
OPTI Canada, Inc., 9% Sr. Sec. Nts., 12/15/1213		1,755,000			1,803,263
Pemex Project Funding Master Trust, 6.625% Sr. Unsec. Unsub. Nts., 6/15/3813		5,360,000			5,014,457
Petrobras International Finance Co., 7.875% Sr. Unsec. Nts., 3/15/19		3,090,000			3,577,639
Petrohawk Energy Corp., 10.50% Sr. Unsec. Nts., 8/1/14		3,400,000			3,731,500
Petroleos Mexicanos, 8% Unsec. Unsub. Nts., 5/3/19		2,130,000			2,476,125
Petroleum Co. of Trinidad & Tobago Ltd., 9.75% Sr. Unsec. Nts., 8/14/1913		3,880,000			4,360,150
Petroleum Export Ltd. Cayman SPV, 5.265% Sr. Nts., Cl. A3, 6/15/1113		1,733,653			1,690,424
Plains Exploration & Production Co., 10% Sr. Unsec. Nts., 3/1/16		5,030,000			5,533,000
PT Adaro Indonesia, 7.625% Nts., 10/22/1913		3,050,000			3,030,938
Quicksilver Resources, Inc.:
8.25% Sr. Unsec. Nts., 8/1/15		3,675,000			3,785,250
11.75% Sr. Nts., 1/1/16		2,260,000			2,576,400
SandRidge Energy, Inc.:
8.75% Sr. Nts., 1/15/2013		2,825,000			2,839,125
9.875% Sr. Unsec. Nts., 5/15/1613		4,000,000			4,230,000
Southwestern Energy Co., 7.50% Sr. Nts., 2/1/18		2,050,000			2,183,250
Tengizchevroil LLP, 6.124% Nts., 11/15/1413		1,516,980			1,524,565
TGI International Ltd., 9.50% Nts., 10/3/1713		2,692,000			2,920,820
Western Refining, Inc., 11.25% Sr. Sec. Nts., 6/15/1713		3,005,000			2,734,550
Williams Cos., Inc. (The), 8.75% Unsec. Nts., 3/15/32		1,996,000			2,394,974
					149,117,771
Financials—4.5%
Capital Markets—0.6%
Banco de Credito del Peru, 9.75% Jr. Sub. Nts., 11/6/693		1,550,000			1,639,125
Goldman Sachs Group, Inc. (The):
6.15% Sr. Unsec. Nts., 4/1/18		6,610,000			7,087,487
7.50% Sr. Unsec. Nts., 2/15/19		1,740,000			2,031,939
Morgan Stanley, 6% Sr. Unsec. Unsub. Nts., Series F, 4/28/15		10,970,000			11,698,781
RailAmerica, Inc., 9.25% Sr. Sec. Nts., 7/1/17		1,455,000			1,555,031
UBS AG Stamford CT, 5.75% Sr. Unsec. Nts., 4/25/18		1,471,000			1,499,949
					25,512,312
Commercial Banks—1.6%
Banco BMG SA, 9.15% Nts., 1/15/1613		3,520,000			3,643,200
Banco de Credito del Peru, 6.95% Sub. Nts., 11/7/211,13		1,510,000			1,472,250
Banco do Brasil SA, 8.50% Jr. Sub. Perpetual Bonds13,15		4,250,000			4,547,500
Bank of Scotland plc:
4.375% Sr. Sec. Nts., 7/13/16		8,035,000	EUR		11,579,951
4.50% Sr. Sec. Nts., 7/13/21		5,504,000	EUR		7,514,309
Corparacion Adina de Fomento, 8.125% Nts., 6/4/19		1,980,000			2,295,608

	Principal
	Amount			Value
Commercial Banks Continued
Depfa ACS Bank, 4.375% Sr. Sec. Nts., 1/15/15		5,550,000	EUR	$	7,985,971
HSBC Finance Corp.:
4.75% Sr. Unsec. Nts., 7/15/13		1,378,000			1,435,993
5.70% Sr. Unsec. Nts., 6/1/11		1,557,000			1,627,171
HSBK Europe BV:
7.25% Unsec. Unsub. Nts., 5/3/1713		1,360,000			1,251,200
9.25% Sr. Nts., 10/16/1313		13,170,000			13,565,100
ICICI Bank Ltd.:
5.50% Sr. Unsec. Nts., 3/25/1513		6,050,000			6,028,317
6.375% Bonds, 4/30/221,13		6,060,000			5,455,509
Inter-American Development Bank, 8.729% Nts., 1/25/121		441,785,730	COP		203,338
Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/102,3,4		90,000			—
Salisbury International Investments Ltd., 4.434% Sec. Nts., Series 2006-003, Tranche E, 7/20/111,3		1,100,000			902,990
					69,508,407
Consumer Finance—0.2%
American Express Credit Corp.:
5.875% Sr. Unsec. Nts., 5/2/13		2,045,000			2,196,271
7.30% Sr. Unsec. Nts., Series C, 8/20/13		2,196,000			2,470,028
Capital One Bank USA NA, 8.80% Sub. Nts., 7/15/19		1,296,000			1,534,004
JSC Astana Finance, 9.16% Nts., 3/14/122,3		7,200,000			1,224,000
SLM Corp., 8.45% Sr. Unsec. Nts., Series A, 6/15/18		2,145,000			2,119,725
					9,544,028
Diversified Financial Services—1.4%
Autopistas del Nordeste Cayman Ltd., 9.39% Nts., 1/15/2613		5,344,092			4,008,069
BA Covered Bond Issuer, 4.25% Sec. Nts., 4/5/17		1,655,000	EUR		2,314,917
Banco Invex SA, 27.981% Mtg.-Backed Certificates, Series 062U, 3/13/341,16		4,830,734	MXN		1,248,118
Bank of America Corp.:
4.90% Sr. Unsec. Nts., 5/1/13		2,750,000			2,853,133
5.65% Sr. Unsec. Nts., 5/1/18		7,280,000			7,405,849
Citigroup, Inc.:
5.50% Sr. Unsec. Nts., 4/11/13		10,816,000			11,222,000
6.50% Sr. Nts., 8/19/13		2,944,000			3,138,457
Cloverie plc, 4.503% Sec. Nts., Series 2005-93, 12/20/101,3		1,100,000			1,021,900
Export-Import Bank of Korea (The), 5.875% Sr. Unsec. Nts., 1/14/15		3,100,000			3,333,898
GMAC LLC, 8% Sr. Unsec. Unsub. Nts., 11/1/3113		7,960,000			7,243,600
JPMorgan Hipotecaria su Casita:
6.47% Sec. Nts., 8/26/353		5,808,600	MXN		391,080
25.825% Mtg.-Backed Certificates, Series 06U, 9/25/351		2,213,603	MXN		412,753
Merrill Lynch & Co., Inc., 7.75% Jr. Sub. Bonds, 5/14/38		7,515,000			8,282,049
National Rural Utilities Cooperative Finance Corp., 10.375% Sec. Bonds, 11/1/18		1,153,000			1,530,189
Tiers-BSP, 0%/8.60% Collateralized Trust, Cl. A, 6/15/9713,17		6,360,000			3,015,263
Universal City Development Partners Ltd., 8.875% Sr. Nts., 11/15/1513		2,815,000			2,769,256
					60,190,531
Insurance—0.2%
American International Group, Inc., 8.25% Sr. Unsec. Nts., 8/15/18		3,753,000			3,528,770
International Lease Finance Corp.:
6.375% Sr. Unsec. Nts., 3/25/13		1,676,000			1,378,921
6.625% Sr. Unsec. Nts., Series R, 11/15/13		1,258,000			1,013,484
Multiplan, Inc., 10.375% Sr. Sub. Nts., 4/15/163		3,975,000			3,895,500
Prudential Financial, Inc., 7.375% Sr. Unsec. Unsub. Nts., 6/15/19		1,086,000			1,219,696
					11,036,371
Real Estate Investment
Trusts—0.1%
DuPont Fabros Technology LP, 8.50% Sr. Unsec. Nts., 12/15/1713		1,710,000			1,746,338
Simon Property Group LP, 5.30% Sr. Unsec. Nts., 5/30/13		1,851,000			1,911,348
					3,657,686
Thrifts & Mortgage
Finance—0.4%
Banco Hipotecario SA, 9.75% Sr. Unsec. Nts., 4/27/1613		1,370,000			1,191,900
WM Covered Bond Program:
3.875% Sec. Nts., Series 1, 9/27/11		1,704,000	EUR		2,507,628

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Thrifts & Mortgage Finance Continued
WM Covered Bond Program: Continued
4% Sec. Mtg. Nts., Series 2, 9/27/16		10,595,000	EUR	$	14,932,925
4.375% Sec. Nts., 5/19/14		1,150,000	EUR		1,688,959
					20,321,412
Health Care—1.3%
Health Care Equipment & Supplies—0.2%
Biomet, Inc., 10.375% Sr. Unsec. Nts., 10/15/1714		6,360,000			6,932,400
Inverness Medical Innovations, Inc., 7.875% Sr. Nts., 2/1/1613		1,630,000			1,605,550
Universal Hospital Services, Inc., 8.50% Sr. Sec. Nts., 6/1/1514		2,340,000			2,316,600
					10,854,550
Health Care Providers & Services—1.0%
Apria Healthcare Group, Inc.:
11.25% Sr. Sec. Nts., 11/1/1413		1,535,000			1,692,338
12.375% Sr. Sec. Nts., 11/1/1413		1,345,000			1,486,225
Catalent Pharma Solutions, Inc., 9.50% Sr. Unsec. Nts., 4/15/1514		1,876,481			1,702,907
Community Health Systems, Inc., 8.875% Sr. Unsec. Nts., 7/15/15		5,380,000			5,581,750
HCA, Inc.:
6.375% Nts., 1/15/15		5,165,000			4,900,294
8.50% Sr. Sec. Nts., 4/15/1913		1,135,000			1,228,638
HEALTHSOUTH Corp., 10.75% Sr. Unsec. Nts., 6/15/16		4,975,000			5,435,188
Select Medical Corp., 7.625% Sr. Unsec. Sub. Nts., 2/1/15		6,205,000			6,049,875
Tenet Healthcare Corp., 7.375% Nts., 2/1/13		1,890,000			1,904,175
UnitedHealth Group, Inc., 6.875% Sr. Unsec. Nts., 2/15/38		2,103,000			2,180,426
US Oncology Holdings, Inc., 6.428% Sr. Unsec. Nts., 3/15/121,14		1,815,000			1,706,100
US Oncology, Inc., 9.125% Sr. Sec. Nts., 8/15/17		2,155,000			2,273,525
Vanguard Health Holding Co. I LLC, 0%/11.25% Sr. Nts., 10/1/1517		4,840,000			5,118,300
WellPoint, Inc., 6.375% Sr. Unsec. Unsub. Nts., 6/15/37		1,483,000			1,513,986
					42,773,727
Pharmaceuticals—0.1%
DJO Finance LLC/DJO Finance Corp., 10.875% Sr. Unsec. Nts., 11/15/14		2,920,000			3,095,200
Industrials—2.4%
Aerospace & Defense—0.3%
BE Aerospace, Inc., 8.50% Sr. Unsec. Nts., 7/1/18		5,510,000			5,854,375
Hawker Beechcraft Acquisition Co. LLC, 8.50% Sr. Unsec. Nts., 4/1/15		750,000			532,500
TransDigm, Inc., 7.75% Nts., 7/15/1413		3,390,000			3,457,800
Vought Aircraft Industries, Inc., 8% Sr. Nts., 7/15/11		4,575,000			4,534,969
					14,379,644
Airlines—0.4%
American Airlines Pass Through Trust 2001-2, 7.858% Pass-Through Certificates, Series 2001-2, Cl. A-2, 10/1/113		1,490,000			1,490,000
American Airlines Pass Through Trust 2009-1A, 10.375% Pass-Through Certificates, Series 2009-1A, 7/2/19		830,000			917,150
American Airlines, Inc., 10.50% Sr. Sec. Nts., 10/15/1213		4,220,000			4,431,000
Delta Air Lines, Inc.:
9.50% Sr. Sec. Nts., 9/15/1413		1,010,000			1,054,188
12.25% Sr. Sec. Nts., 3/15/1513		6,050,000			6,080,250
United Air Lines, Inc., 10.40% Sr. Sec. Nts., 11/1/163		3,990,000			4,204,463
					18,177,051
Building Products—0.2%
AMH Holdings, Inc., 11.25% Sr. Unsec. Nts., 3/1/14		1,000,000			970,000
Associated Materials LLC, 9.875% Sr. Sec. Nts., 11/15/1613		1,620,000			1,717,200
Goodman Global Group, Inc., 11.843% Sr. Nts., 12/15/1412,13		4,155,000			2,378,738
USG Corp., 9.75% Sr. Unsec. Nts., 8/1/1413		1,370,000			1,469,325
					6,535,263
Commercial Services &
Supplies—0.3%
Acco Brands Corp., 10.625% Sr. Sec. Nts., 3/15/1513		1,365,000			1,508,325
Aramark Services, Inc., 8.50% Sr. Unsec. Nts., 2/1/15		2,320,000			2,401,200
Corrections Corp. of America, 7.75% Sr. Nts., 6/1/17		1,975,000			2,044,125
Iron Mountain, Inc., 7.75% Sr. Sub. Nts., 1/15/15		1,040,000			1,050,400

	Principal
	Amount		Value
Commercial Services & Supplies Continued
West Corp., 9.50% Sr. Unsec. Nts., 10/15/14	$	6,895,000	$	7,032,900
				14,036,950
Construction & Engineering—0.2%
IIRSA Norte Finance Ltd., 8.75% Sr. Nts., 5/30/2413		6,282,138		6,627,655
Odebrecht Finance Ltd.:
7% Sr. Unsec. Nts., 4/21/2013		1,530,000		1,554,863
9.625% Sr. Unsec. Nts., 4/9/1413		1,520,000		1,759,400
				9,941,918
Industrial Conglomerates—0.3%
General Electric Capital Corp.:
5.40% Sr. Unsec. Nts., Series A, 9/20/13		3,392,000		3,609,017
6.875% Sr. Unsec. Nts., 1/10/39		4,501,000		4,662,950
Tyco International Finance SA, 8.50% Sr. Unsec. Unsub. Nts., 1/15/19		4,435,000		5,365,148
				13,637,115
Machinery—0.2%
Manitowoc Co., Inc. (The), 7.125% Sr. Nts., 11/1/13		4,540,000		4,290,300
Terex Corp., 8% Sr. Unsec. Sub. Nts., 11/15/17		5,015,000		4,852,013
				9,142,313
Marine—0.0%
Navios Maritime Holdings, Inc., 8.875% Nts., 11/1/1713		1,240,000		1,294,250
Professional Services—0.1%
Altegrity, Inc., 10.50% Sr. Unsec. Sub. Nts., 11/1/1513		2,680,000		2,405,300
Road & Rail—0.3%
Avis Budget Car Rental LLC, 7.625% Sr. Unsec. Unsub. Nts., 5/15/14		6,095,000		5,820,725
Hertz Corp., 10.50% Sr. Unsec. Sub. Nts., 1/1/16		3,785,000		4,059,413
Panama Canal Railway Co., 7% Sr. Sec. Nts., 11/1/2613		2,911,280		2,314,468
				12,194,606
Trading Companies & Distributors—0.1%
Ashtead Capital, Inc., 9% Nts., 8/15/1613		610,000		613,813
Ashtead Holdings plc, 8.625% Sr. Sec. Nts., 8/1/1513		855,000		863,550
RSC Equipment Rental, Inc., 10% Sr. Sec. Nts., 7/15/1713		655,000		715,588
United Rentals North America, Inc., 9.25% Sr. Unsec. Unsub. Nts., 12/15/19		1,495,000		1,551,063
United Rentals, Inc., 7% Sr. Sub. Nts., 2/15/14		1,710,000		1,556,100
				5,300,114
Information Technology—1.0%
Computers & Peripherals—0.0%
Seagate Technology International, 10% Sr. Sec. Nts., 5/1/1413		1,255,000		1,393,050
Electronic Equipment & Instruments—0.3%
NXP BV/NXP Funding LLC, 7.87% Sr. Sec. Nts., 10/18/14		1,940,000		1,770,250
RBS Global, Inc./Rexnord Corp., 11.75% Sr. Unsec. Sub. Nts., 8/1/16		4,975,000		4,950,125
Sanmina-SCI Corp., 8.125% Sr. Sub. Nts., 3/1/16		6,745,000		6,761,863
				13,482,238
IT Services—0.4%
First Data Corp., 9.875% Sr. Unsec. Nts., 9/24/15		6,495,000		6,089,063
Sabre Holdings Corp., 7.35% Sr. Unsec. Unsub. Nts., 8/1/11		2,765,000		2,816,844
SunGard Data Systems, Inc.:
9.125% Sr. Unsec. Nts., 8/15/13		4,460,000		4,593,800
10.25% Sr. Unsec. Sub. Nts., 8/15/15		3,172,000		3,394,040
				16,893,747
Office Electronics—0.1%
Xerox Corp., 5.65% Sr. Unsec. Nts., 5/15/13		1,495,000		1,558,919
Semiconductors & Semiconductor Equipment—0.2%
Amkor Technology, Inc.:
7.75% Sr. Nts., 5/15/13		1,560,000		1,591,200
9.25% Sr. Unsec. Nts., 6/1/16		3,220,000		3,437,350
Freescale Semiconductor, Inc.:
8.875% Sr. Unsec. Nts., 12/15/14		3,700,000		3,413,250
10.125% Sr. Unsec. Sub. Nts., 12/15/1613		2,200,000		1,782,000
				10,223,800
Materials—2.6%
Chemicals—0.6%
Braskem Finance Ltd., 7.25% Sr. Unsec. Nts., 6/5/1813		4,185,000		4,279,163

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Chemicals Continued
Dow Chemical Co. (The), 7.60% Sr. Unsec. Unsub. Nts., 5/15/14	$	2,546,000	$	2,899,797
Hexion US Finance Corp./ Hexion Nova Scota Finance ULC, 9.75% Sr. Sec. Nts., 11/15/14		1,810,000		1,782,850
Huntsman International LLC, 7.375% Sr. Unsub. Nts., 1/1/15		7,080,000		6,832,200
Momentive Performance Materials, Inc., 11.50% Sr. Unsec. Sub. Nts., 12/1/16		10,105,000		8,993,450
Nalco Co., 8.875% Unsec. Sub. Nts., 11/15/13		2,135,000		2,209,725
PolyOne Corp., 8.875% Sr. Unsec. Nts., 5/1/12		1,390,000		1,438,650
				28,435,835
Construction Materials—0.1%
C10 Capital SPV Ltd., 6.722% Unsec. Perpetual Debs.13,15		2,750,000		1,943,373
CEMEX Finance LLC, 9.50% Sr. Sec. Bonds, 12/14/1613		2,270,000		2,389,175
				4,332,548
Containers & Packaging—0.7%
Berry Plastics Holding Corp., 8.875% Sr. Sec. Nts., 9/15/14		7,045,000		6,886,488
Cascades, Inc.:
7.75% Sr. Nts., 12/15/1713		1,250,000		1,268,750
7.875% Sr. Nts., 1/15/2013		2,435,000		2,483,700
Crown Americas, Inc., 7.75% Sr. Nts., 11/15/15		3,710,000		3,858,400
Graham Packaging Co. LP:
8.25% Sr. Nts., 1/1/1713		2,250,000		2,233,125
9.875% Sr. Unsec. Sub. Nts., 10/15/14		4,930,000		5,053,250
Graphic Packing International, Inc., 9.50% Sr. Unsec. Unsub. Nts., 6/15/17		5,295,000		5,639,175
Viskase Companies, Inc., 9.875% Sr. Sec. Nts., 1/15/1813		1,465,000		1,483,313
				28,906,201
Metals & Mining—0.9%
Alcoa, Inc., 6.75% Sr. Unsec. Unsub. Nts., 7/15/18		961,000		981,865
CSN Islands XI Corp., 6.875% Sr. Unsec. Nts., 9/21/1913		1,900,000		1,909,500
Edgen Murray Corp., 12.25% Sr. Sec. Nts., 1/15/1513		2,445,000		2,414,438
Freeport-McMoRan Copper & Gold, Inc., 8.375% Sr. Nts., 4/1/17		1,480,000		1,622,821
Novelis, Inc., 7.25% Sr. Unsec. Nts., 2/15/151		6,055,000		5,797,663
Rio Tinto Finance (USA) Ltd.:
5.875% Sr. Unsec. Unsub. Nts., 7/15/13		2,052,000		2,215,953
9% Sr. Unsec. Nts., 5/1/19		888,000		1,125,718
Teck Resources Ltd., 10.25% Sr. Sec. Nts., 5/15/16		4,005,000		4,685,850
United Maritime LLC, 11.75% Sr. Sec. Nts., 6/15/1513		2,440,000		2,458,300
Vale Overseas Ltd., 6.875% Bonds, 11/21/36		604,000		605,003
Vedanta Resources plc, 9.50% Sr. Unsec. Nts., 7/18/1813		13,715,000		13,989,300
Voto-Votorantim Overseas Trading Operations, 6.625% Sr. Unsec. Nts., 9/25/1913		2,300,000		2,317,250
				40,123,661
Paper & Forest Products—0.3%
Celulosa Arauco y Constitucion SA, 7.25% Sr. Unsec. Unsub. Nts., 7/29/19		1,860,000		2,028,226
Georgia-Pacific LLC:
7.70% Debs., 6/15/15		1,300,000		1,371,500
8.25% Sr. Unsec. Nts., 5/1/1613		3,460,000		3,684,900
PE Paper Escrow GmbH, 12% Sr. Sec. Nts., 8/1/1413		1,835,000		2,031,270
Verso Paper Holdings LLC, 9.125% Sr. Sec. Nts., 8/1/14		3,625,000		3,480,000
				12,595,896
Telecommunication Services—1.8%
Diversified Telecommunication Services—0.9%
Axtel SAB de CV, 9% Sr. Unsec. Nts., 9/22/1913		1,545,000		1,591,350
Cincinnati Bell, Inc., 8.25% Sr. Nts., 10/15/17		3,260,000		3,325,200
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		1,960,000		1,974,700
Global Crossing Ltd., 12% Sr. Sec. Nts., 9/15/1513		1,590,000		1,752,975
Intelsat Subsidiary Holding Co. Ltd., 8.50% Sr. Unsec. Nts., 1/15/1313		2,135,000		2,188,375
Level 3 Financing, Inc., 9.25% Sr. Unsec. Unsub. Nts., 11/1/14		1,855,000		1,762,250
PAETEC Holding Corp., 9.50% Sr. Unsec. Unsub. Nts., 7/15/15		7,115,000		6,883,763
Telecom Italia Capital SA, 7.721% Sr. Unsec. Unsub. Nts., 6/4/38		1,900,000		2,194,363

	Principal
	Amount			Value
Diversified Telecommunication Services Continued
Telefonica del Peru SA, 8% Sr. Unsec. Bonds, 4/11/1613		3,290,100	PEN	$	1,184,390
Telmar Norte Leste SA, 9.50% Sr. Unsec. Nts., 4/23/1913		2,495,000			2,994,000
Verizon Communications, Inc., 8.95% Sr. Unsec. Unsub. Nts., 3/1/39		4,548,000			6,172,996
Windstream Corp.:
7.875% Sr. Nts., 11/1/1713		1,710,000			1,697,175
8.625% Sr. Unsec. Unsub. Nts., 8/1/16		5,570,000			5,695,325
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/102,3,4		250,000			3
					39,416,865
Wireless Telecommunication Services—0.9%
America Movil SAB de CV, 8.46% Sr. Unsec. Unsub. Bonds, 12/18/36		52,700,000	MXN		3,298,060
CC Holdings GS V LLC/Crown Castle GS III Corp., 7.75% Sr. Sec. Nts., 5/1/1713		4,720,000			5,050,400
Cricket Communications, Inc.:
7.75% Sr. Sec. Unsub. Nts., 5/15/16		3,510,000			3,518,775
9.375% Sr. Unsec. Nts., 11/1/14		3,610,000			3,646,100
MetroPCS Wireless, Inc., 9.25% Sr. Unsec. Nts., 11/1/14		6,910,000			7,030,925
Nextel Communications, Inc., 7.375% Sr. Nts., Series D, 8/1/15		6,625,000			6,475,938
SBA Telecommunications, Inc.:
8% Sr. Nts., 8/15/1613		1,810,000			1,900,500
8.25% Sr. Nts., 8/15/1913		4,480,000			4,771,200
Sprint Capital Corp., 8.75% Nts., 3/15/32		6,320,000			5,988,200
Teligent, Inc., 11.50% Sr. Nts., 12/1/082,3,4		500,000			—
					41,680,098
Utilities—1.6%
Electric Utilities—0.8%
Centrais Eletricas Brasileiras
SA, 6.857% Sr. Unsec. Unsub. Nts., 7/30/1913		2,300,000			2,504,125
Edison Mission Energy, 7% Sr. Unsec. Nts., 5/15/17		7,120,000			5,660,400
Eletropaulo Metropolitana SA, 19.125% Nts., 6/28/103		1,115,000	BRR		666,054
Empresas Publicas de Medellin ESP, 7.625% Sr. Unsec. Nts., 7/29/1913		2,600,000			2,873,000
Energy Future Holdings Corp., 10.875% Sr. Unsec. Nts., 11/1/17		3,320,000			2,730,700
Israel Electric Corp. Ltd., 7.25% Nts., 1/15/1913		9,000,000			9,763,281
Majapahit Holding BV:
7.25% Nts., 10/17/1113		1,990,000			2,089,500
7.75% Nts., 10/17/1613		4,450,000			4,733,910
8% Sr. Unsec. Nts., 8/7/1913		900,000			954,000
National Power Corp., 5.875% Unsec. Unsub. Bonds, 12/19/16		109,600,000	PHP		2,145,533
Texas Competitive Electric Holdings Co. LLC, 10.25% Sr. Unsec. Nts., Series A, 11/1/15		1,795,000			1,462,925
					35,583,428
Energy Traders—0.7%
AES Corp. (The), 8% Sr. Unsec. Unsub. Nts., 10/15/17		1,145,000			1,180,781
Dynegy Holdings, Inc., 8.375% Sr. Unsec. Nts., 5/1/16		6,885,000			6,575,175
Electric Power Development Co. Ltd., 1.80% Gtd. Unsec. Nts., 6/28/10		202,000,000	JPY		2,184,662
Mirant North America LLC, 7.375% Sr. Unsec. Nts., 12/31/13		2,950,000			2,931,563
NRG Energy, Inc.:
7.375% Sr. Nts., 1/15/17		5,080,000			5,105,400
7.375% Sr. Nts., 2/1/16		3,740,000			3,754,025
Power Sector Assets & Liabilities Management Corp.:
7.25% Gtd. Sr. Unsec. Nts., 5/27/1913		2,280,000			2,456,700
7.39% Sr. Gtd. Unsec. Nts., 12/2/2413		2,270,000			2,349,450
Reliant Energy, Inc., 7.625% Sr. Unsec. Unsub. Nts., 6/15/14		5,055,000			5,029,725
					31,567,481
Multi-Utilities—0.1%
Sempra Energy, 9.80% Sr. Unsec. Nts., 2/15/19		1,821,000			2,276,447
Total Corporate Bonds and Notes (Cost $989,954,497)					1,064,085,287

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Preferred Stocks—0.0%
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.3,4,14		4,253	$	—
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.3,4		5,000		—
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.3,4,14		151		—
Total Preferred Stocks (Cost $537,064)				—
Common Stocks—0.2%
American Media, Inc.3,4		1,562		16
Arco Capital Corp. Ltd.3,4		690,638		1,726,595
Charter Communications, Inc., Cl. A4		110,986		3,940,003
Global Aero Logistics, Inc.3,4		2,168		2,168
MHP SA, GDR4,13		56,610		560,439
Orbcomm, Inc.4		375		1,013
Premier Holdings Ltd.3,4		18,514		—
Total Common Stocks (Cost $12,804,011)				6,230,234

	Units
Rights, Warrants and Certificates—0.0%
Global Aero Logistics, Inc. Wts., Strike Price $10, Exp. 2/28/113,4 (Cost $2,025)		266	3

	Principal
	Amount
Structured Securities—4.1%
Citigroup Funding, Inc.:
Ghana (Republic of) Credit Linked Nts., 12.08%, 6/9/103		1,180,000	GHS	802,326
Ghana (Republic of) Credit Linked Nts., 12.08%, 6/9/103		1,180,000	GHS	802,326
Ghana (Republic of) Credit Linked Nts., 12.08%, 6/9/103		1,180,000	GHS	802,326
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		31,590,000,000	IDR	3,669,450
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		31,580,000,000	IDR	3,668,288
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		15,590,000,000	IDR	1,810,913
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/17/15		15,790,000,000	IDR	1,709,723
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/17/15		15,670,000,000	IDR	1,696,730
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/17/15		33,010,000,000	IDR	3,574,286
Citigroup Global Markets Holdings, Inc.:
Brazil (Federal Republic of) Credit Linked Nts., 9.762%, 1/3/173		8,850,000	BRR	4,371,801
Colombia (Republic of) Credit Linked Bonds, 11.25%, 10/25/183		3,255,000,000	COP	1,830,159
Colombia (Republic of) Credit Linked Nts., 11%, 5/19/11		6,880,000,000	COP	3,649,186
Colombia (Republic of) Credit Linked Nts., 13.041%, 2/26/153,16		2,199,000,000	COP	2,235,727
Colombia (Republic of) Credit Linked Nts., Series 01, 13.041%, 2/26/153,16		811,000,000	COP	824,545
Colombia (Republic of) Credit Linked Nts., Series 02, 13.041% 12/26/153,16		1,345,000,000	COP	1,367,464
Colombia (Republic of) Credit Linked Nts., Series II, 15%, 4/27/123		552,359,546	COP	324,051
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/123		1,200,000,000	COP	704,000
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/123		1,034,000,000	COP	606,613
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/123		927,000,000	COP	543,840
Dominican Republic Unsec. Credit Linked Nts., 15%, 3/12/123		49,300,000	DOP	1,357,762
Ghana (Republic of) Credit Linked Nts., 13.50%, 4/2/103		2,990,000	GHS	2,063,084
Ukraine Hryvnia Unsec. Credit Linked Nts., 11.94%, 1/11/103		880,000	UAH	113,266
Credit Suisse First Boston International:
Boryspil Airport Total Return Linked Nts., 10%, 4/19/101		4,840,000	UAH	574,909
Moitk Total Return Linked Nts., 3/26/112,3,4		53,910,000	RUR	179
Oreniz Total Return Linked Nts., 9.24%, 2/21/121,3		116,835,000	RUR	3,358,750
Ukraine (Republic of) Credit Linked Nts., Series EMG 13, 11.94%, 1/11/10		2,195,000	UAH	282,105
Vietnam Shipping Industry Group Total Return Linked Nts., 10.50%, 1/19/173		14,609,000,000	VND	388,537
Credit Suisse First Boston, Inc. (Nassau Branch):
Russian Specialized Construction & Installation Administration Credit Linked Nts., 5/20/102,3,4		97,250,000	RUR	32,321
Ukraine (Republic of) Credit Linked Nts., 11.94%, 1/11/103		5,650,000	UAH	726,148

	Principal
	Amount			Value
Structured Securities Continued
Credit Suisse First Boston, Inc. (Nassau Branch): Continued Ukraine (Republic of) Credit Linked Nts., Series EMG 11, 11.94%, 1/11/10		661,000	UAH	$	84,953
Ukraine (Republic of) Credit Linked Nts., Series NPC 12, 11.94%, 1/11/103		4,170,000	UAH		535,936
Credit Suisse Group AG, Russian Moscoblgaz Finance Total Return Linked Nts., 9.25%, 6/24/12		106,500,000	RUR		2,902,365
Credit Suisse International:
OAO Gazprom Total Return Linked Nts., 13.12%, 6/26/121		41,550,000	RUR		1,513,457
OAO Gazprom Total Return Linked Nts., 13.12%, 6/26/121		30,880,000	RUR		1,124,803
OAO Gazprom Total Return Linked Nts., 13.12%, 6/26/121		44,460,000	RUR		1,619,454
Deutsche Bank AG:
Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.09%, 1/5/11		4,999,216	MXN		357,191
Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.65%, 1/5/11		3,320,991	MXN		237,283
Coriolanus Ltd. Sec. Credit Linked Bonds, 3.242%, 4/30/253,12		2,843,277			1,616,959
Coriolanus Ltd. Sec. Credit Linked Bonds, 3.269%, 4/30/253,12		2,271,446			1,291,761
Coriolanus Ltd. Sec. Credit Linked Bonds, 3.346%, 4/30/253,12		2,135,063			1,214,200
Coriolanus Ltd. Sec. Credit Linked Nts., 10.62%, 9/10/103		3,300,000			1,247,400
Coriolanus Ltd. Sec. Credit Linked Nts., 3.191%, 4/30/253,8,12		2,491,157			1,416,710
Coriolanus Ltd. Sec. Credit Linked Nts., 9.545%, 12/31/173,16		20,560,000	BRR		6,071,294
Coriolanus Ltd. Sec. Credit Linked Nts., Series 113, 9%, 4/26/111,3		655,000			698,276
European Investment Bank, Russian Federation Credit Linked Nts., 5.502%, 1/19/103,12		705,000			703,414
Indonesia (Republic of) Credit Linked Nts., 12.80%, 6/22/21		11,690,000,000	IDR		1,468,224
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/22/15		820,000			814,323
Indonesia (Republic of) Credit Linked Nts., Series 02, 12.80%, 6/22/21		29,700,000,000	IDR		3,671,603
JSC Gazprom Total Return Linked Nts., 13.12%, 6/28/121		45,990,000	RUR		1,675,261
JSC Gazprom Total Return Linked Nts., 13.12%, 6/28/121		38,600,000	RUR		1,406,068
Opic Reforma I Credit Linked Nts., Cl. 1A, 6.958%, 9/24/141,3		14,850,000	MXN		1,135,148
Opic Reforma I Credit Linked Nts., Cl. 1B, 6.958%, 9/24/141,3		2,970,000	MXN		227,030
Opic Reforma I Credit Linked Nts., Cl. 1C, 6.958%, 9/24/141,3		4,950,000	MXN		378,383
Opic Reforma I Credit Linked Nts., Cl. 1D, 6.958%, 9/24/141,3		2,475,000	MXN		189,191
Opic Reforma I Credit Linked Nts., Cl. 1E, 6.958%, 9/24/141,3		3,465,000	MXN		264,868
Opic Reforma I Credit Linked Nts., Cl. 2A, 8.42%, 5/22/151,3		1,417,014	MXN		108,318
Opic Reforma I Credit Linked Nts., Cl. 2B, 8.42%, 5/22/151,3		2,479,100	MXN		189,505
Opic Reforma I Credit Linked Nts., Cl. 2C, 8.42%, 5/22/151,3		37,378,810	MXN		2,857,270
Opic Reforma I Credit Linked Nts., Cl. 2D, 8.42%, 5/22/151,3		2,724,116	MXN		208,234
Opic Reforma I Credit Linked Nts., Cl. 2E, 8.42%, 5/22/151,3		1,979,122	MXN		151,286
Opic Reforma I Credit Linked Nts., Cl. 2F, 8.42%, 5/22/151,3		1,263,966	MXN		96,619
Opic Reforma I Credit Linked Nts., Cl. 2G, 8.42%, 5/22/151,3		232,771	MXN		17,793
Ukraine (Republic of) 5 yr. Credit Linked Nts., 4.05%, 8/27/10		885,000			628,624
Ukraine (Republic of) 5.5 yr. Credit Linked Nts., 4.05%, 3/1/11		885,000			570,409
Ukraine (Republic of) 6 yr. Credit Linked Nts., 4.05%, 8/29/11		885,000			496,981
Ukraine (Republic of) 6.5 yr. Credit Linked Nts., 4.05%, 2/29/12		885,000			445,199
Ukraine (Republic of) 7 yr. Credit Linked Nts., 4.05%, 8/30/12		885,000			411,153
United Mexican States Credit Linked Nts., 9.52%, 1/5/11		3,311,534	MXN		236,607
Dresdner Bank AG, Lukoil Credit Linked Nts., Series 3, 7.04%, 12/12/111,13		34,190,000	RUR		1,074,369
Eirles Two Ltd. Sec. Nts.:
Series 324, 3.791%, 4/30/121,3		4,100,000			2,640,810
Series 335, 2.241%, 4/30/121,3		6,300,000			5,049,450

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Structured Securities Continued
Goldman Sachs & Co., Turkey (Republic of) Credit Linked Nts., 14.802%, 3/29/1712,13		21,980,000	TRY	$	5,622,392
Goldman Sachs Capital Markets LP, Colombia (Republic of) Credit Linked Nts., 10.476%, 2/8/373,12		63,720,800,000	COP		1,549,839
Hallertau SPC Credit Linked Nts.:
Series 2007-01, 2.494%, 12/20/171,3		12,250,000			9,861,250
Series 2008-01, 9.888%, 8/2/102,3,4,12		14,337,604	BRR		823,527
Series 2008-2A, 6.707%, 9/17/131,3		18,215,625			18,388,673
ING Bank NV, Ukraine (Republic of) Credit Linked Nts., Series 725, 11.89%, 1/11/103		4,689,000	UAH		601,441
JPMorgan Chase Bank NA:
Brazil (Federal Republic of) Credit Linked Nts., 11.009%, 5/16/453		1,445,000	BRR		1,468,406
Colombia (Republic of) Credit Linked Bonds, 10.190%, 1/5/163,12		9,020,000,000	COP		2,578,024
Colombia (Republic of) Credit Linked Bonds, 10.218%, 10/31/163,12		12,177,000,000	COP		3,209,138
Colombia (Republic of) Credit Linked Bonds, Series A, 10.218%, 10/31/163,12		12,125,000,000	COP		3,195,433
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		7,190,000,000	IDR		826,525
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		15,770,000,000	IDR		1,812,837
Indonesia (Republic of) Credit Linked Nts., 11.50%, 9/18/19		24,160,000,000	IDR		2,777,307
Peru (Republic of) Credit Linked Nts., 8.115%, 9/2/1512,13		3,470,000	PEN		798,274
Swaziland (Kingdom of) Credit Linked Nts., 7.25%, 6/20/103		1,120,000			1,145,312
JPMorgan Chase Bank NA London Branch, Indonesia (Republic of) Credit Linked Nts., 12.80%, 6/17/21		25,490,000,000	IDR		3,148,326
Lehman Brothers Treasury Co. BV, Microvest Capital Management LLC Credit Linked Nts., 7.55%, 5/24/123		5,267,585			5,230,712
Merrill Lynch, Colombia (Republic of) Credit Linked Nts., 10%, 11/17/163		1,784,000,000	COP		766,140
Morgan Stanley:
Peru (Republic of) Credit Linked Nts., 6.25%, 3/23/1713		4,885,000	PEN		1,341,654
Russian Federation Total Return Linked Bonds, Series 007, Cl. VR, 5%, 8/22/34		85,122,158	RUR		1,366,628
Morgan Stanley & Co. International Ltd./Red Arrow International Leasing plc Total Return Linked Nts., Series A, 8.375%, 7/9/12		14,192,567	RUR		466,690
Morgan Stanley Capital Services, Inc.:
Brazil (Federal Republic of) Credit Linked Nts., 12.551%, 1/5/2212,13		28,914,000	BRR		1,559,679
Ukraine (Republic of) Credit Linked Nts., 2.396%, 10/15/171,3		8,300,000			3,984,000
Ukraine (Republic of) Credit Linked Nts., Series 2, 3.266%, 10/15/171,3		6,800,000			3,264,000
United Mexican States Credit Linked Nts., 5.64%, 11/20/153		2,000,000			1,640,000
WTI Trading Ltd. Total Return Linked Nts., Series A, 15%, 3/8/12		5,139,504			4,778,711
WTI Trading Ltd. Total Return Linked Nts., Series C, 15%, 3/8/12		6,876,672			6,395,305
UBS AG, Ghana (Republic of) Credit Linked Nts., 14.47%, 12/28/113		1,222,052	GHS		768,184
Total Structured Securities (Cost $221,887,024)					182,307,404
Event-Linked Bonds—0.9%
Akibare Ltd. Catastrophe Linked Nts., Cl. A, 3.217%, 5/22/121,13		1,888,000			1,830,677
Atlas V Capital Ltd. Catastrophe Linked Nts., Series 2, 11.79%, 2/24/121,13		820,000			879,799
East Lane Re III Ltd. Catastrophe Linked Nts., 10.54%, 3/16/121,13		3,373,000			3,526,134
Fhu-Jin Ltd. Catastrophe Linked Nts., Cl. B, 4.181%, 8/10/111,13		2,880,000			2,863,296

	Principal
	Amount		Value
Event-Linked Bonds Continued
Longpoint RE Ltd. Catastrophe Linked Nts.:
5.40%, 12/18/131,13	$	1,915,000	$	1,912,606
5.40%, 12/24/121,13		1,033,000		1,031,657
Medquake Ltd. Catastrophe Linked Nts., 5.373%, 5/31/101,13		1,500,000		1,486,523
Midori Ltd. Catastrophe Linked Nts., 3.034%, 10/24/121,13		1,850,000		1,804,305
Multicat Mexico 2009 Ltd. Catastrophe Linked Nts.:
10.309%, 10/19/121,13		599,000		599,599
11.559%, 10/19/121		1,790,000		1,793,580
Muteki Ltd. Catastrophe Linked Nts., 4.673%, 5/24/111,13		2,100,000		2,049,720
Nelson Re Ltd. Catastrophe Linked Nts., Series 2007-I, Cl. A, 12.173%, 6/21/101,13		3,340,000		3,323,133
Osiris Capital plc Catastrophe Linked Combined Mortality Index Nts., Series D, 5.284%, 1/15/101,13		890,000		889,964
Redwood Capital XI Ltd. Catastrophe Linked Nts., 0.00%, 1/10/111,13,18		1,331,000		1,331,333
Residential Reinsurance 2007 Ltd. Catastrophe Linked Nts.:
Series CL2, 11.756%, 6/6/111,13		2,590,000		2,573,877
Series CL3, 12.506%, 6/7/101,13		1,000,000		1,025,400
Successor X Ltd. Catastrophe Linked Nts.:
12.941%, 12/9/101,12,13		683,000		607,255
23.131%, 12/9/1012,13		939,000		763,524
Vega Capital Ltd. Catastrophe Linked Nts., Series D, 0%, 6/24/1112,13		4,205,000		5,713,544
Willow Re Ltd. Catastrophe Linked Nts., 6/16/102,3		1,582,000		1,109,378
Total Event-Linked Bonds (Cost $35,996,992)				37,115,304

	Expiration		Strike
	Date		Price			Contracts		Value
Options Purchased—0.0%
Euro (EUR) Call4		1/15/10		1.489	EUR		208,545,000	$	—
Mexican Nuevo Peso (MXN) Call4		3/18/10	$	12.50			97,000,000		59,364
Total Options Purchased (Cost $7,867,185)									59,364

	Shares
Investment Companies—10.0%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%18,19		4,680,460			4,680,460
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%19,20		76,771,099			76,771,099
Oppenheimer Master Event-Linked Bond Fund, LLC4,20		1,404,749			14,343,328
Oppenheimer Master Loan Fund, LLC4,20		33,609,439			347,307,865
Total Investment Companies (Cost $436,559,744)					443,102,752
Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $4,463,675,877)					4,463,916,334
Investments Purchased with Cash Collateral from Securities Loaned—0.9%21
OFI Liquid Assets Fund, LLC, 0.33%19,20 (Cost $37,599,500)		37,599,500			37,599,500
Total Investments, at Value (Cost $4,501,275,377)		102.0	%		4,501,515,834
Liabilities in Excess of Other Assets		(2.0	)		(87,017,808	)
Net Assets		100.0	%	$	4,414,498,026

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments

Principal amount is 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
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
VND	Vietnam Dong
ZAR	South African Rand

1.	Represents the current interest rate for a variable or increasing rate security.
2.	Issue is in default. See Note 1 of accompanying Notes.
3.	Illiquid or restricted security. The aggregate value of illiquid or restricted securities as of December 31, 2009 was $163,931,880, which represents 3.71% of the Fund’s net assets, of which $5,823,645 is considered restricted. See Note 6 of accompanying Notes. Information concerning restricted securities is as follows:

							Unrealized
	Acquisition						Appreciation
Security	Date		Cost		Value		(Depreciation)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1A, 6.958%, 9/24/14		12/27/07	$	1,364,764	$	1,135,148	$	(229,616	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1B, 6.958%, 9/24/14		6/12/08		286,334		227,030		(59,304	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1C, 6.958%, 9/24/14		8/12/08		487,085		378,383		(108,702	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1D, 6.958%, 9/24/14		8/6/09		189,935		189,191		(744	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 1E, 6.958%, 9/24/14		9/10/09		259,017		264,868		5,851
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2A, 8.42%, 5/22/15		5/21/08		136,622		108,318		(28,304	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2B, 8.42%, 5/22/15		6/12/08		239,007		189,505		(49,502	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2C, 8.42%, 5/22/15		6/18/08		3,626,317		2,857,270		(769,047	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2D, 8.42%, 5/22/15		7/8/08		264,086		208,234		(55,852	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2E, 8.42%, 5/22/15		7/15/08		192,185		151,286		(40,899	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2F, 8.42%, 5/22/15		8/8/08		124,426		96,619		(27,807	)
Deutsche Bank AG, Opic Reforma I Credit Linked Nts., Cl. 2G, 8.42%, 5/22/15		8/22/08		22,959		17,793		(5,166	)
			$	7,192,737	$	5,823,645	$	(1,369,092	)

4.	Non-income producing security.
5.	A sufficient amount of securities has been designated to cover outstanding foreign currency exchange contracts. See Note 5 of accompanying Notes.
6.	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 $20,563,263 or 0.47% of the Fund’s net assets as of December 31, 2009.

7.	The current amortization rate of the security’s cost basis exceeds the future interest payments currently estimated to be received. Both the amortization rate and interest payments are contingent on future mortgage pre-payment speeds and are therefore subject to change.
8.	When-issued security or delayed delivery to be delivered and settled after December 31, 2009. See Note 1 of accompanying Notes.
9.	A sufficient amount of liquid assets has been designated to cover outstanding written put options. See Note 5 of accompanying Notes.
10.	Partial or fully-loaned security. See Note 7 of accompanying Notes.
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 $24,999,850. See Note 5 of accompanying Notes.
12.	Zero coupon bond reflects effective yield on the date of purchase.
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 $540,855,282 or 12.25% of the Fund’s net assets as of December 31, 2009.
14.	Interest or dividend is paid-in-kind, when applicable.
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.	Denotes an inflation-indexed security: coupon and principal are indexed to a consumer price index.
17.	Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 18. Interest rate is less than 0.0005%.
18.	Interest rate is less than 0.0005%.
19.	Rate shown is the 7-day yield as of December 31, 2009.
20.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
OFI Liquid Assets Fund, LLC		325,265,870		244,535,280		532,201,650		37,599,500
Oppenheimer Institutional Money Market Fund, Cl. E		314,416,821		3,251,233,591		3,488,879,313		76,771,099
Oppenheimer Master Event-Linked Bond Fund, LLC		1,404,749		—		—		1,404,749
Oppenheimer Master Loan Fund, LLC		14,194,313		19,415,126		—		33,609,439

						Realized
	Value		Income			Loss
OFI Liquid Assets Fund, LLC	$	37,599,500	$	501,092	a	$	—
Oppenheimer Institutional Money Market Fund, Cl. E		76,771,099		2,500,925			—
Oppenheimer Master Event-Linked Bond Fund, LLC		14,343,328		1,286,057	b		280,967	b
Oppenheimer Master Loan Fund, LLC		347,307,865		20,407,379	c		1,762,842	c
	$	476,021,792	$	24,695,453		$	2,043,809

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.
c.	Represents the amount allocated to the Fund from Oppenheimer Master Loan Fund, LLC.
21.	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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)
2)	Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)
3)	Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

							Level 3—
	Level 1—			Level 2—			Significant
	Unadjusted			Other Significant			Unobservable
	Quoted Prices			Observable Inputs			Inputs		Value
Assets Table
Investments, at Value:
Asset-Backed Securities	$	—		$	26,427,935		$	1,445,549	$	27,873,484
Mortgage-Backed Obligations		—			636,575,400			—		636,575,400
U.S. Government Obligations		—			92,167,477			—		92,167,477
Foreign Government Obligations		—			1,880,524,205			290,296		1,880,814,501
Loan Participations		—			93,585,124			—		93,585,124
Corporate Bonds and Notes		—			1,064,085,287			—		1,064,085,287
Preferred Stocks		—			—			—		—
Common Stocks		4,501,455			1,726,611			2,168		6,230,234
Rights, Warrants and Certificates		—			—			3		3
Structured Securities		—			174,732,843			7,574,561		182,307,404
Event-Linked Bonds		—			37,115,304			—		37,115,304
Options Purchased		—			59,364			—		59,364
Investment Companies		443,102,752			—			—		443,102,752
Investments Purchased with Cash Collateral from Securities Loaned		37,599,500			—			—		37,599,500
Total Investments, at Value		485,203,707			4,006,999,550			9,312,577		4,501,515,834
Other Financial Instruments:
Appreciated swaps, at value		—			13,432,301			—		13,432,301
Futures margins		2,104,699			—			—		2,104,699
Foreign currency exchange contracts		—			29,623,669			—		29,623,669
Total Assets	$	487,308,406		$	4,050,055,520		$	9,312,577	$	4,546,676,503
Liabilities Table
Other Financial Instruments:
Appreciated swaps, at value	$	—		$	(1,195,988	)	$	—	$	(1,195,988	)
Depreciated swaps, at value		—			(7,663,287	)				(7,663,287	)
Appreciated options written, at value		—			(94,558	)		—		(94,558	)
Futures margins		(3,112,305	)		—			—		(3,112,305	)
Foreign currency exchange contracts		—			(11,995,141	)		—		(11,995,141	)
Unfunded purchase agreements		—			(354,545	)		—		(354,545	)
Total Liabilities	$	(3,112,305	)	$	(21,303,519	)	$	—	$	(24,415,824	)

Currency contracts, unfunded purchase agreements and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

Foreign Currency Exchange Contracts as of December 31, 2009 are as follows:

		Contract
Counterparty/		Amount			Expiration				Unrealized		Unrealized
Contract Description	Buy/Sell	(000’s)			Dates		Value		Appreciation		Depreciation
Banc of America:
Australian Dollar (AUD)	Sell		30,900	AUD		2/10/10	$	27,639,799	$	156,435	$	202,132
Chinese Renminbi (Yuan) (CNY)	Sell		58,800	CNY		2/4/10		8,615,911		5,790		—
Indonesia Rupiah (IDR)	Buy		217,849,000	IDR		1/29/10-2/25/10		22,987,362		189,726		—
Japanese Yen (JPY)	Buy		3,133,000	JPY		5/10/10		33,669,336		—		995,074
New Zealand Dollar (NZD)	Buy		23,740	NZD		2/10/10		17,184,548		87,370		—
										439,321		1,197,206
Bank Paribas Asia—FGN:
New Turkish Lira (TRY)	Buy		21,650	TRY		11/3/10		14,471,531		133,308		—
Norwegian Krone (NOK)	Buy		81,700	NOK		2/10/10		14,085,177		—		495,013
Norwegian Krone (NOK)	Sell		55,100	NOK		2/10/10		9,499,306		102,502		3,061
Polish Zloty (PLZ)	Buy		142,710	PLZ		1/7/10-2/10/10		49,798,305		784,176		216,263
Polish Zloty (PLZ)	Sell		24,790	PLZ		5/10/10		8,580,854		6,520		—
										1,026,506		714,337
Barclay’s Capital:
Euro (EUR)	Sell		174,850	EUR		1/21/10-3/4/10		250,638,618		8,829,428		1,087,269
Hungarian Forint (HUF)	Sell		5,568,000	HUF		2/8/10		29,450,355		1,361,443		—
Japanese Yen (JPY)	Sell		3,484,500	JPY		2/2/10-4/5/10		37,427,468		1,577,043		—
Mexican Nuevo Peso (MXN)	Buy		51,410	MXN		1/29/10		3,916,300		—		8,727
Philippines Peso (PHP)	Buy		414,000	PHP		2/2/10		8,919,559		160,750		—
										11,928,664		1,095,996
Citigroup:
Colombian Peso (COP)	Sell		14,711,000	COP		1/29/10		7,184,852		103,233		—
Euro (EUR)	Sell		31,810	EUR		2/10/10-3/18/10		45,597,041		946,303		—
New Taiwan Dollar (TWD)	Sell		280,000	TWD		2/4/10		8,868,500		—		104,121
Peruvian New Sol (PEN)	Sell		14,600	PEN		1/19/10-1/21/10		5,051,919		17,741		—
Singapore Dollar (SGD)	Buy		2,070	SGD		5/10/10		1,471,739		—		12,017
Swedish Krona (SEK)	Buy		14,400	SEK		2/10/10		2,013,138		—		83,641
Swedish Krona (SEK)	Sell		4,700	SEK		2/10/10		657,066		3,032		—
										1,070,309		199,779
Credit Suisse:
British Pound Sterling (GBP)	Buy		4,500	GBP		2/10/10		7,266,617		—		258,531
New Turkish Lira (TRY)	Sell		75,780	TRY		1/13/10-2/16/10		50,514,864		—		268,410
Russian Ruble (RUR)	Buy		199,860	RUR		10/7/10		6,319,466		—		132,300
South African Rand (ZAR)	Buy		261,675	ZAR		1/20/10		35,319,752		474,498		—
Swedish Krona (SEK)	Buy		22,800	SEK		2/10/10		3,187,469		16,927		—
Swedish Krona (SEK)	Sell		105,220	SEK		2/10/10		14,709,889		335,017		8,637
										826,442		667,878
Deutsche Bank Capital Corp.:
Australian Dollar (AUD)	Sell		1,200	AUD		1/21/10		1,075,545		—		14,577
British Pound Sterling (GBP)	Sell		2,625	GBP		1/21/10		4,239,362		—		8,649
Euro (EUR)	Sell		22,010	EUR		5/10/10		31,542,442		875,503		35,376
Indian Rupee (INR)	Buy		764,000	INR		2/22/10		16,353,045		—		11,955
Japanese Yen (JPY)	Sell		4,737,000	JPY		1/21/10-5/10/10		50,872,062		2,534,788		—
Norwegian Krone (NOK)	Buy		49,700	NOK		2/10/10		8,568,339		—		11,188
Norwegian Krone (NOK)	Sell		83,590	NOK		2/10/10		14,411,016		252,495		2,904
Russian Ruble (RUR)	Buy		331,200	RUR		10/7/10		10,472,366		—		442,118
Swiss Franc (CHF)	Buy		2,640	CHF		2/10/10		2,552,713		59		—
Swiss Franc (CHF)	Sell		36,038	CHF		1/21/10-2/10/10		34,846,333		—		15,053
										3,662,845		541,820

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Foreign Currency Exchange Contracts: Continued

		Contract
Counterparty/		Amount			Expiration				Unrealized		Unrealized
Contract Description	Buy/Sell	(000’s)			Dates		Value		Appreciation		Depreciation
Goldman, Sachs & Co.:
Brazilian Real (BRR)	Buy		63,000	BRR		2/2/10	$	35,926,494	$	924,610	$	—
Brazilian Real (BRR)	Sell		8,680	BRR		2/2/10		4,949,872		—		114,757
Mexican Nuevo Peso (MXN)	Buy		224,250	MXN		1/19/10-1/29/10		17,101,397		—		319,972
South African Rand (ZAR)	Buy		231,040	ZAR		2/17/10		31,022,462		483,341		—
South Korean Won (KRW)	Buy		14,046,000	KRW		1/19/10		12,054,881		—		23,543
										1,407,951		458,272
Hong Kong & Shanghai Bank Corp.:
Israeli Shekel (ILS)	Buy		37,870	ILS		1/29/10		9,998,319		13,908		2,932
Mexican Nuevo Peso (MXN)	Sell		75,010	MXN		1/29/10		5,714,096		64,127		—
New Turkish Lira (TRY)	Buy		12,925	TRY		2/8/10		8,602,856		6,820		—
Polish Zloty (PLZ)	Buy		35,980	PLZ		1/7/10		12,559,621		—		515,628
										84,855		518,560
JP Morgan Chase:
Chilean Peso (CLP)	Sell		4,554,000	CLP		2/8/10		8,987,747		102,073		—
Euro (EUR)	Sell		23,740	EUR		1/13/10-11/8/10		34,028,251		56,986		859,105
Indian Rupee (INR)	Buy		1,030,000	INR		1/19/10		22,101,569		—		58,500
Indonesia Rupiah (IDR)	Buy		236,102,000	IDR		1/13/10-3/29/10		24,872,017		81,526		16,960
Japanese Yen (JPY)	Sell		724,000	JPY		4/5/10		7,777,765		74,048		—
Malaysian Ringgit (MYR)	Buy		7,010	MYR		5/10/10		2,036,596		—		13,651
Mexican Nuevo Peso (MXN)	Buy		70,490	MXN		1/19/10		5,376,168		—		135,932
Mexican Nuevo Peso (MXN)	Sell		51,180	MXN		1/29/10		3,898,779		42,237		—
Russian Ruble (RUR)	Buy		391,780	RUR		1/18/10		12,329,997		1,140		142,176
South Korean Won (KRW)	Buy		26,853,000	KRW		1/19/10		23,046,399		—		58,918
										358,010		1,285,242
RBS Greenwich Capital:
Polish Zloty (PLZ)	Buy		135,830	PLZ		1/7/10		47,414,489		583,619		697,460
South African Rand (ZAR)	Buy		47,270	ZAR		3/18/10		6,311,442		117,141		—
Swiss Franc (CHF)	Buy		27,730	CHF		2/10/10-5/10/10		26,814,962		12,367		341,145
Swiss Franc (CHF)	Sell		53,480	CHF		2/2/10-2/10/10		51,711,358		788,759		17,826
										1,501,886		1,056,431
Santander Investments:
Argentine Peso (ARP)	Buy		32,900	ARP		2/9/10		8,538,630		28,542		—
Colombian Peso (COP)	Buy		7,737,000	COP		1/19/10		3,778,751		—		130,799
Mexican Nuevo Peso (MXN)	Sell		198,910	MXN		2/8/10		15,135,279		—		372,226
										28,542		503,025
Standard New York Securities, Inc.
South African Rand (ZAR)	Buy		68,600	ZAR		2/8/10		9,226,217		12,227		—
State Street:
British Pound Sterling (GBP)	Buy		5,190	GBP		2/10/10		8,380,831		11,101		8,813
British Pound Sterling (GBP)	Sell		7,630	GBP		2/10/10		12,320,952		323,112		—
Canadian Dollar (CAD)	Buy		30,070	CAD		2/10/10		28,752,155		409,790		10
Canadian Dollar (CAD)	Sell		25,600	CAD		1/21/10-2/10/10		24,478,081		5		486,705
Euro (EUR)	Buy		3,410	EUR		2/10/10		4,888,155		—		231,607
Euro (EUR)	Sell		200,070	EUR		1/13/10-2/10/10		286,806,359		6,379,483		1,647,006
										7,123,491		2,374,141

Foreign Currency Exchange Contracts: Continued

		Contract
Counterparty/		Amount			Expiration				Unrealized		Unrealized
Contract Description	Buy/Sell	(000’s)			Dates		Value		Appreciation		Depreciation
Westpac:
Australian Dollar (AUD)	Buy		87,750	AUD		2/10/10	$	78,491,663	$	22,855	$	1,382,454
British Pound Sterling (GBP)	Buy		2,560	GBP		3/18/10		4,132,941		48,410		—
New Zealand Dollar (NZD)	Buy		10,730	NZD		2/10/10		7,767,068		81,355		—
										152,620		1,382,454
Total unrealized appreciation and depreciation									$	29,623,669	$	11,995,141

Futures Contracts as of December 31, 2009 are as follows:

								Unrealized
		Number of		Expiration				Appreciation
Contract Description	Buy/Sell	Contracts		Date		Value		(Depreciation)
CAC40 10 Euro Index	Sell		166		1/15/10	$	9,379,546	$	(176,656	)
DAX Index	Buy		34		3/19/10		7,261,744		93,395
DAX Index	Sell		44		3/19/10		9,397,552		(120,878	)
Euro-BOBL	Sell		450		3/8/10		74,611,867		727,938
Euro-Bundesobligation	Buy		120		3/8/10		20,847,800		(327,405	)
FTSE 100 Index	Sell		17		3/19/10		1,472,178		(29,081	)
Japan (Government of) Bonds, 10 yr.	Sell		21		3/11/10		31,499,436		(65,353	)
Japan (Government of) E-Mini Bonds, 10 yr.	Buy		50		3/10/10		7,501,476		20,710
NASDAQ 100 E-Mini Index	Buy		409		3/19/10		15,204,575		520,493
NIKKEI 225 Index	Buy		22		3/11/10		1,243,088		52,992
NIKKEI 225 Index	Sell		104		3/11/10		11,769,582		(505,173	)
Standard & Poor’s 500 E-Mini	Sell		982		3/19/10		54,535,370		(332,800	)
United Kingdom Long Gilt	Buy		11		3/29/10		2,033,451		(7,111	)
U.S. Long Bonds	Buy		2,002		3/22/10		230,980,750		(9,450,662	)
U.S. Long Bonds	Sell		614		3/22/10		70,840,250		1,379,260
U.S. Treasury Nts., 2 yr.	Buy		169		3/31/10		36,548,891		(93,587	)
U.S. Treasury Nts., 2 yr.	Sell		711		3/31/10		153,764,860		552,336
U.S. Treasury Nts., 5 yr.	Buy		1,491		3/31/10		170,544,774		(2,878,778	)
U.S. Treasury Nts., 5 yr.	Sell		1,205		3/31/10		137,831,290		2,329,188
U.S. Treasury Nts., 10 yr.	Buy		3,793		3/22/10		437,913,703		(10,497,683	)
U.S. Treasury Nts., 10 yr.	Sell		1,913		3/22/10		220,861,828		5,629,934
								$	(13,178,921	)

Written Option as of December 31, 2009 is as follows:

Number of

Exercise

Expiration

Premiums

Unrealized

Description

Type

Contracts

Price

Date

Received

Value

Appreciation

Mexican Nuevo Peso (MXN)

Put

108,600,000

$

14

3/18/10

$

106,195

$

(94,558

)

$

11,637

Credit Default Swap Contracts as of December 31, 2009 are as follows:

				Pay/					Upfront
	Buy/Sell	Notional		Receive					Payment					Unrealized
Reference Entity/	Credit	Amount		Fixed			Termination		Received/					Appreciation
Swap Counterparty	Protection	(000’s)		Rate			Date		(Paid)		Value			(Depreciation)
Baxter International, Inc.
UBS AG	Buy	$	7,068		1.00	%		12/20/14	$	198,497	$	(190,739	)	$	7,758
	Total		7,068							198,497		(190,739	)		7,758
Bolivarian Republic of Venezuela:
Barclays Bank plc	Sell		1,360		30.50			1/20/10		—		203,927			203,927
Morgan Stanley Capital Services, Inc.	Sell		1,360		30.00			1/20/10		—		200,453			200,453
	Total		2,720							—		404,380			404,380

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap Contracts: Continued

				Pay/					Upfront
	Buy/Sell	Notional		Receive					Payment					Unrealized
Reference Entity/	Credit	Amount		Fixed			Termination		Received/					Appreciation
Swap Counterparty	Protection	(000’s)		Rate			Date		(Paid)		Value			(Depreciation)
CBS Corp.
Credit Suisse International	Sell	$	7,068		1.00	%		12/20/14	$	120,990	$	(140,988	)	$	(19,998	)
	Total		7,068							120,990		(140,988	)		(19,998	)
CDX North America High Yield
Index, Series 12:
Credit Suisse International	Sell		5,922		5.00			6/20/14		704,471		23,921			728,392
JPMorgan Chase Bank NA, NY Branch	Sell		4,418		5.00			6/20/14		527,706		17,846			545,552
	Total		10,340							1,232,177		41,767			1,273,944
CDX North America High Yield
Index, Series 13:
Barclays Bank plc	Sell		15,993		5.00			12/20/14		1,517,897		(69,734	)		1,448,163
Goldman Sachs International	Sell		9,593		5.00			12/20/14		831,725		(41,827	)		789,898
Goldman Sachs International	Sell		15,993		5.00			12/20/14		1,507,800		(69,734	)		1,438,066
JPMorgan Chase Bank NA, NY Branch	Sell		4,950		5.00			12/20/14		259,875		(31,965	)		227,910
	Total		46,530							4,117,297		(213,260	)		3,904,037
Development Bank of Kazakhstan JSC
Credit Suisse International	Sell		7,500		3.75			2/20/13		—		22,463			22,463
	Total		7,500							—		22,463			22,463
Devon Energy
Credit Suisse International	Buy		7,068		1.00			12/20/14		135,511		(126,857	)		8,654
	Total		7,068							135,511		(126,857	)		8,654
Hartford Financial Services Group, Inc.
Credit Suisse International	Sell		6,726		1.00			12/20/14		444,443		(148,982	)		295,461
	Total		6,726							444,443		(148,982	)		295,461
HSBK Europe BV:
Morgan Stanley Capital Services, Inc.	Sell		600		4.78			3/20/13		—		(14,129	)		(14,129	)
Morgan Stanley Capital Services, Inc.	Sell		3,200		4.88			3/20/13		—		(66,495	)		(66,495	)
	Total		3,800							—		(80,624	)		(80,624	)
International Paper Co.
JPMorgan Chase Bank NA, NY Branch	Sell		7,068		1.00			12/20/14		67,738		(78,079	)		(10,341	)
	Total		7,068							67,738		(78,079	)		(10,341	)
Islamic Republic of Pakistan
Citibank NA, New York	Sell		1,570		5.10			3/20/13		—		(108,565	)		(108,565	)
	Total		1,570							—		(108,565	)		(108,565	)
Istanbul Bond Co. SA for Finansbank AS
Morgan Stanley Capital Services, Inc.	Sell		5,180		1.30			3/24/13		—		(478,804	)		(478,804	)
	Total		5,180							—		(478,804	)		(478,804	)
Lockheed Martin Corp.
Morgan Stanley Capital Services, Inc.	Buy		6,726		1.00			12/20/14		228,472		(213,882	)		14,590
	Total		6,726							228,472		(213,882	)		14,590

Credit Default Swap Contracts: Continued

				Pay/					Upfront
	Buy/Sell	Notional		Receive					Payment						Unrealized
Reference Entity/	Credit	Amount		Fixed			Termination		Received/						Appreciation
Swap Counterparty	Protection	(000’s)		Rate			Date		(Paid)			Value			(Depreciation)
Nordstrom, Inc.
Deutsche Bank AG	Sell	$	7,005		1.00	%		12/20/14	$	72,759		$	1,982		$	74,741
	Total		7,005							72,759			1,982			74,741
Republic of Hellenic:
Barclays Bank plc	Buy		2,120		1.00			12/20/14		(106,433	)		151,656			45,223
	Total		2,120							(106,433	)		151,656			45,223
Barclays Bank plc	Sell		16,630		1.00			12/20/14		1,087,616			(1,189,638	)		(102,022	)
	Total		16,630							1,087,616			(1,189,638	)		(102,022	)
Republic of Hungary
Credit Suisse International	Sell		4,600		2.70			9/20/10		—			43,231			43,231
	Total		4,600							—			43,231			43,231
Republic of Peru
Deutsche Bank AG	Buy		1,900		1.71			12/20/16		—			(50,774	)		(50,774	)
	Total		1,900							—			(50,774	)		(50,774	)
Republic of the Philippines:
Barclays Bank plc	Buy		3,270		1.76			12/20/14		—			4,153			4,153
JPMorgan Chase Bank NA, London Branch	Buy		4,900		1.74			12/20/14		—			10,594			10,594
	Total		8,170							—			14,747			14,747
The Kroger Co.
UBS AG	Buy		7,068		1.00			12/20/14		68,420			(47,554	)		20,866
	Total		7,068							68,420			(47,554	)		20,866
Troy Capital SA for Yasar Holdings SA
Morgan Stanley Capital Services, Inc.	Sell		1,340		8.75			6/20/10		—			(253,192	)		(253,192	)
	Total		1,340							—			(253,192	)		(253,192	)
United Mexican States
Goldman Sachs International	Buy		3,080		1.35			9/20/14		—			(2,546	)		(2,546	)
	Total		3,080							—			(2,546	)		(2,546	)
Wal-Mart Stores, Inc.
Morgan Stanley Capital Services, Inc.	Buy		6,726		1.00			12/20/14		157,160			(149,398	)		7,762
	Total		6,726							157,160			(149,398	)		7,762
XL Capital Ltd.
Deutsche Bank AG	Sell		6,420		1.00			12/20/14		177,397			(105,316	)		72,081
	Total		6,420							177,397			(105,316	)		72,081
				Grand Total Buys						681,627			(615,347	)		66,280
				Grand Total Sells						7,320,417			(2,283,625	)		5,036,792
				Total Credit Default Swaps					$	8,002,044		$	(2,898,972	)	$	5,103,072

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

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**
Non-Investment Grade Corporate Debt Indexes	$	56,870,000	$	—		B
Investment Grade Single Name Corporate Debt		34,287,000		—	BBB+ to BBB
Investment Grade Sovereign Debt		33,910,000		—	BBB+ to BBB-
Non-Investment Grade Sovereign Debt		9,430,000		—	BB- to B-
Total	$	134,497,000	$	—

*	The Fund has no amounts recoverable from related purchased 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 period end reference asset security ratings, 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 credit event on the reference asset which would result in a related payment by the Fund.

Interest Rate Swap Contracts as of December 31, 2009 are as follows:

	Notional
Interest Rate/	Amount			Paid by			Received by			Termination
Swap Counterparty	(000’s)			the Fund			the Fund			Date	Value
BZDI:
Banco Santander Central Hispano SA		4,420	BRR	BZDI				14.000	%	1/3/12	$	211,162
Goldman Sachs Group, Inc. (The)		43,800	BRR	BZDI				10.670		1/2/12		(462,781	)
Goldman Sachs Group, Inc. (The)		6,910	BRR	BZDI				12.260		1/2/15		(1,744	)
Goldman Sachs Group, Inc. (The)		3,160	BRR	BZDI				12.260		1/2/15		(830	)
Goldman Sachs Group, Inc. (The)		4,420	BRR	BZDI				14.050		1/2/12		211,119
Goldman Sachs Group, Inc. (The)		30,100	BRR	BZDI				12.800		1/2/17		38,036
Goldman Sachs Group, Inc. (The)		4,390	BRR	BZDI				12.870		1/2/14		64,166
Goldman Sachs Group, Inc. (The)		4,035	BRR	BZDI				14.160		1/2/17		98,643
Goldman Sachs Group, Inc. (The)		8,790	BRR	BZDI				12.920		1/2/14		140,372
Goldman Sachs Group, Inc. (The)		7,700	BRR	BZDI				14.300		1/2/17		203,928
Goldman Sachs Group, Inc. (The)		19,400	BRR	BZDI				12.870		1/2/14		217,657
Goldman Sachs International		2,640	BRR	BZDI				14.100		1/2/17		59,862
Goldman Sachs International		17,000	BRR	BZDI				13.900		1/2/17		385,913
JPMorgan Chase Bank NA		15,800	BRR	BZDI				13.900		1/2/17		286,868
Morgan Stanley		12,300	BRR	BZDI				12.810		1/2/17		50,337
Morgan Stanley		17,000	BRR	BZDI				12.050		1/2/12		190,798
Morgan Stanley		12,860	BRR	BZDI				15.000		1/2/17		340,513
Morgan Stanley		32,000	BRR	BZDI				13.900		1/2/17		581,128
Total		246,725	BRR									2,615,147
MXN TIIE BANXICO:
Banco Santander SA, Inc.		97,800	MXN	BANXICO				8.060		2/6/14		199,637
Banco Santander SA, Inc.		90,600	MXN	BANXICO				8.540		9/27/13		334,615
Citibank NA		175,200	MXN	BANXICO				8.920		11/24/11		608,084
Credit Suisse International		35,800	MXN	BANXICO				8.560		9/27/13		143,714
Goldman Sachs Group, Inc. (The)		54,800	MXN	BANXICO				8.540		9/27/13		202,394
Goldman Sachs Group, Inc. (The)		174,000	MXN	BANXICO				9.350		11/18/11		687,740
Goldman Sachs Group, Inc. (The)		211,300	MXN	BANXICO				9.080		11/22/11		760,176
Goldman Sachs Group, Inc. (The)		212,800	MXN	BANXICO				9.270		11/21/11		805,995
Goldman Sachs Group, Inc. (The)		563,000	MXN	BANXICO				10.000		11/11/11		953,984
JPMorgan Chase Bank NA		171,100	MXN	BANXICO				8.920		11/24/11		593,854
JPMorgan Chase Bank NA		560,000	MXN	BANXICO				10.000		11/11/11		948,901
Total		2,346,400	MXN									6,239,094
Six-Month AUD BBR BBSW
							Six-Month AUD
Westpac Banking Corp.		24,000	AUD		6.215	%	BBR BBSW			11/4/19		18,949

Interest Rate Swap Contracts: Continued

	Notional
Interest Rate/	Amount			Paid by		Received by			Termination
Swap Counterparty	(000’s)			the Fund		the Fund			Date		Value
Six-Month HUF BUBOR Reuters:
Barclays Bank plc		866,000	HUF	Six-Month HUF BUBOR Reuters			7.180	%		10/8/18	$	(35,800	)
Barclays Bank plc		1,433,000	HUF	Six-Month HUF BUBOR Reuters			7.820			9/19/13		227,841
Citibank NA		852,000	HUF	Six-Month HUF BUBOR Reuters			7.200			10/8/18		(17,756	)
Citibank NA		853,000	HUF	Six-Month HUF BUBOR Reuters			7.180			10/3/18		(17,631	)
Goldman Sachs Group, Inc. (The)		3,722,000	HUF	Six-Month HUF BUBOR Reuters			6.500			12/7/11		(71,359	)
JPMorgan Chase Bank NA		866,000	HUF	Six-Month HUF BUBOR Reuters			7.200			10/6/18		(18,047	)
JPMorgan Chase Bank NA		753,000	HUF	Six-Month HUF BUBOR Reuters			7.880			8/12/13		94,389
JPMorgan Chase Bank NA		666,000	HUF	Six-Month HUF BUBOR Reuters			7.890			9/12/13		111,736
JPMorgan Chase Bank NA		1,142,000	HUF	Six-Month HUF BUBOR Reuters			8.480			6/6/13		489,245
Morgan Stanley		3,092,000	HUF	Six-Month HUF BUBOR Reuters			6.570			12/1/11		(60,835	)
Total		14,245,000	HUF									701,783
Six-Month JPY BBA LIBOR:
Citibank NA		553,000	JPY		1.391	Six-Month JPY BBA LIBOR				10/6/19		(15,256	)
JPMorgan Chase Bank NA		796,100	JPY		1.484	Six-Month JPY BBA LIBOR				8/7/19		(125,511	)
JPMorgan Chase Bank NA		611,000	JPY		1.563	Six-Month JPY BBA LIBOR				11/9/19		(110,783	)
Total		1,960,100	JPY									(251,550	)
Six-Month PLZ WIBOR WIBO:
Goldman Sachs Group, Inc. (The)		13,700	PLZ	Six-Month PLZ WIBOR WIBO			5.320			10/3/18		(124,012	)
Goldman Sachs Group, Inc. (The)		21,640	PLZ	Six-Month PLZ WIBOR WIBO			5.330			10/6/18		(187,556	)
JPMorgan Chase Bank NA		1,400	PLZ	Six-Month PLZ WIBOR WIBO			5.600			9/10/19		(2,827	)
JPMorgan Chase Bank NA		8,475	PLZ	Six-Month PLZ WIBOR WIBO			5.650			9/11/19		(5,604	)
JPMorgan Chase Bank NA		12,700	PLZ	Six-Month PLZ WIBOR WIBO			5.690			9/14/19		4,617
Total		57,915	PLZ									(315,382	)
Three-Month ILS TELBOR01 Reuters:
Credit Suisse International		6,640	ILS	Three-Month ILS TELBOR01 Reuters			4.940			12/15/18		(59,282	)
Credit Suisse International		6,220	ILS	Three-Month ILS TELBOR01 Reuters			4.650			12/22/18		(87,416	)
UBS AG		16,930	ILS	Three-Month ILS TELBOR01 Reuters			5.036			12/12/18		(82,369	)

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Interest Rate Swap Contracts: Continued

Notional

Interest Rate/

Amount

Paid by

Received by

Termination

Swap Counterparty

(000’s)

the Fund

the Fund

Date

Value

Three-Month ILS TELBOR01 Reuters: Continued

Three-Month ILS

UBS AG

17,164

ILS

TELBOR01 Reuters

4.780

%

1/7/19

$

17,566

Three-Month ILS

UBS AG

15,550

ILS

TELBOR01 Reuters

5.850

9/4/18

211,859

Total

62,504

ILS

358

Three-Month SEK STIBOR SIDE

Three-Month SEK

Barclays Bank plc

153,255

SEK

STIBOR SIDE

3.470

12/2/19

(160,744

)

Three-Month USD BBA LIBOR

Three-Month

Goldman Sachs Group, Inc. (The)

21,600

USD BBA LIBOR

3.600

11/3/19

(514,000

)

Three-Month ZAR JIBAR SAFEX:

Three-Month ZAR

Barclays Bank plc

94,370

ZAR

JIBAR SAFEX

7.450

9/22/11

1,189

Three-Month ZAR

Goldman Sachs Group, Inc. (The)

63,820

ZAR

JIBAR SAFEX

7.500

9/23/11

813

Total

158,190

ZAR

2,002

Total Interest Rate Swaps

$

8,335,657

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:

AUD	Australian Dollar
BRR	Brazilian Real
HUF	Hungarian Forint
ILS	Israeli Shekel
JPY	Japanese Yen
MXN	Mexican Nuevo Peso
PLZ	Polish Zloty
SEK	Swedish Krona
ZAR	South African Rand

Abbreviations/Definitions are as follows:

BANIXCO	Banco de Mexico
BBA LIBOR	British Bankers’ Association London-Interbank Offered Rate
BBR BBSW	Bank Bill Swap Reference Rate (Australian Financial Market)
BUBOR	Budapest Interbank Offered Rate
BZDI	Brazil Interbank Deposit Rate
JIBAR	South Africa Johannesburg Interbank Agreed Rate
SAFEX	South African Futures Exchange
STIBOR SIDE	Stockholm Interbank Offered Rate
TIIE	Interbank Equilibrium Interest Rate
TELBOR01	Tel Aviv Interbank Offered Rate 1 Month
WIBOR WIBO	Poland Warsaw Interbank Offer Bid Rate

Total Return Swap Contracts as of December 31, 2009 are as follows:

	Notional
Reference Entity/	Amount			Paid by	Received by	Termination
Swap Counterparty	(000’s)			the Fund	the Fund	Date		Value
AMEX Cyclical/Transportation Select Index
				One-Month BBA
				LIBOR plus 10 basis
				points and if negative,
				the absolute value of the
				Total Return of the AMEX	If positive, the Total Return of the AMEX
				Cyclical/Transportation	Cyclical/Transportation
Morgan Stanley	$	3,710		Select Index	Select Index		12/9/10	$	99,929
AMEX Health Care Select Index
				One-Month LIBOR plus 10
				basis points and if negative,
				the absolute value of	If positive, the
				the Total Return of the	Total Return of
				AMEX Health Care	the AMEX Health
Deutsche Bank AG		3,669		Select Index	Care Select Index		10/8/10		18,407
AMEX Tech Select Index
				One-Month BBA
				LIBOR plus 10 basis
				points and if negative,
				the absolute value of the
				Total Return of the AMEX	If positive, the Total Return of the AMEX
Citibank NA		3,670		Tech Select Index	Tech Select Index		12/8/10		127,079
Custom basket of securities:
				One-Month JPY BBA
				LIBOR plus 40 basis
				points and if negative,
				the absolute value of the
				Total Return of a custom	If positive, the Total Return of a custom
Citibank NA, New York		1,048,490	JPY	basket of securities	basket of securities		4/14/10		420,552
				One-Month EUR BBA
				LIBOR plus 25 basis
				points and if negative,
				the absolute value of the
				Total Return of a custom	If positive, the Total Return of a custom
Morgan Stanley		5,896	EUR	basket of securities	basket of securities		3/5/10		324,603
				One-Month EUR BBA
				LIBOR plus 30 basis
				points and if negative,
				the absolute value of the
				Total Return of a custom	If positive, the Total Return of a custom
Morgan Stanley International		5,894	EUR	basket of securities	basket of securities		10/8/10		90,909
				One-Month BBA
				LIBOR plus 25 basis
				points and if negative,
				the absolute value of the
				Total Return of a custom	If positive, the Total Return of a custom
UBS AG		44,215		basket of securities	basket of securities		12/6/10		680,593
					Reference Entity Total				1,516,657

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Total Return Swap Contracts: Continued

	Notional
Reference Entity/	Amount		Paid by	Received by	Termination
Swap Counterparty	(000’s)		the Fund	the Fund	Date		Value
MSCI Daily TR EAFE Standard Gross USD Index:
				One-Month LIBOR
				plus 15 basis points
				and if negative the
				absolute value of the
			If positive, the Total	Total Return of the
			Return of the MSCI	MSCI Daily EAFE
			Daily EAFE Standard	Standard Gross
Citibank NA	$	8,285	Gross USD Index	USD Index		10/7/10	$	(122,756	)
				One-Month BBA
				LIBOR minus 5 basis
				points and if negative
				the absolute value of
				the Total Return of
			If positive, the Total Return	the MSCI Daily EAFE
			of the MSCI Daily EAFE	Standard Gross
Goldman Sachs Group, Inc. (The)		6,466	Standard Gross USD Index	USD Index		10/7/10		100,007
				One-Month BBA
				LIBOR minus 35 basis
				points and if negative,
				the absolute value of
				the Total Return of the
			If positive, the Total Return	MSCI Daily EAFE
			of the MSCI Daily EAFE	Standard Gross
Morgan Stanley		4,970	Standard Gross USD Index	USD Index		10/7/10		52,249
				One-Month LIBOR
				minus 10 basis points
				and if negative, the
				absolute value of the
				Total Return of the
			If positive, the Total Return	MSCI Daily EAFE
			of the MSCI Daily EAFE	Standard Gross
UBS AG		6,463	Standard Gross USD Index	USD Index		10/11/10		81,262
				Reference Entity Total				110,762
MSCI Daily TR Net Australia USD Index
			One-Month BBA
			LIBOR plus 20 basis
			points and if negative,
			the absolute value of the	If positive, the Total
			Total Return of the MSCI	Return of the MSCI
			Daily Net Australia	Daily Net Australia
Goldman Sachs Group, Inc. (The)		4,012	USD Index	USD Index		10/11/10		(56,265	)
MSCI Daily TR Net Brazil USD Index
			One-Month BBA LIBOR
			plus 25 basis points
			and if negative, the absolute	If positive, the Total
			value of the Total Return	Return of the MSCI
			of the MSCI Daily Net	Daily Net Brazil
Goldman Sachs Group, Inc. (The)		3,909	Brazil USD Index	USD Index		10/6/10		(77,512	)

Total Return Swap Contracts: Continued

	Notional
Reference Entity/	Amount		Paid by	Received by	Termination
Swap Counterparty	(000’s)		the Fund	the Fund	Date		Value
MSCI Daily TR Net Emerging Markets South Africa USD Index
			One-Month LIBOR
			plus 40 basis points
			and if negative the
			absolute value of the	If positive, the Total
			Total Return of the	Return of the MSCI
			MSCI Daily Net	Daily Net Emerging
			Emerging Markets South	Markets South Africa
Deutsche Bank AG	$	4,536	Africa USD Index	USD Index		12/6/10	$	54,422
MSCI Daily TR Net Emerging Markets USD Index
			One-Month BBA LIBOR
			plus 100 basis points
			and if negative, the absolute	If positive, the Total
			value of the Total Return of	Return of the MSCI
			the MSCI Daily Net Emerging	Daily Net Emerging
UBS AG		8,106	Markets USD Index	Markets USD Index		5/12/10		125,961
MSCI Daily TR Net Singapore USD Index
			One-Month BBA LIBOR
			plus 10 basis points and
			if negative, the absolute value	If positive, the Total
			of the Total Return of the	Return of the MSCI
			MSCI Daily Net Singapore	Daily Net Singapore
Citibank NA		4,341	USD Index	USD Index		11/3/10		78,173
MSCI Daily TR Net Spain USD Index
			One-Month LIBOR
			minus 25 basis points
			and if negative, the	If positive, the Total
			absolute value of the	Return of the MSCI
			Total Return of the MSCI	Daily Net Spain
Morgan Stanley		4,116	Daily Net Spain USD Index	USD Index		10/6/10		(179,709	)
S&P SmallCap 600 Index
				One-Month BBA
				LIBOR minus 50 basis
			If positive, the Total	points and if negative,
			Return of the S&P	the Total Return of the
Goldman Sachs Group, Inc. (The)		10,856	SmallCap 600 Index	S&P SmallCap 600 Index		11/5/10		(651,684	)
			Total of Total Return Swaps				$	1,166,220

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:

EUR	Euro
JPY	Japanese Yen

Abbreviations/Definitions are as follows:

BBA LIBOR	British Bankers’ Association London-Interbank Offered Rate
LIBOR	London-Interbank Offered Rate
MSCI	Morgan Stanley Capital International
MSCI EAFE	Morgan Stanley Capital International Europe, Australia and Far East. A stock market index of foreign stocks from the perspective of a North American investor
S&P	Standard & Poor’s
TR	Total Return

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Currency Swaps as of December 31, 2009 are as follows:

	Notional
Reference Entity/	Amount			Paid by	Received by	Termination
Swap Counterparty	(000’s)			the Fund	the Fund	Date		Value
COP TRM (COP02)
Deutsche Bank AG		3,360,000	COP	6.44% of the USD
				equivalent notional at	12.51% of the
				inception of trade	COP notional		3/18/19	$	129
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 Capital				Three-Month USD	Rushydro and OJSC
Services, Inc.		271,430	RUR	BBA LIBOR	Saratovskaya HPP		12/26/13		(2,030,008	)
					Total Currency Swaps			$	(2,029,879	)

Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies:

COP	Colombian Peso
RUR	Russian Ruble

Abbreviations are as follows:

BBA LIBOR	British Bankers’ Association London-Interbank Offered Rate
TRM	Tasa Representativa del Mercado

Swap Summary as of December 31, 2009 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		4,420	BRR	$	211,162
Banco Santander SA, Inc.	Interest Rate		188,400	MXN		534,252
Barclays Bank plc:
	Credit Default Buy Protection		5,390			155,809
	Credit Default Sell Protection		33,983			(1,055,445	)
	Interest Rate		2,299,000	HUF		192,041
	Interest Rate		153,255	SEK		(160,744	)
	Interest Rate		94,370	ZAR		1,189
						(867,150	)
Citibank NA:
	Interest Rate		1,705,000	HUF		(35,387	)
	Interest Rate		553,000	JPY		(15,256	)
	Interest Rate		175,200	MXN		608,084
	Total Return		16,296			82,496
						639,937
Citibank NA, New York:
	Credit Default Sell Protection		1,570			(108,565	)
	Total Return		1,048,490	JPY		420,552
						311,987
Credit Suisse International:
	Credit Default Buy Protection		7,068			(126,857	)
	Credit Default Sell Protection		31,816			(200,355	)
	Interest Rate		12,860	ILS		(146,698	)
	Interest Rate		35,800	MXN		143,714
						(330,196	)
Deutsche Bank AG:
	Credit Default Buy Protection		1,900			(50,774	)
	Credit Default Sell Protection		13,425			(103,334	)
	Currency		3,360,000	COP		129
	Total Return		8,205			72,829
						(81,150	)

Swap Summary: Continued

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)				Value
Goldman Sachs Group, Inc. (The):
	Interest Rate		132,705	BRR	$	508,566
	Interest Rate		3,722,000	HUF		(71,359	)
	Interest Rate		1,215,900	MXN		3,410,289
	Interest Rate		35,340	PLZ		(311,568	)
	Interest Rate		21,600			(514,000	)
	Interest Rate		63,820	ZAR		813
	Total Return		25,243			(685,454	)
						2,337,287
Goldman Sachs International:
	Credit Default Buy Protection		3,080			(2,546	)
	Credit Default Sell Protection		25,586			(111,561	)
	Interest Rate		19,640	BRR		445,775
						331,668
JPMorgan Chase Bank NA:
	Interest Rate		15,800	BRR		286,868
	Interest Rate		3,427,000	HUF		677,323
	Interest Rate		1,407,100	JPY		(236,294	)
	Interest Rate		731,100	MXN		1,542,755
	Interest Rate		22,575	PLZ		(3,814	)
						2,266,838
JPMorgan Chase Bank NA, London Branch	Credit Default Buy Protection		4,900			10,594
JPMorgan Chase Bank NA, NY Branch	Credit Default Sell Protection		16,436			(92,198	)
Morgan Stanley:
	Interest Rate		74,160	BRR		1,162,776
	Interest Rate		3,092,000	HUF		(60,835	)
	Total Return		5,896	EUR		324,603
	Total Return		12,796			(27,531	)
						1,399,013
Morgan Stanley Capital Services, Inc.:
	Credit Default Buy Protection		13,452			(363,280	)
	Credit Default Sell Protection		11,680			(612,167	)
	Currency		271,430	RUR		(2,030,008	)
						(3,005,455	)
Morgan Stanley International	Total Return		5,894	EUR		90,909
UBS AG:
	Credit Default Buy Protection		14,136			(238,293	)
	Interest Rate		49,644	ILS		147,056
	Total Return		58,784			887,816
						796,579
Westpac Banking Corp.	Interest Rate		24,000	AUD		18,949
		Total Swaps			$	4,573,026

Notional amount is reported in U.S.Dollars (USD), except for those denoted in the following currencies:

AUD	Australian Dollar
BRR	Brazilian Real
COP	Colombian Peso
EUR	Euro
HUF	Hungarian Forint
ILS	Israeli Shekel
JPY	Japanese Yen
MXN	Mexican Nuevo Peso
PLZ	Polish Zloty
RUR	Russian Ruble
SEK	Swedish Krona
ZAR	South African Rand

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $4,031,796,593)	$	4,025,494,042
Affiliated companies (cost $469,478,784)		476,021,792
		4,501,515,834
Cash—foreign currencies (cost $843,367)		824,284
Unrealized appreciation on foreign currency exchange contracts		29,623,669
Appreciated swaps, at value (upfront payments received $1,198,503)		13,432,301
Receivables and other assets:
Interest, dividends and principal paydowns		65,915,991
Investments sold		6,764,602
Shares of beneficial interest sold		6,435,798
Closed foreign currency contracts		5,637,045
Futures margins		2,104,699
Other		36,664
Total assets		4,632,290,887
Liabilities
Appreciated options written, at value (premiums received $106,195)		94,558
Return of collateral for securities loaned		37,599,500
Unrealized depreciation on foreign currency exchange contracts		11,995,141
Appreciated swaps, at value (upfront payments received $5,527,197)		1,195,988
Depreciated swaps, at value (upfront payments received $1,276,344)		7,663,287
Unrealized depreciation on unfunded purchase agreements		354,545
Payables and other liabilities:
Investments purchased (including $128,956,625 purchased on a when-issued or delayed delivery basis)		134,769,516
Closed foreign currency contracts		15,973,278
Futures margins		3,112,305
Distribution and service plan fees		2,258,260
Shares of beneficial interest redeemed		1,697,795
Transfer and shareholder servicing agent fees		373,226
Shareholder communications		254,579
Trustees’ compensation		24,507
Other		426,376
Total liabilities		217,792,861
Net Assets	$	4,414,498,026
Composition of Net Assets
Par value of shares of beneficial interest	$	822,436
Additional paid-in capital		4,323,808,202
Accumulated net investment income		241,824,892
Accumulated net realized loss on investments and foreign currency transactions		(168,796,267	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		16,838,763
Net Assets	$	4,414,498,026
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 $757,771,738 and 142,961,655 shares of beneficial interest outstanding)	$	5.30
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $3,656,726,288 and 679,474,371 shares of beneficial interest outstanding)	$	5.38

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Allocation of Income and Expenses from master funds1
Net investment income allocated from Oppenheimer Master Event-Linked Bond Fund:
Dividends	$	2,405
Interest		1,283,652
Expenses2		(81,775	)
Net investment income from Oppenheimer Master Event-Linked Bond Fund, LLC		1,204,282
Net investment income allocated from Oppenheimer Master Loan Fund, LLC:
Dividends		115,935
Interest		20,291,444
Expenses3		(820,154	)
Net investment income from Oppenheimer Master Loan Fund, LLC		19,587,225
Investment Income
Interest (net of foreign withholding taxes of $100,137)		232,896,664
Fee income		4,161,424
Dividends:
Unaffiliated companies		13,185
Affiliated companies		2,500,925
Income from investment of securities lending cash collateral, net—affiliated companies		501,092
Total investment income		240,073,290
Expenses
Management fees		20,955,987
Distribution and service plan fees—Service shares		7,869,295
Transfer and shareholder servicing agent fees:
Non-Service shares		479,075
Service shares		2,237,664
Shareholder communications:
Non-Service shares		83,089
Service shares		386,747
Custodian fees and expenses		316,628
Trustees’ compensation		70,337
Other		241,596
Total expenses		32,640,418
Less waivers and reimbursements of expenses		(1,095,780	)
Net expenses		31,544,638
Net Investment Income		229,320,159

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 $732.
3.	Net of expense waivers and/or reimbursements of $28,146.

STATEMENT OF OPERATIONS Continued

Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies (including premiums on options exercised)	$	(69,026,713	)
Closing and expiration of option contracts written		1,114,876
Closing and expiration of futures contracts		(14,871,760	)
Foreign currency transactions		(4,556,821	)
Short positions		(45,916	)
Swap contracts		(70,005,356	)
Allocated from Oppenheimer Master Event-Linked Bond Fund, LLC		(280,967	)
Allocated from Oppenheimer Master Loan Fund, LLC		(1,762,842	)
Net realized loss		(159,435,499	)
Net change in unrealized appreciation (depreciation) on:
Investments		448,766,507
Translation of assets and liabilities denominated in foreign currencies		81,034,364
Futures contracts		(19,040,820	)
Option contracts written		(1,086	)
Short positions		27,270
Swap contracts		29,708,154
Unfunded purchase agreements		(2,073,502	)
Allocated from Oppenheimer Master Event-Linked Bond Fund, LLC		(341,896	)
Allocated from Oppenheimer Master Loan Fund, LLC		54,116,973
Net change in unrealized appreciation		592,195,964
Net Increase in Net Assets Resulting from Operations	$	662,080,624

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	229,320,159		$	218,155,192
Net realized loss		(159,435,499	)		(197,517,639	)
Net change in unrealized appreciation (depreciation)		592,195,964			(643,679,330	)
Net increase (decrease) in net assets resulting from operations		662,080,624			(623,041,777	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(3,468,223	)		(36,989,595	)
Service shares		(7,263,543	)		(140,242,199	)
		(10,731,766	)		(177,231,794	)
Distributions from net realized gain:
Non-Service shares		(522,726	)		(8,547,484	)
Service shares		(2,276,448	)		(33,595,865	)
		(2,799,174	)		(42,143,349	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(5,135,048	)		73,339,965
Service shares		312,198,649			617,334,287
		307,063,601			690,674,252
Net Assets
Total increase (decrease)		955,613,285			(151,742,668	)
Beginning of period		3,458,884,741			3,610,627,409
End of period (including accumulated net investment income of $241,824,892 and $54,184,535, respectively)	$	4,414,498,026		$	3,458,884,741

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	4.49		$	5.56		$	5.26		$	5.11		$	5.21
Income (loss) from investment operations:
Net investment income1		.30			.30			.28			.26			.25
Net realized and unrealized gain (loss)		.53			(1.04	)		.21			.11			(.12	)
Total from investment operations		.83			(.74	)		.49			.37			.13
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.02	)		(.27	)		(.19	)		(.22	)		(.23	)
Distributions from net realized gain		—2			(.06	)		—			—			—
Total dividends and distributions to shareholders		(.02	)		(.33	)		(.19	)		(.22	)		(.23	)
Net asset value, end of period	$	5.30		$	4.49		$	5.56		$	5.26		$	5.11
Total Return, at Net Asset Value3		18.83	%		(14.21	)%		9.69	%		7.49	%		2.67	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	757,772		$	648,570		$	734,611		$	606,632		$	538,141
Average net assets (in thousands)	$	681,926		$	753,062		$	664,668		$	564,248		$	550,201
Ratios to average net assets:4,5
Net investment income		6.20	%		5.78	%		5.34	%		5.05	%		4.91	%
Total expenses		0.67	%6		0.59	%6		0.59	%6		0.64	%6		0.71	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.64	%		0.57	%		0.57	%		0.63	%		0.71	%
Portfolio turnover rate7		110	%		86	%		76	%		93	%		98	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
3.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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.	Includes the Fund’s share of the allocated expenses and/or net investment income from the master funds.
6.	Total expenses including indirect expenses from affiliated funds, excluding investments in master funds, were as follows:

Year Ended December 31, 2009	0.68	%
Year Ended December 31, 2008	0.60	%
Year Ended December 31, 2007	0.61	%
Year Ended December 31, 2006	0.64	%

7. 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, 2009	$	1,909,574,925	$	1,836,038,328
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

See accompanying Notes to Financial Statements.

Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	4.56		$	5.65		$	5.34		$	5.19		$	5.29
Income (loss) from investment operations:
Net investment income1		.29			.29			.28			.25			.21
Net realized and unrealized gain (loss)		.54			(1.06	)		.22			.11			(.08	)
Total from investment operations		.83			(.77	)		.50			.36			.13
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.01	)		(.26	)		(.19	)		(.21	)		(.23	)
Distributions from net realized gain		—2			(.06	)		—			—			—
Total dividends and distributions to shareholders		(.01	)		(.32	)		(.19	)		(.21	)		(.23	)
Net asset value, end of period	$	5.38		$	4.56		$	5.65		$	5.34		$	5.19
Total Return, at Net Asset Value3		18.41	%		(14.49	)%		9.55	%		7.23	%		2.48	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	3,656,726		$	2,810,315		$	2,876,016		$	1,396,188		$	658,107
Average net assets (in thousands)	$	3,143,836		$	3,152,967		$	2,075,028		$	1,016,582		$	408,515
Ratios to average net assets:4,5
Net investment income		5.95	%		5.54	%		5.08	%		4.83	%		4.20	%
Total expenses		0.92	%6		0.84	%6		0.84	%6		0.89	%6		0.96	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.89	%		0.82	%		0.82	%		0.88	%		0.96	%
Portfolio turnover rate7		110	%		86	%		76	%		93	%		98	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
3.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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.	Includes the Fund’s share of the allocated expenses and/or net investment income from the master funds.
6.	Total expenses including indirect expenses from affiliated funds, excluding investments in master funds, were as follows:

Year Ended December 31, 2009	0.93	%
Year Ended December 31, 2008	0.85	%
Year Ended December 31, 2007	0.86	%
Year Ended December 31, 2006	0.89	%

7. 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, 2009	$	1,909,574,925	$	1,836,038,328
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

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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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, 2009, 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	$	128,956,625

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.

     Forward roll transactions may be deemed to entail embedded leverage since the Fund purchases mortgage-related securities with extended settlement dates rather than paying for the securities under a normal settlement cycle. This embedded leverage increases the Fund’s market value of investments relative to its net assets which can incrementally increase the volatility of the Fund’s performance. Forward roll transactions can be replicated over multiple settlement periods.

     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; and 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, 2009, the Fund held no short sales.

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. Information concerning securities in default as of December 31, 2009 is as follows:

Cost	$	37,402,347
Market Value	$	5,789,978
Market Value as a % of Net Assets		0.13	%

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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share.

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.

Investment 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. When applicable, the Fund’s investment in LAF is included in the Statement of Investments. Shares of LAF are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

Investment 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 the master funds’ expenses, including their 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.

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
						Appreciation
						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
$	258,724,787	$	—	$	177,955,454	$	12,542,065

1. As of December 31, 2009, the Fund had $164,592,749 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, 2009, details of the capital loss carryforward were as follows:

Expiring
2017	$	164,592,749

2.	As of December 31, 2009, the Fund had $12,994,641 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2018.
3.	The Fund had $26,214 of post-October passive foreign investment company losses which were deferred.
4.	The Fund had $341,850 of straddle losses which were deferred.
5.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
6.	During the fiscal year ended December 31, 2008, 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

Reduction		Reduction
to Accumulated		to Accumulated Net
Net Investment		Realized Loss
Income		on Investments
$	30,948,036	$	30,948,036

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	13,530,940	$	184,452,300
Long-term capital gain		—		34,922,843
Total	$	13,530,940	$	219,375,143

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, 2009 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	$	4,496,787,657
Federal tax cost of other investments		(235,406,728	)
Total federal tax cost	$	4,261,380,929
Gross unrealized appreciation	$	244,278,300
Gross unrealized depreciation		(231,736,235	)
Net unrealized appreciation	$	12,542,065

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.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		24,677,592		$	117,209,141			44,736,337		$	230,966,547
Dividends and/or distributions reinvested		952,494			3,990,949			8,575,721			45,537,079
Redeemed		(27,020,460	)		(126,335,138	)		(40,970,673	)		(203,163,661	)
Net increase (decrease)		(1,390,374	)	$	(5,135,048	)		12,341,385		$	73,339,965
Service Shares
Sold		88,989,960		$	433,996,423			147,318,126		$	805,889,322
Dividends and/or distributions reinvested		2,234,190			9,539,991			32,192,234			173,838,064
Redeemed		(28,146,787	)		(131,337,765	)		(72,462,189	)		(362,393,099	)
Net increase		63,077,363		$	312,198,649			107,048,171		$	617,334,287

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 IMMF, LAF and the master funds, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	2,371,879,746	$	1,871,718,033
U.S. government and government agency obligations		495,036,638		829,374,901
To Be Announced (TBA) mortgage-related securities		1,909,574,925		1,836,038,328

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. For the year ended December 31, 2009, the Fund paid $2,345,233 to OFS for services to the Fund.

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 daily 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 May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as a percentage of daily net assets will not exceed the annual rate of 0.75% for Non-Service shares and 1.00% for Service shares. This voluntary undertaking may be amended or withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived fees and/or reimbursed the Fund $1,095,780 for management fees.

5. Risk Exposures and the Use of Derivative Instruments

The Fund’s investment objectives not only permit the Fund to purchase investment securities, they also allow the Fund to enter into various types of derivatives contracts, including, but not limited to, futures contracts, forward foreign currency exchange contracts, credit default swaps, interest rate swaps, total return swaps, and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase, decrease, or change the level or types of exposure to market risk factors. Central to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity and debt securities: they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Fund to pursue its objectives more quickly and efficiently than if it were to make direct purchases or sales of securities capable of effecting a similar response to market factors.

Market Risk Factors. In accordance with its investment objectives, the Fund may use derivatives to increase or decrease its exposure to one or more of the following market risk factors defined below:

Commodity Risk. Commodity risk relates to the change in value of commodities or commodity indexes as they relate to increases or decreases in the commodities market. Commodities are physical assets that have tangible properties. Examples of these types of assets are crude oil, heating oil, metals, livestock, and agricultural products.

Credit Risk. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds.

Foreign Exchange Rate Risk. Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency.

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

Volatility Risk. Volatility risk refers to the magnitude of the movement, but not the direction of the movement, in a financial instrument’s price over a defined time period. Large increases or decreases in a financial instrument’s price over a relative time period typically indicate greater volatility risk, while small increases or decreases in its price typically indicate lower volatility risk.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

     Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Fund to increase its market value exposure relative to its net assets and can substantially increase the volatility of the Fund’s performance.

     Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Typically, the associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Counterparty Credit Risk. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction. As of December 31, 2009, the maximum amount of loss that the Fund would incur if the counterparties to its derivative transactions failed to perform would be $43,115,334, which represents gross payments to be received by the Fund on these derivative contracts were they to be unwound as of period end. To reduce this risk the Fund has entered into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) master agreements, which allow the Fund to net unrealized appreciation and depreciation for positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty. The amount of loss that the Fund would incur taking into account these master netting arrangements would be $26,256,000 as of December 31, 2009. In addition, the Fund may require that certain counterparties post cash and/or securities in collaterial accounts to cover their net payment obligations for those derivative contracts subject to ISDA master agreements. If the counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Fund.

     As of December 31, 2009 the Fund has required certain counterparties to post collateral of $1,069,108. Credit Related Contingent Features. The Fund has several credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s Net Asset Value or NAV. The contingent features are established within the Fund’s ISDA master agreements which govern positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty.

     As of December 31, 2009, the aggregate fair value of derivative instruments with credit related contingent features in a net liability position was $4,089,640 for which collateral was not posted by the Fund. If a contingent feature would have been triggered as of December 31, 2009, the Fund could have been required to pay this amount in cash to its counterparties. If the Fund fails to perform under these contracts and agreements, the cash and/or securities posted as collateral will be made available to the counterparty. Cash posted as collateral for these contracts, if any, is reported on the Statement of Assets and Liabilities; securities posted as collateral, if any, are reported on the Statement of Investments.

Valuations of derivative instruments as of December 31, 2009 are as follows:

	Asset Derivatives				Liability Derivatives
	Statement				Statement
Derivatives Not	of Assets				of Assets
Accounted for as	and Liabilities				and Liabilities
Hedging Instruments	Location	Value			Location	Value
Credit contracts	Appreciated swaps, at value	$	680,226		Appreciated swaps, at value	$	1,195,988
Credit contracts					Depreciated swaps, at value		2,383,210
Equity contracts	Appreciated swaps, at value		2,254,146		Depreciated swaps, at value		1,087,926
Foreign exchange contracts	Appreciated swaps, at value		129		Depreciated swaps, at value		2,030,008
Interest rate contracts	Appreciated swaps, at value		10,497,800		Depreciated swaps, at value		2,162,143
Equity contracts	Futures margins		559,740	*	Futures margins		165,504	*
Interest rate contracts	Futures margins		1,544,959	*	Futures margins		2,946,801	*
Foreign exchange contracts	Investments, at value		59,364	**
Foreign exchange contracts	Unrealized appreciation on foreign currency exchange contracts		29,623,669		Unrealized depreciation on foreign currency exchange contracts		11,995,141
Foreign exchange contracts					Appreciated written options, at value		94,558
Total		$	45,220,033			$	24,061,279

*	Includes only the current day’s variation margin. Prior variation margin movements have been reflected in cash on the Statement of Assets and Liabilities upon receipt or payment.
**	Amounts relate to purchased options.

     The effect of derivative instruments on the Statement of Operations is as follows:

Amount of Realized Gain or Loss Recognized on Derivatives
	Investments from
	unaffiliated		Closing and
	companies		expiration		Closing and
Derivatives Not	(including		of option		expiration of			Foreign
Accounted for as	premiums on		contracts		futures			currency
Hedging Instruments	options exercised)*		written		contracts			transactions		Swap contracts			Total
Credit contracts	$	—	$	—	$	—		$	—	$	(94,976,540	)	$	(94,976,540	)
Equity contracts		—		—		(15,786,985	)		—		14,499,865			(1,287,120	)
Foreign exchange contracts		173,252		1,114,876		—			2,370,480		2,008,990			5,667,598
Interest rate contracts		474,893		—		915,225			—		8,476,466			9,866,584
Volatility contracts		—		—		—			—		(14,137	)		(14,137	)
Total	$	648,145	$	1,114,876	$	(14,871,760	)	$	2,370,480	$	(70,005,356	)	$	(80,743,615	)

* Includes purchased option contracts, purchased swaption contracts and written option contracts exercised, if any.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Amount of Change in Unrealized Gain or Loss Recognized on Derivatives
										Translation of
										assets and
										liabilities
Derivatives Not				Option						denominated
Accounted for as				contracts			Futures			in foreign
Hedging Instruments	Investments*			written			contracts			currencies		Swap contracts			Total
Credit contracts	$	—		$	—		$	—		$	—	$	38,781,860		$	38,781,860
Equity contracts		—			—			907,439			—		(7,042,355	)		(6,134,916	)
Foreign exchange contracts		(7,807,821	)		(1,086	)		—			24,620,885		1,929,726			18,741,704
Interest rate contracts		—			—			(19,948,259	)		—		(3,961,077	)		(23,909,336	)
Total	$	(7,807,821	)	$	(1,086	)	$	(19,040,820	)	$	24,620,885	$	29,708,154		$	27,479,312

* Includes purchased option contracts and purchased swaption contracts, if any.

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.

     The Fund has entered into forward foreign currency exchange contracts with the obligation to purchase specified foreign currencies in the future at a currently negotiated forward rate in order to take a positive investment perspective on the related currency. These forward foreign currency exchange contracts seek to increase exposure to foreign exchange rate risk.

     The Fund has entered into forward foreign currency exchange contracts with the obligation to purchase specified foreign currencies in the future at a currently negotiated forward rate in order to decrease exposure to foreign exchange rate risk associated with foreign currency denominated securities held by the portfolio.

     The Fund has entered into forward foreign currency exchange contracts with the obligation to sell specified foreign currencies in the future at a currently negotiated forward rate in order to take a negative investment perspective on the related currency. These forward foreign currency exchange contracts seek to increase exposure to foreign exchange rate risk.

     The Fund has entered into forward foreign currency exchange contracts with the obligation to sell specified foreign currencies in the future at a currently negotiated forward rate in order to decrease exposure to foreign exchange rate risk associated with foreign currency denominated securities held by the portfolio.

     Additional associated risk to the Fund includes counterparty credit risk. Counterparty 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.

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.

     The Fund has purchased futures contracts on various bonds and notes to increase exposure to interest rate risk.

     The Fund has sold futures contracts on various bonds and notes to decrease exposure to interest rate risk.

     The Fund has purchased futures contracts on various equity indexes to increase exposure to equity risk.

     The Fund has sold futures contracts on various equity indexes to decrease exposure to equity risk.

     Additional associated 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.

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 Fund has written put options on currencies to increase exposure to foreign exchange rate risk. A written put option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

     The Fund has written call options on currencies to decrease exposure to foreign exchange rate risk. A written call option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

     The Fund has purchased call options on currencies to increase exposure to foreign exchange rate risk. A purchased call option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

     The Fund has purchased put options on currencies to decrease exposure to foreign exchange rate risk. A purchased put option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

     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.

     Additional associated risks to the Fund include counterparty credit risk for over-the-counter options and liquidity risk.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Written option activity for the year ended December 31, 2009 was as follows:

	Call Options						Put Options
	Number of			Amount of			Number of			Amount of
	Contracts			Premiums			Contracts			Premiums
Options outstanding as of December 31, 2008		4,945,000		$	78,520			4,945,000		$	78,520
Options written		499,200,000			935,729			598,355,000			970,765
Options closed or expired		(496,920,000	)		(876,563	)		(22,775,000	)		(238,313	)
Options exercised		(7,225,000	)		(137,686	)		(471,925,000	)		(704,777	)
Options outstanding as of December 31, 2009		—		$	—			108,600,000		$	106,195

Swap Contracts

The Fund may enter into swap contract agreements with a counterparty to exchange a series of cash flows based on either specified reference rates, or the occurrence of a credit event, over a specified period. Such contracts may include interest rate, equity, debt, index, total return, credit and currency swaps.

     Swaps are marked to market daily using primarily quotations from pricing services, counterparties and brokers. Swap contracts are reported on a schedule following the Statement of Investments. The values of swap contracts are aggregated by positive and negative values and disclosed separately on the Statement of Assets and Liabilities by contracts in unrealized appreciation and depreciation positions. Upfront payments paid or received, if any, affect the value of the respective swap. Therefore, to determine the unrealized appreciation (depreciation) on swaps, upfront payments paid should be subtracted from, while upfront payments received should be added to, the value of contracts reported as an asset on the Statement of Assets and Liabilities. Conversely, upfront payments paid should be added to, while upfront payments received should be subtracted from the value of contracts reported as a liability. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is 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. The Fund also records any periodic payments received from (paid to) the counterparty, including at termination, under such contracts as realized gain (loss) on the Statement of Operations.

     Swap contract agreements are exposed to the market risk factor of the specific underlying reference asset. Swap contracts are typically more attractively priced compared to similar investments in related cash securities because they isolate the risk to one market risk factor and eliminate the other market risk factors. Investments in cash securities (for instance bonds) have exposure to multiple risk factors (credit and interest rate risk). Because swaps require little or no initial cash investment, they can expose the Fund to substantial risk in the isolated market risk factor.

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, sovereign debt, 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.

     The Fund has sold credit protection through credit default swaps to increase exposure to the credit risk of individual securities and, or, indexes that are either unavailable or considered to be less attractive in the bond market.

     The Fund has purchased credit protection through credit default swaps to decrease exposure to the credit risk of individual securities and, or, indexes.

     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.

     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.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

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.

     The Fund has entered into interest rate swaps in which it pays a floating interest rate and receives a fixed interest rate in order to increase exposure to interest rate risk. Typically, if relative interest rates rise, payments made by the Fund under a swap agreement will be greater than the payments received by the Fund.

     The Fund has entered into interest rate swaps in which it pays a fixed interest rate and receives a floating interest rate in order to decrease exposure to interest rate risk. Typically, if relative interest rates rise, payments received by the Fund under the swap agreement will be greater than the payments made by the Fund.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

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.

     Total return swap contracts are exposed to the market risk factor of the specific underlying financial instrument or index. Total return swaps are less standard in structure than other types of swaps and can isolate and, or, include multiple types of market risk factors including equity risk, credit risk, and interest rate risk.

     The Fund has entered into total return swaps on various equity indexes to increase exposure to equity risk. These equity risk related total return swaps require the Fund to pay a floating reference interest rate, or an amount equal to the negative price movement of an index multiplied by the notional amount of the contract. The Fund will receive payments equal to the positive price movement of the same index multiplied by the notional amount of the contract.

     The Fund has entered into total return swaps on various equity indexes to decrease exposure to equity risk. These equity risk related total return swaps require the Fund to pay an amount equal to the positive price movement of an index multiplied by the notional amount of the contract. The Fund will receive payments of a floating reference interest rate or an amount equal to the negative price movement of the same index multiplied by the notional amount of the contract.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

     The Fund has entered into total return swaps to increase exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the Fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

     The Fund has entered into total return swaps to decrease exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

     Additional associated risks to the Fund include counterparty credit risk 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.

     The Fund has entered into currency swap contracts with the obligation to pay an interest rate on the dollar notional amount and receive an interest rate on various foreign currency notional amounts in order to take a positive investment perspective on the related currencies for which the Fund receives a payment. These currency swap contracts seek to increase exposure to foreign exchange rate risk.

     The Fund has entered into currency swap contracts with the obligation to pay an interest rate various foreign currency notional amounts and receive an interest rate on on the dollar notional amount in order to take a negative investment perspective on the related currencies for which the Fund receives a payment. These currency swap contracts seek to decrease exposure to foreign exchange rate risk.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

Swaption Transactions. The Fund may enter into a swaption contract which grants the purchaser the right, but not the obligation, to enter into a swap transaction at preset terms detailed in the underlying agreement 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 terms on the underlying swap.

     Swaptions are marked to market daily using primarily portfolio pricing services or quotations from counterparties and brokers. Purchased swaptions are reported as a component of investments in the Statement of Investments, the Statement of Assets and Liabilities and the Statement of Operations. Written swaptions are reported on a schedule following the Statement of Investments and their value is reported as a separate asset or liability line item in the Statement of Assets and Liabilities. The net change in unrealized appreciation or depreciation on written swaptions is separately 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.

     The Fund generally will incur a greater risk when it writes a swaption than when it purchases a swaption. When the Fund writes a swaption it will become obligated, upon exercise of the swaption, according to the terms of the underlying agreement. Swaption contracts written by the Fund do not give rise to counterparty credit risk as they obligate the Fund, not its counterparty, to perform. When the Fund purchases a swaption it only risks losing the amount of the premium it paid if the swaption expires unexercised. However, when the Fund exercises a purchased swaption there is a risk that the counterparty will fail to perform or otherwise default on its obligations under the swaption contract.

     The Fund has written swaptions which give it the obligation, if exercised by the purchaser, to sell credit protection through credit default swaps in order to increase exposure to the credit risk of individual securities and, or, indexes. A written swaption of this type becomes more valuable as the likelihood of a credit event on the reference asset decreases.

     As of December 31, 2009, the Fund had no written or purchased swaptions outstanding.

6. Illiquid or Restricted Securities

As of December 31, 2009, 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 Directors 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.

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, 2009, the Fund had on loan securities valued at $36,746,005. Collateral of $37,599,500 was received for the loans, all of which was received in cash and subsequently invested in approved instruments.

8. Unfunded Purchase Agreements

Pursuant to the terms of certain indenture agreements, the Fund has unfunded purchase agreements of $15,121,194 at December 31, 2009. The Fund generally will maintain with its custodian, liquid investments having an aggregate value at least equal to the amount of unfunded purchase agreements. The following agreements are subject to funding based on the borrower’s discretion. The Fund is obligated to fund these agreements at the time of the request by the borrower. These agreements have been excluded from the Statement of Investments.

As of December 31, 2009, the Fund had unfunded purchase agreements as follows:

	Commitment		Unfunded
	Termination Date		Amount
Deutsche Bank AG, Opic Reforma I Credit Linked Nts.		10/23/13	$	9,000,153

	Interest			Commitment		Unfunded		Unrealized
	Rate			Termination Date		Amount		Depreciation
Deutsche Bank AG; An unfunded commitment that the Fund receives 0.125% quarterly; and will pay out, upon request, up to 6,121,041 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	$	6,121,041	$	354,545

NOTES TO FINANCIAL STATEMENTS Continued

9. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 18, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

10. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer High Income Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer High Income Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer High Income Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Principal
	Amount		Value
Corporate Bonds and Notes—94.2%
Consumer Discretionary—23.5%
Auto Components—1.4%
Allison Transmission, Inc., 11% Sr. Nts., 11/1/151	$	1,045,000	$	1,102,475
American Axle & Manufacturing Holdings, Inc., 9.25% Sr. Sec. Nts., 1/15/171		690,000		703,800
Goodyear Tire & Rubber Co. (The), 9% Sr. Unsec. Nts., 7/1/15		255,000		266,475
				2,072,750
Automobiles—2.0%
Case New Holland, Inc., 7.125% Sr. Unsec. Nts., 3/1/14		815,000		831,300
Ford Motor Co., 7.45% Bonds, 7/16/31		1,130,000		1,004,288
Ford Motor Credit Co. LLC:
7.50% Sr. Unsec. Unsub. Nts., 8/1/12		580,000		585,243
8.125% Sr. Unsec. Nts., 1/15/20		485,000		477,412
				2,898,243
Diversified Consumer Services—0.7%
Service Corp. International:
6.75% Sr. Unsec. Nts., 4/1/15		285,000		280,725
7% Sr. Unsec. Unsub. Nts., 6/15/17		340,000		331,500
StoneMor Operating LLC/Cornerstone Family Service of West Virginia, Inc./Osiris Holdings of Maryland Subsidiary, Inc., 10.25% Sr. Nts., 12/1/171		340,000		347,650
				959,875
Hotels, Restaurants & Leisure—6.5%
CCM Merger, Inc., 8% Unsec. Nts., 8/1/131		410,000		334,663
Greektown Holdings, Inc., 10.75% Sr. Nts., 12/1/131,2		1,155,000		180,469
Harrah’s Operating Co., Inc., 10% Sr. Sec. Nts., 12/15/181		1,393,000		1,124,848
Harrah’s Operating Escrow LLC/Harrah’s Escrow Group, 11.25% Sr. Sec. Nts., 6/1/171		380,000		399,475
Isle of Capri Casinos, Inc., 7% Sr. Unsec. Sub. Nts., 3/1/14		685,000		613,075
Landry’s Restaurant, Inc., 11.625% Sr. Sec. Nts., 12/1/151		455,000		484,575
Las Vegas Sands Corp., 6.375% Sr. Unsec. Nts., 2/15/15		415,000		369,350
Mashantucket Pequot Tribe, 8.50% Bonds, Series A, 11/15/151,2		1,655,000		413,750
MGM Mirage, Inc.:
6.75% Sr. Unsec. Nts., 4/1/13		375,000		325,313
8.50% Sr. Unsec. Nts., 9/15/10		200,000		200,000
Mohegan Tribal Gaming Authority:
6.125% Sr. Unsec. Sub. Nts., 2/15/13		390,000		314,438
11.50% Sr. Sec. Nts., 11/1/171		125,000		128,125
Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 3/15/10		685,000		685,000
Peninsula Gaming LLC:
8.375% Sr. Sec. Nts., 8/15/151		110,000		110,275
10.75% Sr. Unsec. Nts., 8/15/171		280,000		282,800
Pinnacle Entertainment, Inc.:
8.25% Sr. Unsec. Sub. Nts., 3/15/12		391,000		392,955
8.625% Sr. Nts., 8/1/171		110,000		112,750
Pokagon Gaming Authority, 10.375% Sr. Nts., 6/15/141		425,000		444,125
Station Casinos, Inc., 6.50% Sr. Unsec. Sub. Nts., 2/1/142		2,595,000		25,950
Travelport LLC, 11.875% Sr. Unsec. Sub. Nts., 9/1/16		750,000		798,750
Wendy’s/Arby’s Restaurants LLC, 10% Sr. Unsec. Unsub. Nts., 7/15/161		750,000		821,250
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 6.625% Nts., 12/1/14		805,000		781,856
				9,343,792
Household Durables—1.6%
Beazer Homes USA, Inc.:
8.375% Sr. Nts., 4/15/12		125,000		118,125
8.625% Sr. Unsec. Nts., 5/15/11		260,000		254,800
Jarden Corp., 7.50% Sr. Unsec. Sub. Nts., 5/1/17		805,000		807,013
K. Hovnanian Enterprises, Inc.:
7.75% Sr. Unsec. Sub. Nts., 5/15/13		285,000		218,025
8.875% Sr. Sub. Nts., 4/1/12		705,000		595,725
Lennar Corp., 12.25% Sr. Unsec. Unsub. Nts., 6/1/173		210,000		254,100
				2,247,788
Internet & Catalog Retail—0.1%
NetFlix, Inc., 8.50% Sr. Unsec. Nts., 11/15/171		180,000		187,650
Leisure Equipment & Products—0.4%
Colt Defense LLC, 8.75% Sr. Unsec. Nts., 11/15/171		500,000		518,750
Easton-Bell Sports, Inc., 9.75% Sr. Sec. Nts., 12/1/161		90,000		93,713
				612,463

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Media—8.1%
Allbritton Communications Co., 7.75% Sr. Unsec. Sub. Nts., 12/15/12	$	780,000	$	771,225
AMC Entertainment, Inc., 8% Sr. Unsec. Sub. Nts., 3/1/14		678,000		650,880
American Media Operations, Inc.:
9% Sr. Unsec. Nts., 5/1/131,4		1,853		1,195
12.02% Sr. Sub. Nts., 11/1/131,4		1,739,262		1,121,824
Belo Corp., 7.75% Sr. Unsec. Unsub. Debs., 6/1/27		550,000		442,750
Cequel Communications Holdings I LLC, 8.625% Sr. Unsec. Nts., 11/15/171		455,000		461,825
Charter Communications, Inc., 13.50% Sr. Nts., 11/30/16		443,694		524,668
Clear Channel Worldwide Holdings, Inc.:
9.25% Sr. Nts., 12/15/171		155,000		160,425
9.25% Sr. Unsec. Nts., 12/15/171		40,000		41,000
Lin Television Corp., 6.50% Sr. Sub. Nts., 5/15/13		1,540,000		1,493,800
Marquee Holdings, Inc., 9.505% Sr. Nts., 8/15/145		310,000		259,238
Mediacom LLC/Mediacom Capital Corp., 9.125% Sr. Nts., 8/15/191		650,000		666,250
MediaNews Group, Inc.:
6.375% Sr. Sub. Nts., 4/1/142,3		1,460,000		3,796
6.875% Sr. Unsec. Sub. Nts., 10/1/132,3		2,510,000		6,526
NTL Cable plc, 9.125% Sr. Nts., 8/15/16		395,000		418,206
Radio One, Inc., 6.375% Sr. Unsec. Sub. Nts., 2/15/13		140,000		103,425
Reynolds Group, 7.75% Sr. Sec. Nts., 10/15/161		585,000		601,088
Salem Communications Corp., 9.625% Sr. Sec. Nts., 12/15/161		185,000		194,713
Sinclair Broadcast Group, Inc., 8% Sr. Unsec. Sub. Nts., 3/15/12		1,240,000		1,215,200
Sinclair Television Group, Inc., 9.25% Sr. Sec. Nts., 11/1/171		125,000		130,625
TL Acquisitions, Inc., 10.50% Sr. Nts., 1/15/151		695,000		668,069
Valassis Communications, Inc., 8.25% Sr. Unsec. Unsub. Nts., 3/1/15		840,000		842,100
Virgin Media Finance plc, 8.75% Sr. Unsec. Nts., 4/15/14		45,000		46,688
Warner Music Group Corp., 7.375% Sr. Sub. Bonds, 4/15/14		845,000		820,706
				11,646,222
Multiline Retail—0.5%
Bon-Ton Stores, Inc. (The), 10.25% Sr. Unsec. Unsub. Nts., 3/15/14		710,000		658,525
Specialty Retail—1.7%
Burlington Coat Factory Warehouse Corp., 11.125% Sr. Unsec. Nts., 4/15/14		640,000		664,000
Leslie’s Poolmart, Inc., 7.75% Sr. Unsec. Nts., 2/1/13		515,000		520,150
Michaels Stores, Inc., 10% Sr. Unsec. Unsub. Nts., 11/1/14		1,000,000		1,040,000
Sally Holdings LLC, 10.50% Sr. Unsec. Sub. Nts., 11/15/16		230,000		248,400
				2,472,550
Textiles, Apparel & Luxury Goods—0.5%
Levi Strauss & Co., 9.75% Sr. Unsec. Unsub. Nts., 1/15/15		685,000		722,675
Consumer Staples—6.4%
Beverages—0.4%
Cott Beverages, Inc., 8.375% Sr. Nts., 11/15/171		525,000		543,375
Food & Staples Retailing—1.9%
Albertson’s, Inc., 8% Sr. Unsec. Debs., 5/1/31		1,160,000		1,058,500
Real Time Data Co., 11% Nts., 5/31/092,3,4,6		476,601		—
Rite Aid Corp.:
7.50% Sr. Sec. Nts., 3/1/17		1,120,000		1,058,400
9.50% Sr. Unsec. Unsub. Nts., 6/15/17		405,000		354,375
Pantry, Inc. (The), 7.75% Sr. Unsec. Sub. Nts., 2/15/14		355,000		342,575
				2,813,850
Food Products—3.6%
ASG Consolidated LLC/Finance, Inc., 11.50% Sr. Unsec. Nts., 11/1/11		1,025,000		1,032,688
Bumble Bee Foods LLC, 7.75% Sr. Sec. Nts., 12/15/151		240,000		241,200
Chiquita Brands International, Inc.:
7.50% Sr. Unsec. Nts., 11/1/14		265,000		263,675
8.875% Sr. Unsec. Unsub. Nts., 12/1/15		560,000		574,000
Dean Foods Co., 7% Sr. Unsec. Unsub. Nts., 6/1/16		565,000		556,525
JBS USA LLC/JBS USA Finance, Inc., 11.625% Sr. Nts., 5/1/143		590,000		671,125
Pinnacle Foods Finance LLC, 9.25% Sr. Unsec. Nts., 4/1/151		195,000		198,900
Pinnacle Foods Finance LLC/ Pinnacle Foods Finance Corp., 10.625% Sr. Sub. Nts., 4/1/17		1,210,000		1,264,450
Smithfield Foods, Inc., 7% Sr. Nts., 8/1/11		360,000		360,900
				5,163,463

	Principal
	Amount		Value
Personal Products—0.5%
Elizabeth Arden, Inc., 7.75% Sr. Unsec. Sub. Nts., 1/15/14	$	545,000	$	539,550
Revlon Consumer Products Corp., 9.75% Sr. Sec. Nts., 11/15/151		185,000		191,938
				731,488
Energy—13.8%
Energy Equipment & Services—1.3%
Helix Energy Solutions Group, Inc., 9.50% Sr. Unsec. Nts., 1/15/161		830,000		854,900
Key Energy Services, Inc., 8.375% Sr. Unsec. Nts., 12/1/14		670,000		675,025
North American Energy Alliance LLC, 10.875% Sr. Sec. Nts., 6/1/161		380,000		405,650
				1,935,575
Oil, Gas & Consumable Fuels—12.5%
Alon Refining Krotz Springs, Inc., 13.50% Sr. Sec. Nts., 10/15/141		730,000		684,375
Antero Resources Finance Corp., 9.375% Sr. Nts., 12/7/171		390,000		399,750
Arch Coal, Inc., 8.75% Sr. Nts., 8/1/161		960,000		1,020,000
Atlas Energy Resources LLC, 10.75% Sr. Unsec. Nts., 2/1/18		1,120,000		1,243,200
Atlas Pipeline Partners LP, 8.125% Sr. Unsec. Nts., 12/15/15		555,000		493,950
Berry Petroleum Co.:
8.25% Sr. Sub. Nts., 11/1/16		470,000		465,300
10.25% Sr. Unsec. Nts., 6/1/14		620,000		677,350
Bill Barrett Corp., 9.875% Sr. Nts., 7/15/16		585,000		625,950
Chesapeake Energy Corp., 6.875% Sr. Unsec. Nts., 1/15/16		320,000		321,600
Cimarex Energy Co., 7.125% Sr. Nts., 5/1/17		300,000		304,500
Cloud Peak Energy Resources LLC, 8.25% Sr. Unsec. Nts., 12/15/171		695,000		698,475
Concho Resources, Inc., 8.625% Sr. Unsec. Nts., 10/1/17		480,000		506,400
Continental Resources, Inc., 8.25% Sr. Unsec. Nts., 10/1/191		285,000		300,675
Denbury Resources, Inc., 7.50% Sr. Sub. Nts., 12/15/15		280,000		280,700
Enterprise Products Operating LLP, 8.375% Jr. Sub. Nts., 8/1/665		1,140,000		1,112,876
Forest Oil Corp.:
7.25% Sr. Unsec. Nts., 6/15/191		440,000		436,700
8.50% Sr. Nts., 2/15/141		955,000		1,002,750
Mariner Energy, Inc., 11.75% Sr. Unsec. Nts., 6/30/16		555,000		621,600
Murray Energy Corp., 10.25% Sr. Sec. Nts., 10/15/151		640,000		640,000
OPTI Canada, Inc., 9% Sr. Sec. Nts., 12/15/121		320,000		328,800
Petrohawk Energy Corp., 10.50% Sr. Unsec. Nts., 8/1/14		520,000		570,700
Plains Exploration & Production Co., 10% Sr. Unsec. Nts., 3/1/16		1,005,000		1,105,500
Quicksilver Resources, Inc.:
8.25% Sr. Unsec. Nts., 8/1/15		735,000		757,050
11.75% Sr. Nts., 1/1/16		615,000		701,100
SandRidge Energy, Inc.:
8.75% Sr. Nts., 1/15/201		560,000		562,800
9.875% Sr. Unsec. Nts., 5/15/161		795,000		840,713
Southwestern Energy Co., 7.50% Sr. Nts., 2/1/18		485,000		516,525
Western Refining, Inc., 11.25% Sr. Sec. Nts., 6/15/171		740,000		673,400
				17,892,739
Financials—1.8%
Capital Markets—0.2%
RailAmerica, Inc., 9.25% Sr. Sec. Nts., 7/1/17		257,000		274,669
Diversified Financial Services—1.1%
GMAC LLC, 8% Sr. Unsec. Unsub. Nts., 11/1/311		1,590,000		1,446,900
Universal City Development Partners Ltd., 8.875% Sr. Nts., 11/15/151		155,000		152,481
				1,599,381
Insurance—0.3%
Multiplan, Inc., 10.375% Sr. Sub. Nts., 4/15/163		400,000		392,000
Real Estate Investment Trusts—0.2%
DuPont Fabros Technology LP, 8.50% Sr. Unsec. Nts., 12/15/171		340,000		347,225
Health Care—7.3%
Health Care Equipment & Supplies—1.4%
Biomet, Inc., 10.375% Sr. Unsec. Nts., 10/15/174		1,210,000		1,318,900
Inverness Medical Innovations, Inc., 7.875% Sr. Nts., 2/1/161		385,000		379,225
Universal Hospital Services, Inc., 8.50% Sr. Sec. Nts., 6/1/154		350,000		346,500
				2,044,625
Health Care Providers & Services—5.4%
Apria Healthcare Group, Inc., 12.375% Sr. Sec. Nts., 11/1/141		335,000		370,175
Catalent Pharma Solutions, Inc., 9.50% Sr. Unsec. Nts., 4/15/154		431,012		391,143

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount		Value
Health Care Providers & Services Continued
Community Health Systems, Inc., 8.875% Sr. Unsec. Nts., 7/15/15	$	1,005,000	$	1,042,688
HCA, Inc., 6.375% Nts., 1/15/15		925,000		877,594
HEALTHSOUTH Corp., 10.75% Sr. Unsec. Nts., 6/15/16		565,000		617,263
Rural/Metro Corp., 0%/12.75% Sr. Unsec. Nts., 3/15/163,7		680,000		690,200
Select Medical Corp., 7.625% Sr. Unsec. Sub. Nts., 2/1/15		1,520,000		1,482,000
Tenet Healthcare Corp., 7.375% Nts., 2/1/13		365,000		367,738
US Oncology Holdings, Inc., 6.428% Sr. Unsec. Nts., 3/15/124,5		601,000		564,940
US Oncology, Inc., 9.125% Sr. Sec. Nts., 8/15/17		320,000		337,600
Vanguard Health Holding Co. I LLC, 0%/11.25% Sr. Nts., 10/1/157		895,000		946,463
				7,687,804
Pharmaceuticals—0.5%
DJO Finance LLC/DJO Finance Corp., 10.875% Sr. Unsec. Nts., 11/15/14		715,000		757,900
Industrials—11.6%
Aerospace & Defense—1.9%
BE Aerospace, Inc., 8.50% Sr. Unsec. Nts., 7/1/18		1,095,000		1,163,438
Hawker Beechcraft Acquisition Co. LLC, 8.50% Sr. Unsec. Nts., 4/1/15		150,000		106,500
TransDigm, Inc., 7.75% Nts., 7/15/141		625,000		637,500
Vought Aircraft Industries, Inc., 8% Sr. Nts., 7/15/11		910,000		902,038
				2,809,476
Airlines—2.5%
American Airlines Pass Through Trust 2001-2, 7.858% Pass-Through Certificates, Series 2001-2, Cl. A-2, 10/1/113		255,000		255,000
American Airlines Pass Through Trust 2009-1A, 10.375% Pass-Through Certificates, Series 2009-1A, 7/2/19		225,000		248,625
American Airlines, Inc., 10.50% Sr. Sec. Nts., 10/15/121		840,000		882,000
Delta Air Lines, Inc.:
9.50% Sr. Sec. Nts., 9/15/141		185,000		193,094
12.25% Sr. Sec. Nts., 3/15/151		1,205,000		1,211,025
United Air Lines, Inc., 10.40% Sr. Sec. Nts., 11/1/163		730,000		769,238
				3,558,982
Building Products—0.7%
AMH Holdings, Inc., 11.25% Sr. Unsec. Nts., 3/1/14		200,000		194,000
Goodman Global Group, Inc., 11.841% Sr. Nts., 12/15/141,8		820,000		469,450
USG Corp., 9.75% Sr. Unsec. Nts., 8/1/141		335,000		359,288
				1,022,738
Commercial Services & Supplies—2.2%
Acco Brands Corp., 10.625% Sr. Sec. Nts., 3/15/151		270,000		298,350
American Pad & Paper Co., 13% Sr. Sub. Nts., Series B, 11/15/052,3,6		200,000		—
Aramark Services, Inc., 8.50% Sr. Unsec. Nts., 2/1/15		470,000		486,450
Corrections Corp. of America, 7.75% Sr. Nts., 6/1/17		535,000		553,725
Iron Mountain, Inc., 7.75% Sr. Sub. Nts., 1/15/15		405,000		409,050
West Corp., 9.50% Sr. Unsec. Nts., 10/15/14		1,360,000		1,387,200
				3,134,775
Machinery—1.2%
Manitowoc Co., Inc. (The), 7.125% Sr. Nts., 11/1/13		870,000		822,150
Terex Corp., 8% Sr. Unsec. Sub. Nts., 11/15/17		940,000		909,450
				1,731,600
Marine—0.2%
Navios Maritime Holdings, Inc., 8.875% Nts., 11/1/171		225,000		234,844
Professional Services—0.5%
Altegrity, Inc., 10.50% Sr. Unsec. Sub. Nts., 11/1/151		755,000		677,613
Road & Rail—1.5%
Avis Budget Car Rental LLC, 7.625% Sr. Unsec. Unsub. Nts., 5/15/14		1,285,000		1,227,175
Hertz Corp., 10.50% Sr. Unsec. Sub. Nts., 1/1/16		910,000		975,975
				2,203,150
Trading Companies & Distributors—0.9%
Ashtead Capital, Inc., 9% Nts., 8/15/161		120,000		120,750
Ashtead Holdings plc, 8.625% Sr. Sec. Nts., 8/1/151		170,000		171,700
RSC Equipment Rental, Inc., 10% Sr. Sec. Nts., 7/15/171		185,000		202,113
United Rentals North America, Inc., 9.25% Sr. Unsec. Unsub. Nts., 12/15/19		275,000		285,313

	Principal
	Amount		Value
Trading Companies & Distributors Continued
United Rentals, Inc., 7% Sr. Sub. Nts., 2/15/14	$	495,000	$	450,450
				1,230,326
Information Technology—5.7%
Computers & Peripherals—0.2%
Seagate Technology International, 10% Sr. Sec. Nts., 5/1/141		225,000		249,750
Electronic Equipment & Instruments—1.8%
NXP BV/NXP Funding LLC, 7.87% Sr. Sec. Nts., 10/18/14		385,000		351,313
RBS Global, Inc., /Rexnord Corp., 11.75% Sr. Unsec. Sub. Nts., 8/1/16		975,000		970,125
Sanmina-SCI Corp., 8.125% Sr. Sub. Nts., 3/1/16		1,345,000		1,348,363
				2,669,801
IT Services—2.3%
First Data Corp., 9.875% Sr. Unsec. Nts., 9/24/15		1,360,000		1,275,000
SunGard Data Systems, Inc.:
9.125% Sr. Unsec. Nts., 8/15/13		1,260,000		1,297,800
10.25% Sr. Unsec. Sub. Nts., 8/15/15		632,000		676,240
				3,249,040
Semiconductors & Semiconductor Equipment—1.4%
Amkor Technology, Inc.:
7.75% Sr. Nts., 5/15/13		275,000		280,500
9.25% Sr. Unsec. Nts., 6/1/16		625,000		667,188
Freescale Semiconductor, Inc.:
8.875% Sr. Unsec. Nts., 12/15/14		735,000		678,038
10.125% Sr. Unsec. Sub. Nts., 12/15/161		435,000		352,350
				1,978,076
Materials—11.2%
Chemicals—3.2%
Hexion US Finance Corp./ Hexion Nova Scota Finance ULC, 9.75% Sr. Sec. Nts., 11/15/14		445,000		438,325
Huntsman International LLC, 7.375% Sr. Unsub. Nts., 1/1/15		1,405,000		1,355,825
Momentive Performance Materials, Inc., 11.50% Sr. Unsec. Sub. Nts., 12/1/16		2,390,000		2,127,100
Nalco Co., 8.875% Unsec. Sub. Nts., 11/15/13		375,000		388,125
PolyOne Corp., 8.875% Sr. Unsec. Nts., 5/1/12		295,000		305,325
				4,614,700
Containers & Packaging—4.1%
Berry Plastics Holding Corp., 8.875% Sr. Sec. Nts., 9/15/14		1,400,000		1,368,500
Cascades, Inc.:
7.75% Sr. Nts., 12/15/171		230,000		233,450
7.875% Sr. Nts., 1/15/201		485,000		494,700
Crown Americas, Inc., 7.75% Sr. Nts., 11/15/15		740,000		769,600
Graham Packaging Co. LP:
8.25% Sr. Nts., 1/1/171		410,000		406,925
9.875% Sr. Unsec. Sub. Nts., 10/15/14		980,000		1,004,500
Graphic Packing International, Inc., 9.50% Sr. Unsec. Unsub. Nts., 6/15/17		1,290,000		1,373,850
Viskase Companies, Inc., 9.875% Sr. Sec. Nts., 1/15/181		290,000		293,625
				5,945,150
Metals & Mining—2.3%
Edgen Murray Corp., 12.25% Sr. Sec. Nts., 1/15/151		485,000		478,938
Freeport-McMoRan Copper & Gold, Inc., 8.375% Sr. Nts., 4/1/17		265,000		290,573
Novelis, Inc., 7.25% Sr. Unsec. Nts., 2/15/155		1,205,000		1,153,788
Teck Resources Ltd., 10.25% Sr. Sec. Nts., 5/15/16		800,000		936,000
United Maritime LLC, 11.75% Sr. Sec. Nts., 6/15/151		485,000		488,638
				3,347,937
Paper & Forest Products—1.6%
Georgia-Pacific LLC:
7.70% Debs., 6/15/15		315,000		332,325
8.25% Sr. Unsec. Nts., 5/1/161		855,000		910,575
PE Paper Escrow GmbH, 12% Sr. Sec. Nts., 8/1/141		325,000		359,762
Verso Paper Holdings LLC, 9.125% Sr. Sec. Nts., 8/1/14		665,000		638,400
				2,241,062
Telecommunication Services—8.1%
Diversified Telecommunication Services—3.5%
Cincinnati Bell, Inc., 8.25% Sr. Nts., 10/15/17		610,000		622,200
Citizens Communications Co., 6.25% Sr. Nts., 1/15/13		360,000		362,700
Global Crossing Ltd., 12% Sr. Sec. Nts., 9/15/151		315,000		347,288
Intelsat Subsidiary Holding Co. Ltd., 8.50% Sr. Unsec. Nts., 1/15/131		605,000		620,125
Level 3 Financing, Inc., 9.25% Sr. Unsec. Unsub. Nts., 11/1/14		370,000		351,500

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Diversified Telecommunication Services Continued
PAETEC Holding Corp., 9.50% Sr. Unsec. Unsub. Nts., 7/15/15	$	1,410,000		$	1,364,175
Windstream Corp.:
7.875% Sr. Nts., 11/1/171		340,000			337,450
8.625% Sr. Unsec. Unsub. Nts., 8/1/16		1,030,000			1,053,175
Winstar Communications, Inc., 12.75% Sr. Nts., 4/15/102,3,6		1,000,000			10
					5,058,623
Wireless Telecommunication Services—4.6%
Cricket Communications, Inc.:
7.75% Sr. Sec. Unsub. Nts., 5/15/16		640,000			641,600
9.375% Sr. Unsec. Nts., 11/1/14		655,000			661,550
MetroPCS Wireless, Inc., 9.25% Sr. Unsec. Nts., 11/1/14		1,375,000			1,399,063
Nextel Communications, Inc., 7.375% Sr. Nts., Series D, 8/1/15		1,320,000			1,290,300
SBA Telecommunications, Inc.:
8% Sr. Nts., 8/15/161		445,000			467,250
8.25% Sr. Nts., 8/15/191		810,000			862,650
Sprint Capital Corp., 8.75% Nts., 3/15/32		1,270,000			1,203,325
Teligent, Inc., 11.50% Sr. Nts., 12/1/082,3,6		400,000			—
					6,525,738
Utilities—4.8%
Electric Utilities—1.4%
Edison Mission Energy, 7% Sr. Unsec. Nts., 5/15/17		1,415,000			1,124,925
Energy Future Holdings Corp., 10.875% Sr. Unsec. Nts., 11/1/17		615,000			505,838
Texas Competitive Electric Holdings Co. LLC, 10.25% Sr. Unsec. Nts., Series A, 11/1/15		510,000			415,650
					2,046,413
Energy Traders—3.4%
AES Corp. (The), 8% Sr. Unsec. Unsub. Nts., 10/15/17		270,000			278,438
Dynegy Holdings, Inc., 8.375% Sr. Unsec. Nts., 5/1/16		1,375,000			1,313,125
Mirant North America LLC, 7.375% Sr. Unsec. Nts., 12/31/13		590,000			586,313
NRG Energy, Inc.:
7.375% Sr. Nts., 1/15/17		1,015,000			1,020,075
7.375% Sr. Nts., 2/1/16		695,000			697,606
Reliant Energy, Inc., 7.625% Sr. Unsec. Unsub. Nts., 6/15/14		925,000			920,375
					4,815,932
Total Corporate Bonds and Notes (Cost $133,636,425)					135,352,353
	Shares			Value
Preferred Stocks—0.0%
AmeriKing, Inc., 13% Cum. Sr. Exchangeable, Non-Vtg.3,4,6		13,764		$	—
Eagle-Picher Holdings, Inc., 11.75% Cum. Exchangeable, Series B, Non-Vtg.3,6		8,000			—
ICG Holdings, Inc., 14.25% Exchangeable, Non-Vtg.3,4,6		342			—
Total Preferred Stocks (Cost $1,097,476)					—
Common Stocks—1.0%
American Media, Inc.3,6		9,424			94
Charter Communications, Inc., Cl. A6		40,830			1,449,447
Global Aero Logistics, Inc.3,6		4,647			4,647
Orbcomm, Inc.6		1,127			3,043
Total Common Stocks (Cost $1,138,376)					1,457,231
	Units
Rights, Warrants and Certificates—0.0%
Global Aero Logistics, Inc. Wts., Strike Price $10, Exp. 2/28/113,6 (Cost $4,339)		570			6
	Principal
	Amount
Loan Participations—2.1%
CIT Group, Inc., Sr. Sec. Credit Facilities Term Loan, 7.50%, 1/18/125,9	$	1,255,000			1,289,513
Nuveen Investments, Inc., Sr. Sec. Credit Facilities 2nd Lien
Term Loan, 12.50%, 7/20/153,5		1,625,000			1,700,156
Total Loan Participations (Cost $2,756,194)					2,989,669
	Shares
Investment Companies—1.5%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%10,11		61,877			61,877
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%10,12		2,092,310			2,092,310
Total Investment Companies (Cost $2,154,187)					2,154,187
Total Investments, at Value (Cost $140,786,997)		98.8	%		141,953,446
Other Assets Net of Liabilities		1.2			1,662,468
Net Assets		100.0	%	$	143,615,914

Footnotes to Statement of Investments

1.	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 $36,919,767 or 25.71% of the Fund’s net assets as of December 31, 2009.
2.	Issue is in default. See Note 1 of accompanying Notes.
3.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $4,746,898, which represents 3.31%. See Note 6 of accompanying Notes.
4.	Interest or dividend is paid-in-kind, when applicable.
5.	Represents the current interest rate for a variable or increasing rate security.
6.	Non-income producing security.
7.	Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date.
8.	Zero coupon bond reflects effective yield on the date of purchase.
9.	When-issued security or delayed delivery to be delivered and settled after December 31, 2009. See Note 1 of accompanying Notes.
10.	Rate shown is the 7-day yield as of December 31, 2009.
11.	Interest rate is less than 0.0005%.
12.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
Oppenheimer Institutional Money Market Fund, Cl. E		76,839,590		156,127,613		230,874,893		2,092,310
					Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E					$	2,092,310	$	240,830

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)
2)	Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)
3)	Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

						Level 3—
	Level 1—		Level 2—			Significant
	Unadjusted		Other Significant			Unobservable
	Quoted Prices		Observable Inputs			Inputs		Value
Assets Table
Investments, at Value:
Corporate Bonds and Notes	$	—	$	135,352,353		$	—	$	135,352,353
Preferred Stocks		—		—			—		—
Common Stocks		1,452,490		94			4,647		1,457,231
Rights, Warrants and Certificates		—		—			6		6
Loan Participations		—		2,989,669			—		2,989,669
Investment Companies		2,154,187		—			—		2,154,187
Total Assets	$	3,606,677	$	138,342,116		$	4,653	$	141,953,446
Liabilities Table
Other Financial Instruments:
Depreciated swaps, at value	$	—	$	(26,579	)	$	—	$	(26,579	)
Total Liabilities	$	—	$	(26,579	)	$	—	$	(26,579	)

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments Continued

Credit Default Swap Contracts as of December 31, 2009 are as follows:

									Upfront
		Notional		Pay/					Payment
Reference Entity/	Buy/Sell Credit	Amount		Receive			Termination		Received/						Unrealized
Swap Counterparty	Protection	(000’s)		Fixed Rate			Date		(Paid)			Value			Depreciation
CDX North America High Yield Index, Series 12:
Credit Suisse International	Buy	$	2,820		5.00	%		6/20/14	$	(337,225	)	$	(11,391	)	$	348,616
JPMorgan Chase Bank NA, NY Branch	Buy		1,880		5.00			6/20/14		(225,731	)		(7,594	)		233,325
Morgan Stanley & Co. International Ltd.	Buy		1,880		5.00			6/20/14		(227,167	)		(7,594	)		234,761
	Total		6,580							(790,123	)		(26,579	)		816,702
Grand Total Buys										(790,123	)		(26,579	)		816,702
Grand Total Sells										—			—			—
Total Credit Default Swaps									$	(790,123	)	$	(26,579	)	$	816,702

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, 2009 is as follows:

		Notional
	Swap Type from	Amount
Swap Counterparty	Fund Perspective	(000’s)		Value
Credit Suisse International	Credit Default Buy Protection	$	2,820	$	(11,391	)
JPMorgan Chase Bank NA, NY Branch	Credit Default Buy Protection		1,880		(7,594	)
Morgan Stanley & Co. International Ltd.	Credit Default Buy Protection		1,880		(7,594	)
		Total Swaps		$	(26,579	)

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $138,694,687)	$	139,861,136
Affiliated companies (cost $2,092,310)		2,092,310
		141,953,446
Receivables and other assets:
Interest, dividends and principal paydowns		2,990,649
Investments sold		496,903
Shares of beneficial interest sold		44,340
Other		12,964
Total assets		145,498,302
Liabilities
Depreciated swaps, at value (upfront payments paid $790,123)		26,579
Payables and other liabilities:
Investments purchased (including $1,287,000 purchased on a when-issued or delayed delivery basis)		1,644,262
Shares of beneficial interest redeemed		67,503
Distribution and service plan fees		43,824
Shareholder communications		43,062
Transfer and shareholder servicing agent fees		12,135
Trustees’ compensation		9,709
Other		35,314
Total liabilities		1,882,388
Net Assets	$	143,615,914
Composition of Net Assets
Par value of shares of beneficial interest	$	72,278
Additional paid-in capital		422,445,355
Accumulated net investment income		10,001,371
Accumulated net realized loss on investments and foreign currency transactions		(289,252,837	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		349,747
Net Assets	$	143,615,914
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 $67,385,008 and 34,007,196 shares of beneficial interest outstanding)	$	1.98
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $64,439,840 and 32,387,936 shares of beneficial interest outstanding)	$	1.99
Class 3 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $4,683,987 and 2,349,189 shares of beneficial interest outstanding)	$	1.99
Class 4 Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $7,107,079 and 3,533,235 shares of beneficial interest outstanding)	$	2.01

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Interest	$	13,843,257
Dividends:
Unaffiliated companies		3,439
Affiliated companies		240,830
Fee income		2,922
Total investment income		14,090,448
Expenses
Management fees		1,019,105
Distribution and service plan fees:
Service shares		135,505
Class 4 shares		15,712
Transfer and shareholder servicing agent fees:
Non-Service shares		46,963
Service shares		42,650
Class 3 shares		2,928
Class 4 shares		3,302
Shareholder communications:
Non-Service shares		46,699
Service shares		35,736
Class 3 shares		2,324
Class 4 shares		4,275
Trustees’ compensation		10,634
Custodian fees and expenses		903
Other		70,595
Total expenses		1,437,331
Less reduction to custodian expenses		(241	)
Less waivers and reimbursements of expenses		(525,100	)
Net expenses		911,990
Net Investment Income		13,178,458
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment from unaffiliated companies		(70,636,631	)
Closing and expiration of futures contracts		(46,063	)
Foreign currency transactions		332,428
Swap contracts		(50,484,558	)
Net realized loss		(120,834,824	)
Net change in unrealized appreciation (depreciation) on:
Investments		97,424,857
Translation of assets and liabilities denominated in foreign currencies		(312,520	)
Swap contracts		36,977,935
Net change in unrealized appreciation		134,090,272
Net Increase in Net Assets Resulting from Operations	$	26,433,906

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	13,178,458		$	31,706,472
Net realized loss		(120,834,824	)		(241,823,086	)
Net change in unrealized appreciation (depreciation)		134,090,272			(101,899,131	)
Net increase (decrease) in net assets resulting from operations		26,433,906			(312,015,745	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		—			(16,471,157	)
Service shares		—			(8,570,925	)
Class 3 shares		—			(292,606	)
Class 4 shares		—			(611,268	)
		—			(25,945,956	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		(54,571,861	)		19,699,234
Service shares		7,675,335			5,209,593
Class 3 shares		2,128,095			1,808,854
Class 4 shares		1,786,116			4,859,490
		(42,982,315	)		31,577,171
Net Assets
Total decrease		(16,548,409	)		(306,384,530	)
Beginning of period		160,164,323			466,548,853
End of period (including accumulated net investment income of $10,001,371 and $35,234,239, respectively)	$	143,615,914		$	160,164,323

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	1.58		$	7.95		$	8.55		$	8.44		$	8.80
Income (loss) from investment operations:
Net investment income1		.17			.54			.57			.58			.57
Net realized and unrealized gain (loss)		.23			(6.44	)		(.56	)		.17			(.37	)
Total from investment operations		.40			(5.90	)		.01			.75			.20
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.47	)		(.61	)		(.64	)		(.56	)
Net asset value, end of period	$	1.98		$	1.58		$	7.95		$	8.55		$	8.44
Total Return, at Net Asset Value2		25.32	%		(78.67	)%		(0.10	)%		9.42	%		2.31	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	67,385		$	111,040		$	294,819		$	361,445		$	384,726
Average net assets (in thousands)	$	71,782		$	211,186		$	335,702		$	365,154		$	444,477
Ratios to average net assets:3
Net investment income		9.78	%		9.30	%		6.96	%		7.05	%		6.79	%
Total expenses		0.94	%4		0.80	%4		0.75	%4		0.74	%4		0.75	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.57	%		0.78	%		0.74	%		0.74	%		0.75	%
Portfolio turnover rate		128	%		53	%5		67	%5		57	%		64	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.96	%
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.

Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	1.58		$	7.89		$	8.50		$	8.39		$	8.76
Income (loss) from investment operations:
Net investment income1		.16			.54			.55			.56			.55
Net realized and unrealized gain (loss)		.25			(6.40	)		(.57	)		.17			(.38	)
Total from investment operations		.41			(5.86	)		(.02	)		.73			.17
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.45	)		(.59	)		(.62	)		(.54	)
Net asset value, end of period	$	1.99		$	1.58		$	7.89		$	8.50		$	8.39
Total Return, at Net Asset Value2		25.95	%		(78.57	)%		(0.47	)%		9.23	%		2.01	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	64,440		$	43,375		$	157,333		$	173,299		$	155,617
Average net assets (in thousands)	$	54,202		$	116,236		$	169,569		$	160,703		$	141,287
Ratios to average net assets:3
Net investment income		9.60	%		9.13	%		6.71	%		6.80	%		6.54	%
Total expenses		1.21	%4		1.05	%4		1.01	%4		1.00	%4		1.00	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.80	%		1.03	%		1.00	%		1.00	%		1.00	%
Portfolio turnover rate		128	%		53	%5		67	%5		57	%		64	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.23	%
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.

FINANCIAL HIGHLIGHTS Continued

Class 3 Shares    Year Ended December 31,	2009			2008			20071
Per Share Operating Data
Net asset value, beginning of period	$	1.57		$	7.98		$	8.26
Income (loss) from investment operations:
Net investment income2		.17			.56			.37
Net realized and unrealized gain (loss)		.25			(6.50	)		(.65	)
Total from investment operations		.42			(5.94	)		(.28	)
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.47	)		—
Net asset value, end of period	$	1.99		$	1.57		$	7.98
Total Return, at Net Asset Value3		26.75	%		(78.89	)%		(3.39	)%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	4,684		$	1,582		$	4,921
Average net assets (in thousands)	$	3,568		$	5,292		$	3,750
Ratios to average net assets:4
Net investment income		9.86	%		9.29	%		6.90	%
Total expenses5		0.97	%		0.80	%		0.76	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.53	%		0.78	%		0.75	%
Portfolio turnover rate		128	%		53	%6		67	%6

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 initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.99	%
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.

Class 4 Shares    Year Ended December 31,	2009			2008			20071
Per Share Operating Data
Net asset value, beginning of period	$	1.59		$	7.97		$	8.26
Income (loss) from investment operations:
Net investment income2		.16			.54			.36
Net realized and unrealized gain (loss)		.26			(6.46	)		(.65	)
Total from investment operations		.42			(5.92	)		(.29	)
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			(.46	)		—
Net asset value, end of period	$	2.01		$	1.59		$	7.97
Total Return, at Net Asset Value3		26.42	%		(78.63	)%		(3.51	)%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	7,107		$	4,167		$	9,476
Average net assets (in thousands)	$	6,285		$	10,658		$	7,201
Ratios to average net assets:4
Net investment income		9.62	%		9.00	%		6.61	%
Total expenses5		1.19	%		1.07	%		1.05	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.80	%		1.05	%		1.04	%
Portfolio turnover rate		128	%		53	%6		67	%6

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 initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.21	%
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.

     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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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, 2009, 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	$	1,287,000

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.

     Forward roll transactions may be deemed to entail embedded leverage since the Fund purchases mortgage-related securities with extended settlement dates rather than paying for the securities under a normal settlement cycle. This embedded leverage increases the Fund’s market value of investments relative to its net assets which can incrementally increase the volatility of the Fund’s performance. Forward roll transactions can be replicated over multiple settlement periods.

     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; and 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.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

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. Information concerning securities in default as of December 31, 2009 is as follows:

Cost	$	8,750,458
Market Value	$	630,501
Market Value as a % of Net Assets		0.44	%

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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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
					Securities and
Undistributed	Undistributed		Accumulated		Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3,4,5		Tax Purposes
$10,367,328	$	—	$	288,235,313	$	712,419

1. As of December 31, 2009, the Fund had $286,774,366 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, 2009, details of the capital loss carryforwards were as follows:

Expiring
2010	$	56,061,391
2011		8,529,303
2012		128,504
2016		48,495,519
2017		173,559,649
Total	$	286,774,366

2.	As of December 31, 2009, the Fund had $1,460,947 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2018.
3.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
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, 2009, $22,696,701 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

	Reduction		Reduction
	to Accumulated		to Accumulated Net
Reduction to Paid-in	Net Investment		Realized Loss on
Capital	Income		Investments
$22,697,932	$	38,411,326	$	61,109,258

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	—	$	25,945,956

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

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, 2009 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	$	141,883,678
Federal tax cost of other investments		755,608
Total federal tax cost	$	142,639,286
Gross unrealized appreciation	$	11,521,425
Gross unrealized depreciation		(12,233,844	)
Net unrealized depreciation	$	(712,419	)

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, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		20,776,611		$	33,067,312			46,686,845		$	99,443,229
Dividends and/or distributions reinvested		—			—			2,553,668			16,471,157
Redeemed		(56,972,656	)		(87,639,173	)		(16,133,552	)		(96,215,152	)
Net increase (decrease)		(36,196,045	)	$	(54,571,861	)		33,106,961		$	19,699,234
Service Shares
Sold		10,597,049		$	17,230,535			11,108,688		$	27,272,759
Dividends and/or distributions reinvested		—			—			1,335,035			8,570,925
Redeemed		(5,702,302	)		(9,555,200	)		(4,887,160	)		(30,634,091	)
Net increase		4,894,747		$	7,675,335			7,556,563		$	5,209,593
Class 3 Shares
Sold		2,785,296		$	4,527,494			1,353,807		$	7,210,645
Dividends and/or distributions reinvested		—			—			45,225			292,606
Redeemed		(1,445,037	)		(2,399,399	)1		(1,006,838	)		(5,694,397	)2
Net increase		1,340,259		$	2,128,095			392,194		$	1,808,854
Class 4 Shares
Sold		3,615,090		$	5,889,866			2,743,234		$	12,307,065
Dividends and/or distributions reinvested		—			—			94,331			611,268
Redeemed		(2,698,668	)		(4,103,750	)1		(1,409,411	)		(8,058,843	)2
Net increase		916,422		$	1,786,116			1,428,154		$	4,859,490

1.	Net of redemption fees of $3,548 and $4,585 for Class 3 and Class 4 shares, respectively.
2.	Net of redemption fees of $3,056 and $11,199 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 IMMF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	119,213,984	$	133,605,164

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
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. For the year ended December 31, 2009, the Fund paid $86,434 to OFS for services to the Fund.

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 daily 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 Manager had 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 was in the fifth quintile of the Fund’s Lipper peer group. During the year ended December 31, 2009, the Manager waived $89,094 in advisory fees as a result of this voluntary arrangement.

     Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.26% of the Fund’s average annual net assets. During the year ended December 31, 2009, the Manager waived $259,162. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be withdrawn at any time.

     Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.75% for Non-Service and Class 3 shares and 1.00% for Service and Class 4 shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $70,878, $69,417, $5,175, and $6,717 for Non-Service, Service, Class 3 and Class 4 shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived $24,657 for IMMF management fees.

Capital Stock Activity. On December 17, 2008, the Manager purchased Non-Service Shares of the Fund for $50,000,000. As of that date, the Manager owned approximately 51% of the Non-Service Shares representing approximately 37% of the Fund’s net assets. The Manager redeemed this investment on February 25, 2009. The proceeds of the redemption were $48,344,371.

5. Risk Exposures and the Use of Derivative Instruments

The Fund’s investment objectives not only permit the Fund to purchase investment securities, they also allow the Fund to enter into various types of derivatives contracts, including, but not limited to, futures contracts, forward foreign currency exchange contracts, credit default swaps, interest rate swaps, total return swaps, and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase, decrease, or change the level or types of exposure to market risk factors. Central to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity and debt securities: they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Fund to pursue its objectives more quickly and efficiently than if it were to make direct purchases or sales of securities capable of effecting a similar response to market factors.

Market Risk Factors. In accordance with its investment objectives, the Fund may use derivatives to increase or decrease its exposure to one or more of the following market risk factors defined below:

Commodity Risk. Commodity risk relates to the change in value of commodities or commodity indexes as they relate to increases or decreases in the commodities market. Commodities are physical assets that have tangible properties. Examples of these types of assets are crude oil, heating oil, metals, livestock, and agricultural products.

Credit Risk. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds.

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Foreign Exchange Rate Risk. Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency.

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

Volatility Risk. Volatility risk refers to the magnitude of the movement, but not the direction of the movement, in a financial instrument’s price over a defined time period. Large increases or decreases in a financial instrument’s price over a relative time period typically indicate greater volatility risk, while small increases or decreases in its price typically indicate lower volatility risk.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

     Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Fund to increase its market value exposure relative to its net assets and can substantially increase the volatility of the Fund’s performance.

     Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Typically, the associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Counterparty Credit Risk. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction. To reduce this risk the Fund has entered into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) master agreements, which allow the Fund to net unrealized appreciation and depreciation for positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty. In addition, the Fund may require that certain counterparties post cash and/or securities in collateral accounts to cover their net payment obligations for those derivative contracts subject to ISDA master agreements. If the counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Fund.

     As of December 31, 2009 the Fund has not required certain counterparties to post collateral.

Credit Related Contingent Features. The Fund has several credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s Net Asset Value or NAV. The contingent features are established within the Fund’s ISDA master agreements which govern positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty.

     As of December 31, 2009, the aggregate fair value of derivative instruments with credit related contingent features in a net liability position was $26,579 for which collateral was not posted by the Fund. If a contingent feature would have been triggered as of December 31, 2009, the Fund could have been required to pay this amount in cash to its counterparties. If the Fund fails to perform under these contracts and agreements, the cash and/or securities posted as collateral will be made available to the counterparty. Cash posted as collateral for these contract, if any, is reported on the Statement of Assets and Liabilities; securities posted as collateral, if any, are reported on the Statement of Investments.

Valuations of derivative instruments as of December 31, 2009 are as follows:

	Liability Derivatives
	Statement
Derivatives not	of Assets
Accounted for as	and Liabilities
Hedging Instruments	Location	Value
Credit contracts	Depreciated swaps, at value	$	26,579

The effect of derivative instruments on the Statement of Operations is as follows:

Amount of Realized Gain or Loss Recognized on Derivatives
Derivatives not	Closing and
Accounted for as	expiration of
Hedging Instruments	futures contracts			Swap contracts			Total
Credit contracts	$	—		$	(47,943,630	)	$	(47,943,630	)
Interest rate contracts		(46,063	)		(2,540,928	)		(2,586,991	)
Total	$	(46,063	)	$	(50,484,558	)	$	(50,530,621	)

Amount of Change in Unrealized Gain or Loss Recognized on Derivatives
Derivatives not
Accounted for as
Hedging Instruments	Swap contracts
Credit contracts	$	34,562,372
Interest rate contracts		2,415,563
Total	$	36,977,935

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.

     The Fund has purchased futures contracts on various bonds and notes to increase exposure to interest rate risk.

     The Fund has sold futures contracts on various bonds and notes to decrease exposure to interest rate risk.

     Additional associated 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, 2009, the Fund had no outstanding futures contracts.

Swap Contracts

The Fund may enter into swap contract agreements with a counterparty to exchange a series of cash flows based on either specified reference rates, or the occurrence of a credit event, over a specified period. Such contracts may include interest rate, equity, debt, index, total return, credit and currency swaps.

     Swaps are marked to market daily using primarily quotations from pricing services, counterparties and brokers. Swap contracts are reported on a schedule following the Statement of Investments. The values of swap contracts are aggregated by positive and negative values and disclosed separately on the Statement of Assets and Liabilities by contracts in unrealized appreciation and depreciation positions. Upfront payments paid or received, if any, affect the value of the respective swap. Therefore, to determine the unrealized appreciation (depreciation) on swaps, upfront payments paid should be subtracted from, while upfront payments received should be added to, the value of contracts reported as an asset on the Statement of Assets and Liabilities. Conversely, upfront payments paid should be added to, while upfront payments received should be subtracted from the value of contracts reported as a liability. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is 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. The Fund also records any periodic payments received from (paid to) the counterparty, including at termination, under such contracts as realized gain (loss) on the Statement of Operations.

     As of December 31, 2009, the Fund had no such interest rate swap agreements outstanding.

     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.

     Total return swap contracts are exposed to the market risk factor of the specific underlying financial instrument or index. Total return swaps are less standard in structure than other types of swaps and can isolate and, or, include multiple types of market risk factors including equity risk, credit risk, and interest rate risk.

     The Fund has entered into total return swaps to increase exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the Fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

     The Fund has entered into total return swaps to decrease exposure to the credit risk of various indexes or basket of securities. These credit risk related total return swaps require the fund to pay, or receive payments, to, or from, the counterparty based on the movement of credit spreads of the related indexes.

     Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

     As of December 31, 2009, the Fund had no such total return swap agreements outstanding.

6. Illiquid Securities

As of December 31, 2009, 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. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

8. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

NOTES TO FINANCIAL STATEMENTS Continued

8. Pending Litigation Continued

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Main Street Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Main Street Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Main Street Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

KPMG llp
Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Shares		Value
Common Stocks—99.0%
Consumer Discretionary—10.9%
Diversified Consumer Services—0.6%
H&R Block, Inc.		438,694	$	9,923,258
Hotels, Restaurants & Leisure—3.1%
Hyatt Hotels Corp., Cl. A1		294,020		8,764,736
McDonald’s Corp.		686,016		42,834,839
				51,599,575
Media—4.4%
Grupo Televisa SA, Sponsored GDR		360,823		7,490,685
McGraw-Hill Cos., Inc. (The)		941,801		31,559,752
Time Warner Cable, Inc.		509,914		21,105,340
Washington Post Co. (The), Cl. B		25,459		11,191,776
				71,347,553
Specialty Retail—2.8%
Advance Auto Parts, Inc.		48,361		1,957,653
AutoZone, Inc.1		73,550		11,626,049
Best Buy Co., Inc.		442,271		17,452,014
GameStop Corp., Cl. A1		651,700		14,298,298
				45,334,014
Consumer Staples—10.3%
Food & Staples Retailing—0.8%
Wal-Mart Stores, Inc.		234,566		12,537,553
Food Products—3.4%
General Mills, Inc.		612,225		43,351,652
Unilever NV, NY Shares		363,900		11,764,887
				55,116,539
Household Products—1.2%
Colgate-Palmolive Co.		240,264		19,737,688
Personal Products—1.0%
Mead Johnson Nutrition Co., Cl. A		371,912		16,252,554
Tobacco—3.9%
Philip Morris International, Inc.		1,334,399		64,304,688
Energy—12.0%
Energy Equipment & Services—1.4%
Schlumberger Ltd.		354,200		23,054,878
Oil, Gas & Consumable Fuels—10.6%
Chevron Corp.		674,229		51,908,891
Enterprise Products Partners LP		534,470		16,787,703
Exxon Mobil Corp.		333,985		22,774,437
Noble Energy, Inc.		236,600		16,850,652
Occidental Petroleum Corp.		621,900		50,591,565
Plains All American Pipeline LP		248,011		13,107,381
				172,020,629
Financials—12.7%
Capital Markets—2.1%
State Street Corp.		764,992		33,307,752
Commercial Banks—2.7%
KeyCorp		890,200		4,940,610
Marshall & Ilsley Corp.		945,400		5,152,430
Regions Financial Corp.		1,170,778		6,193,416
SunTrust Banks, Inc.		248,700		5,046,123
U.S. Bancorp		1,020,686		22,975,642
				44,308,221
Consumer Finance—2.0%
American Express Co.		818,070		33,148,196
Diversified Financial Services—3.0%
Bank of America Corp.		1,053,996		15,873,180
Citigroup, Inc.		7,460,100		24,692,931
Leucadia National Corp.1		347,829		8,274,852
				48,840,963
Insurance—2.9%
Chubb Corp.		528,708		26,001,859
Hartford Financial Services Group, Inc. (The)		195,600		4,549,656
Lincoln National Corp.		667,802		16,614,914
				47,166,429
Health Care—13.9%
Biotechnology—3.1%
Amgen, Inc.1		451,122		25,519,972
Celgene Corp.1		463,852		25,827,279
				51,347,251
Health Care Equipment & Supplies—0.5%
Covidien plc		172,600		8,265,814
Health Care Providers & Services—4.1%
Laboratory Corp. of America Holdings1		208,949		15,637,743
Medco Health Solutions, Inc.1		476,558		30,456,822
WellPoint, Inc.1		351,900		20,512,251
				66,606,816
Pharmaceuticals—6.2%
Abbott Laboratories		644,980		34,822,470
Merck & Co., Inc.		1,204,098		43,997,741
Teva Pharmaceutical Industries Ltd., Sponsored ADR		383,300		21,533,794
				100,354,005

STATEMENT OF INVESTMENTS Continued

	Shares			Value
Industrials—12.8%
Aerospace & Defense—2.6%
Precision Castparts Corp.		240,500		$	26,539,175
United Technologies Corp.		227,588			15,796,883
					42,336,058
Air Freight & Logistics—1.0%
United Parcel Service, Inc., Cl. B		286,800			16,453,716
Commercial Services & Supplies—2.0%
Republic Services, Inc.		1,146,664			32,462,058
Construction & Engineering—0.9%
KBR, Inc.		745,954			14,173,126
Industrial Conglomerates—4.3%
General Electric Co.		2,083,800			31,527,894
Tyco International Ltd.		1,053,850			37,601,368
					69,129,262
Professional Services—1.2%
Verisk Analytics, Inc., Cl. A1		665,680			20,156,790
Road & Rail—0.8%
Union Pacific Corp.		213,681			13,654,216
Information Technology—18.1%
Communications Equipment—2.7%
QUALCOMM, Inc.		965,431			44,660,838
Computers & Peripherals—3.2%
Apple, Inc.1		248,982			52,500,345
Internet Software & Services—4.3%
eBay, Inc.1		1,619,605			38,125,502
Google, Inc., Cl. A1		52,070			32,282,359
					70,407,861
IT Services—3.5%
Accenture plc, Cl. A		212,100			8,802,150
Hewitt Associates, Inc.1		410,203			17,335,179
MasterCard, Inc., Cl. A		66,100			16,920,278
Western Union Co.		725,089			13,667,928
					56,725,535
Software—4.4%
Adobe Systems, Inc.1		408,576			15,027,425
Check Point Software Technologies Ltd.1		494,280			16,746,206
Microsoft Corp.		1,287,657			39,260,662
					71,034,293
Materials—3.2%
Chemicals—2.3%
Monsanto Co.		193,699			15,834,893
Praxair, Inc.		264,800			21,266,088
					37,100,981
Containers & Packaging—0.9%
Sealed Air Corp.		659,671			14,420,408
Telecommunication Services—1.6%
Wireless Telecommunication Services—1.6%
America Movil SAB de CV, ADR, Series L		566,096			26,595,190
Utilities—3.5%
Energy Traders—2.0%
AES Corp. (The)1		2,518,300			33,518,573
Multi-Utilities—1.5%
Public Service Enterprise Group, Inc.		717,387			23,853,117
Total Common Stocks (Cost $1,351,924,481)					1,613,756,743
Investment Companies—0.2%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%2,3		239,484			239,484
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%2,4		2,607,806			2,607,806
Total Investment Companies (Cost $2,847,290)					2,847,290
Total Investments, at Value (Cost $1,354,771,771)		99.2	%		1,616,604,033
Other Assets Net of Liabilities		0.8			12,243,213
Net Assets		100.0	%	$	1,628,847,246

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Rate shown is the 7-day yield as of December 31, 2009.
3.	Interest rate is less than 0.0005%.
4.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
OFI Liquid Assets Fund, LLC		93,229,008		463,250,677		556,479,685		—
Oppenheimer Institutional Money Market Fund, Cl. E		7,043,996		412,189,438		416,625,628		2,607,806

	Value		Income
OFI Liquid Assets Fund, LLC	$	—	$	615,180	a
Oppenheimer Institutional Money Market Fund, Cl. E		2,607,806		81,831
	$	2,607,806	$	697,011

a. Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value
Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	178,204,400	$	—	$	—	$	178,204,400
Consumer Staples		167,949,022		—		—		167,949,022
Energy		195,075,507		—		—		195,075,507
Financials		206,771,561		—		—		206,771,561
Health Care		226,573,886		—		—		226,573,886
Industrials		208,365,226		—		—		208,365,226
Information Technology		295,328,872		—		—		295,328,872
Materials		51,521,389		—		—		51,521,389
Telecommunication Services		26,595,190		—		—		26,595,190
Utilities		57,371,690		—		—		57,371,690
Investment Companies		2,847,290		—		—		2,847,290
Total Assets	$	1,616,604,033	$	—	$	—	$	1,616,604,033

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $1,352,163,965)	$	1,613,996,227
Affiliated companies (cost $2,607,806)		2,607,806
		1,616,604,033
Receivables and other assets:
Investments sold		23,119,865
Dividends		2,618,784
Shares of beneficial interest sold		30,636
Other		28,233
Total assets		1,642,401,551
Liabilities
Payables and other liabilities:
Investments purchased		12,180,537
Distribution and service plan fees		724,083
Shares of beneficial interest redeemed		268,230
Shareholder communications		184,493
Transfer and shareholder servicing agent fees		139,094
Trustees’ compensation		23,911
Other		33,957
Total liabilities		13,554,305
Net Assets	$	1,628,847,246
Composition of Net Assets
Par value of shares of beneficial interest	$	90,091
Additional paid-in capital		1,909,237,561
Accumulated net investment income		17,048,397
Accumulated net realized loss on investments and foreign currency transactions		(559,361,065	)
Net unrealized appreciation on investments		261,832,262
Net Assets	$	1,628,847,246
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 $474,637,621 and 26,104,565 shares of beneficial interest outstanding)	$	18.18
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $1,154,209,625 and 63,986,124 shares of beneficial interest outstanding)	$	18.04

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $21,803)	$	30,338,186
Affiliated companies		81,831
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		17,130
Affiliated companies		615,180
Interest		5,763
Total investment income		31,058,090
Expenses
Management fees		9,599,661
Distribution and service plan fees—Service shares		2,572,759
Transfer and shareholder servicing agent fees:
Non-Service shares		306,251
Service shares		735,316
Shareholder communications:
Non-Service shares		173,292
Service shares		415,656
Trustees’ compensation		50,027
Custodian fees and expenses		9,102
Other		80,039
Total expenses		13,942,103
Less waivers and reimbursements of expenses		(16,605	)
Net expenses		13,925,498
Net Investment Income		17,132,592
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments from unaffiliated companies		(277,466,378	)
Foreign currency transactions		(9,781	)
Net realized loss		(277,476,159	)
Net change in unrealized appreciation on investments		638,505,737
Net Increase in Net Assets Resulting from Operations	$	378,162,170

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	17,132,592		$	24,773,186
Net realized loss		(277,476,159	)		(267,651,680	)
Net change in unrealized appreciation (depreciation)		638,505,737			(632,729,270	)
Net increase (decrease) in net assets resulting from operations		378,162,170			(875,607,764	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(8,430,011	)		(10,725,797	)
Service shares		(16,363,358	)		(15,635,174	)
		(24,793,369	)		(26,360,971	)
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		(56,849,676	)		(112,358,225	)
Service shares		(120,134,918	)		223,159,438
		(176,984,594	)		110,801,213
Net Assets
Total increase (decrease)		176,384,207			(919,953,741	)
Beginning of period		1,452,463,039			2,372,416,780
End of period (including accumulated net investment income of $17,048,397 and $24,769,636, respectively)	$	1,628,847,246		$	1,452,463,039

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	14.56		$	25.61		$	24.78		$	21.79		$	20.84
Income (loss) from investment operations:
Net investment income1		.21			.29			.33			.27			.26
Net realized and unrealized gain (loss)		3.71			(9.64	)		.75			2.98			.97
Total from investment operations		3.92			(9.35	)		1.08			3.25			1.23
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.30	)		(.32	)		(.25	)		(.26	)		(.28	)
Distributions from net realized gain		—			(1.38	)		—			—			—
Total dividends and/or distributions to shareholders		(.30	)		(1.70	)		(.25	)		(.26	)		(.28	)
Net asset value, end of period	$	18.18		$	14.56		$	25.61		$	24.78		$	21.79
Total Return, at Net Asset Value2		28.29	%		(38.47	)%		4.43	%		15.03	%		5.98	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	474,637		$	432,360		$	907,727		$	1,046,146		$	1,121,476
Average net assets (in thousands)	$	430,517		$	670,994		$	1,006,655		$	1,054,522		$	1,156,299
Ratios to average net assets:3
Net investment income		1.35	%		1.42	%		1.28	%		1.19	%		1.26	%
Total expenses		0.78	%4		0.66	%4		0.65	%4		0.66	%4		0.67	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.78	%		0.66	%		0.65	%		0.66	%		0.67	%
Portfolio turnover rate		128	%		132	%		111	%		100	%		88	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.78	%
Year Ended December 31, 2008	0.66	%
Year Ended December 31, 2007	0.65	%
Year Ended December 31, 2006	0.66	%

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS Continued

Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	14.42		$	25.38		$	24.58		$	21.63		$	20.70
Income (loss) from investment operations:
Net investment income1		.17			.24			.26			.22			.21
Net realized and unrealized gain (loss)		3.70			(9.56	)		.75			2.95			.96
Total from investment operations		3.87			(9.32	)		1.01			3.17			1.17
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.25	)		(.26	)		(.21	)		(.22	)		(.24	)
Distributions from net realized gain		—			(1.38	)		—			—			—
Total dividends and/or distributions to shareholders		(.25	)		(1.64	)		(.21	)		(.22	)		(.24	)
Net asset value, end of period	$	18.04		$	14.42		$	25.38		$	24.58		$	21.63
Total Return, at Net Asset Value2		27.99	%		(38.63	)%		4.15	%		14.76	%		5.74	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,154,210		$	1,020,103		$	1,464,690		$	1,099,293		$	598,348
Average net assets (in thousands)	$	1,029,909		$	1,268,430		$	1,315,488		$	810,181		$	462,272
Ratios to average net assets:3
Net investment income		1.10	%		1.20	%		1.03	%		0.95	%		1.02	%
Total expenses		1.03	%4		0.91	%4		0.90	%4		0.91	%4		0.91	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.03	%		0.91	%		0.90	%		0.91	%		0.91	%
Portfolio turnover rate		128	%		132	%		111	%		100	%		88	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.03	%
Year Ended December 31, 2008	0.91	%
Year Ended December 31, 2007	0.90	%
Year Ended December 31, 2006	0.91	%

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 from equity and 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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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.

Investment 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. When applicable, the Fund’s investment in LAF is included in the Statement of Investments. Shares of LAF are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

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
					Appreciation
					Based on Cost
Undistributed	Undistributed		Accumulated		of Securities and Other
Net Investment	Long-Term		Loss		Investments for Federal
Income	Gain		Carryforward1,2,3		Income Tax Purposes
$16,050,093	$	—	$	550,173,657	$	253,667,383

1. As of December 31, 2009, the Fund had $550,173,657 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, 2009, details of the capital loss carryforwards were as follows:

Expiring
2016	$	217,993,206
2017		332,180,451
Total	$	550,173,657

2.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
3.	During the fiscal year ended December 31, 2008, 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

	Reduction to
Reduction to	Accumulated Net
Accumulated Net	Realized Loss
Investment Income	on Investments
$60,462	$	60,462

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	24,793,369	$	48,772,351
Long-term capital gain		—		106,374,839
Total	$	24,793,369	$	155,147,190

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, 2009 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.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

Federal tax cost of securities	$	1,362,936,650
Gross unrealized appreciation	$	256,880,152
Gross unrealized depreciation		(3,212,769	)
Net unrealized appreciation	$	253,667,383

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, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		2,817,732		$	41,817,781			4,118,231		$	80,935,200
Dividends and/or distributions reinvested		776,960			8,430,011			2,774,941			57,330,270
Redeemed		(7,176,221	)		(107,097,468	)		(12,645,946	)		(250,623,695	)
Net decrease		(3,581,529	)	$	(56,849,676	)		(5,752,774	)	$	(112,358,225	)
Service Shares
Sold		8,552,121		$	117,291,434			17,273,881		$	299,271,029
Dividends and/or distributions reinvested		1,515,498			16,352,225			4,768,240			97,748,917
Redeemed		(16,800,298	)		(253,778,577	)		(9,024,762	)		(173,860,508	)
Net increase (decrease)		(6,732,679	)	$	(120,134,918	)		13,017,359		$	223,159,438

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 IMMF and LAF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	1,834,666,253	$	2,021,625,599

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. For the year ended December 31, 2009, the Fund paid $904,193 to OFS for services to the Fund.

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 daily 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 May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. This voluntary undertaking may be amended or withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived $16,605 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Foreign currency exchange contracts, if any, are reported on a schedule following the Statement of Investments. These contracts will be valued daily based upon the closing prices of the 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.

     The Fund has purchased and sold foreign currency exchange contracts of different currencies in order to acquire currencies to pay for related foreign securities purchase transactions, or to convert foreign currencies to U.S. dollars from related foreign securities sale transactions. These foreign currency exchange contracts are negotiated at the current spot exchange rate with settlement typically within two business days thereafter.

     Additional associated risk to the Fund includes counterparty credit risk. Counterparty 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, 2009, the Fund held no outstanding forward contracts.

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, 2009, the Fund had no securities on loan.

7. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

8. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Main Street Small Cap Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Main Street Small Cap Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Main Street Small Cap Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Shares		Value
Common Stocks—98.4%
Consumer Discretionary—13.7%
Auto Components—0.2%
Cooper Tire & Rubber Co.		42,520	$	852,526
Spartan Motors, Inc.		21,937		123,505
Standard Motor Products, Inc.1		28,980		246,910
Superior Industries International, Inc.		17,740		271,422
				1,494,363
Distributors—0.1%
Core-Mark Holding Co., Inc.1		26,377		869,386
Diversified Consumer Services—1.3%
Capella Education Co.1		74,220		5,588,766
Career Education Corp.1		23,930		557,808
Corinthian Colleges, Inc.1		53,900		742,203
Hillenbrand, Inc.		7,650		144,126
Jackson Hewitt Tax Service, Inc.1		81,490		358,556
Lincoln Educational Services Corp.1		20,440		442,935
Pre-Paid Legal Services, Inc.		15,921		654,035
Steiner Leisure Ltd.1		31,616		1,257,052
				9,745,481
Hotels, Restaurants & Leisure—2.9%
AFC Enterprises, Inc.1		30,432		248,325
Ambassadors Group, Inc.		29,420		390,992
Ameristar Casinos, Inc.		269,719		4,107,820
Bally Technologies, Inc.1		109,670		4,528,274
Carrols Restaurant Group, Inc.1		28,060		198,384
CEC Entertainment, Inc.1		39,589		1,263,681
Cheesecake Factory, Inc. (The)1		21,970		474,332
Chipotle Mexican Grill, Inc., Cl. A1		26,100		2,300,976
International Speedway Corp., Cl. A		7,730		219,919
Jack in the Box, Inc.1		218,837		4,304,524
P.F. Chang’s China Bistro, Inc.1		43,140		1,635,437
Papa John’s International, Inc.1		54,588		1,275,176
Speedway Motorsports, Inc.		29,919		527,173
				21,475,013
Household Durables—0.7%
American Greetings Corp., Cl. A		27,960		609,248
Blyth, Inc.		30,587		1,031,394
CSS Industries, Inc.		10,310		200,426
Helen of Troy Ltd.1		17,840		436,366
Kid Brands, Inc.1		36,410		159,476
La-Z-Boy, Inc.1		46,000		438,380
National Presto Industries, Inc.		13,191		1,440,853
Tempur-Pedic International, Inc.1		28,423		671,635
				4,987,778
Internet & Catalog Retail—0.5%
HSN, Inc.1		28,426		573,921
NutriSystem, Inc.		23,038		718,094
Ticketmaster Entertainment, Inc.1		164,480		2,009,946
				3,301,961
Leisure Equipment & Products—0.7%
Polaris Industries, Inc.		22,390		976,876
Pool Corp.		157,900		3,012,732
Smith & Wesson Holding Corp.1		32,850		134,357
Sport Supply Group, Inc.		21,050		265,020
Sturm, Ruger & Co., Inc.		116,250		1,127,625
				5,516,610
Media—0.8%
Belo Corp., Cl. A		31,700		172,448
CTC Media, Inc.1		26,990		402,151
Entercom Communications Corp.1		24,140		170,670
Gannett Co., Inc.		25,170		373,775
Harte-Hanks, Inc.		61,765		665,827
Journal Communications, Inc.		47,430		184,503
Lee Enterprises, Inc.1		124,500		432,015
Mediacom Communications Corp.1		32,480		145,186
National CineMedia, Inc.		17,750		294,118
Scholastic Corp.		37,340		1,113,852
Sinclair Broadcast Group, Inc., Cl. A1		126,253		508,800
Valassis Communications, Inc.1		15,740		287,412
Value Line, Inc.		6,707		168,413
Wiley (John) & Sons, Inc., Cl. A		22,030		922,616
				5,841,786
Multiline Retail—0.6%
Big Lots, Inc.1		44,097		1,277,931
Saks, Inc.1		528,400		3,466,304
				4,744,235
Specialty Retail—3.9%
Aeropostale, Inc.1		39,510		1,345,316
Barnes & Noble, Inc.		74,494		1,420,601
Big 5 Sporting Goods Corp.		9,465		162,609
Books-A-Million, Inc.		21,050		141,456
Borders Group, Inc.1		42,612		50,282
Cabela’s, Inc.1		85,193		1,214,852
Cato Corp., Cl. A		77,899		1,562,654
Children’s Place Retail Stores, Inc.1		114,730		3,787,237
Destination Maternity Corp.1		11,350		215,650
Dress Barn, Inc. (The)1		59,294		1,369,691
Finish Line, Inc. (The), Cl. A		73,100		917,405
Group 1 Automotive, Inc.1		28,600		810,810

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Specialty Retail Continued
Gymboree Corp.1		39,348	$	1,711,245
Jo-Ann Stores, Inc.1		7,850		284,484
Jos. A. Banks Clothiers, Inc.1		14,670		618,927
Kirkland’s, Inc.1		109,573		1,903,283
Men’s Wearhouse, Inc. (The)		29,546		622,239
RadioShack Corp.		70,430		1,373,385
Rent-A-Center, Inc.1		71,060		1,259,183
Signet Jewelers Ltd.1		23,120		617,766
Stage Stores, Inc.		129,849		1,604,934
Tractor Supply Co.1		118,340		6,267,286
				29,261,295
Textiles, Apparel & Luxury Goods—2.0%
Carter’s, Inc.1		46,200		1,212,750
Deckers Outdoor Corp.1		8,360		850,379
Fossil, Inc.1		122,247		4,102,609
Perry Ellis International, Inc.1		30,109		453,442
Phillips/Van Heusen Corp.		110,190		4,482,529
Steven Madden Ltd.1		24,087		993,348
Timberland Co., Cl. A1		91,085		1,633,154
UniFirst Corp.		15,394		740,605
				14,468,816
Consumer Staples—2.3%
Beverages—0.1%
Cott Corp.1		93,860		769,652
Food & Staples Retailing—0.2%
Nash Finch Co.		8,870		328,988
Pantry, Inc. (The)1		42,400		576,216
Weis Markets, Inc.		14,766		536,892
				1,442,096
Food Products—1.1%
Agria Corp., ADR1		70,173		219,641
American Italian Pasta Co.1		24,450		850,616
Cal-Maine Foods, Inc.		19,150		652,632
Darling International, Inc.1		167,580		1,404,320
Fresh Del Monte Produce, Inc.1		18,158		401,292
J&J Snack Foods Corp.		5,830		232,967
Lancaster Colony Corp.		15,250		757,925
Overhill Farms, Inc.1		33,740		163,976
TreeHouse Foods, Inc.1		93,160		3,620,198
				8,303,567
Household Products—0.2%
Central Garden & Pet Co., Cl. A1		123,624		1,228,823
Personal Products—0.4%
American Oriental Bioengineering, Inc.1		138,700		644,955
Herbalife Ltd.		45,790		1,857,700
Prestige Brands Holdings, Inc.1		102,040		802,034
				3,304,689
Tobacco—0.3%
Alliance One International, Inc.1		84,170		410,750
Universal Corp.		36,525		1,665,905
				2,076,655
Energy—4.5%
Energy Equipment & Services—2.0%
Acergy SA, Sponsored ADR		115,123		1,797,070
Basic Energy Services, Inc.1		44,170		393,113
Bolt Technology Corp.1		19,400		213,788
Cal Dive International, Inc.1		106,860		807,862
Compagnie Generale de Geophysique-Veritas, Sponsored ADR1		38,620		820,675
Complete Production Services, Inc.1		59,630		775,190
Dawson Geophysical Co.1		21,248		491,041
Geokinetics, Inc.1		22,290		214,430
Gulfmark Offshore, Inc.1		43,596		1,234,203
Matrix Service Co.1		42,063		447,971
Oil States International, Inc.1		46,040		1,808,912
Pioneer Drilling Co.1		52,820		417,278
Rowan Cos., Inc.1		24,690		558,982
Seacor Holdings, Inc.1		18,370		1,400,713
T-3 Energy Services, Inc.1		35,470		904,485
TGC Industries, Inc.1		44,872		175,450
Tidewater, Inc.		28,132		1,348,929
Willbros Group, Inc.1		86,481		1,458,934
				15,269,026
Oil, Gas & Consumable Fuels—2.5%
China Integrated Energy, Inc.1		28,060		197,542
CVR Energy, Inc.1		92,344		633,480
Dominion Resources Black Warrior Trust		14,340		205,779
Encore Acquisition Co.1		5,656		271,601
Gulfport Energy Corp.1		51,680		591,736
Holly Corp.		182,141		4,668,274
Inergy LP		86,400		3,082,752
MarkWest Energy Partners LP		184,318		5,394,988
Pengrowth Energy Trust		30,560		294,293
PrimeEnergy Corp.1		5,544		201,746
Provident Energy Trust		36,830		247,498
Ship Finance International Ltd.		15,443		210,488

	Shares		Value
Oil, Gas & Consumable Fuels Continued
Stone Energy Corp.1		13,410	$	242,051
Teekay Tankers Ltd., Cl. A		65,506		558,766
World Fuel Services Corp.		57,560		1,542,032
				18,343,026
Financials—18.5%
Capital Markets—2.9%
BGC Partners, Inc., Cl. A		79,520		367,382
Fifth Street Finance Corp.		71,690		769,951
Gladstone Investment Corp.		43,320		197,539
Investment Technology Group, Inc.1		17,130		337,461
Knight Capital Group, Inc., Cl. A1		342,226		5,270,280
MF Global Ltd.1		478,374		3,324,699
Oppenheimer Holdings, Inc., Cl. A, Non-Vtg.		15,370		510,591
optionsXpress Holdings, Inc.		177,100		2,736,195
Penson Worldwide, Inc.1		55,632		504,026
Rodman & Renshaw Capital Group, Inc.1		108,720		445,752
Stifel Financial Corp.1		93,230		5,522,945
Tradestation Group, Inc.1		60,478		477,171
Triangle Capital Corp.		17,120		206,981
W.P. Carey & Co. LLC		21,460		593,369
Waddell & Reed Financial, Inc., Cl. A		22,550		688,677
				21,953,019
Commercial Banks—2.8%
Alliance Financial Corp.		8,360		226,974
Banco Latinoamericano de Exportaciones SA, Cl. E		65,500		910,450
Banco Macro SA, ADR		30,495		907,531
Bancolombia SA, Sponsored ADR		22,800		1,037,628
Bank of Marin Bancorp		8,150		265,364
BBVA Banco Frances SA, ADR		31,613		198,846
CapitalSource, Inc.		312,150		1,239,236
Century Bancorp, Inc., Cl. A		9,290		204,659
First of Long Island Corp. (The)2		9,290		234,573
Hancock Holding Co.		91,400		4,002,406
IBERIABANK Corp.		59,900		3,223,219
International Bancshares Corp.		81,419		1,541,262
National Bankshares, Inc.2		7,127		201,623
Northrim BanCorp, Inc.		13,100		221,128
Oriental Financial Group, Inc.		118,301		1,277,651
Santander BanCorp1		25,190		309,333
Sterling Bancshares, Inc.		464,600		2,383,398
Westamerica Bancorp		38,700		2,142,819
				20,528,100
Consumer Finance—1.3%
Advance America Cash Advance Centers, Inc.		154,090		856,740
Cash America International, Inc.		50,807		1,776,213
EZCORP, Inc., Cl. A1		86,940		1,496,237
First Cash Financial Services, Inc.1		69,992		1,553,122
Nelnet, Inc., Cl. A		66,986		1,154,169
Student Loan Corp. (The)		8,410		391,654
World Acceptance Corp.1		66,658		2,388,356
				9,616,491
Diversified Financial Services—1.1%
Encore Capital Group, Inc.1		26,720		464,928
Life Partners Holdings, Inc.		41,747		884,619
MSCI, Inc., Cl. A1		158,740		5,047,932
Portfolio Recovery Associates, Inc.1		34,304		1,539,564
				7,937,043
Insurance—4.8%
Allied World Assurance Holdings Ltd.		21,601		995,158
American Physicians Capital, Inc.		28,625		867,910
American Physicians Service Group, Inc.		7,750		178,793
American Safety Insurance Holdings Ltd.1		13,830		199,844
Amerisafe, Inc.1		66,358		1,192,453
AmTrust Financial Services, Inc.		97,508		1,152,545
Argo Group International Holdings Ltd.1		30,520		889,353
Aspen Insurance Holdings Ltd.		57,510		1,463,630
CNA Surety Corp.1		43,726		651,080
Conseco, Inc.1		248,830		1,244,150
EMC Insurance Group, Inc.		9,600		206,496
Employers Holdings, Inc.		49,820		764,239
Endurance Specialty Holdings Ltd.		36,920		1,374,532
Enstar Group Ltd.1		11,960		873,319
FBL Financial Group, Inc., Cl. A		32,700		605,604
First Mercury Financial Corp.		42,713		585,595
Flagstone Reinsurance Holdings Ltd.		73,130		800,042
FPIC Insurance Group, Inc.1		20,200		780,124
Greenlight Capital Re Ltd., Cl. A1		37,440		882,461
Hanover Insurance Group, Inc.		127,320		5,656,828
Harleysville Group, Inc.		17,610		559,822
Infinity Property & Casualty Corp.		33,464		1,359,977
MBIA, Inc.1		106,640		424,427
Mercer Insurance Group, Inc.		11,550		209,864
Mercury General Corp.		16,710		656,035
Montpelier Re Holdings Ltd.		71,560		1,239,419

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Insurance Continued
National Interstate Corp.		8,360	$	141,786
National Western Life Insurance Co., Cl. A		2,270		394,117
OneBeacon Insurance Group Ltd.		32,390		446,334
Platinum Underwriters Holdings Ltd.		38,650		1,479,909
PMA Capital Corp., Cl. A1		49,320		310,716
ProAssurance Corp.1		23,172		1,244,568
Safety Insurance Group, Inc.		35,389		1,282,143
Seabright Insurance Holdings, Inc.1		17,330		199,122
StanCorp Financial Group, Inc.		41,212		1,649,304
Unitrin, Inc.		56,870		1,253,984
Universal Insurance Holdings, Inc.		75,190		441,365
Validus Holdings Ltd.		49,204		1,325,556
				35,982,604
Real Estate Investment Trusts—4.7%
Agree Realty Corp.		20,940		487,693
Associated Estates Realty Corp.		21,870		246,475
CBL & Associates Properties, Inc.		60,960		589,483
Chimera Investment Corp.		699,800		2,715,224
DiamondRock Hospitality Co.		57,190		484,399
Digital Realty Trust, Inc.		104,610		5,259,791
Equity Lifestyle Properties, Inc.		17,120		864,046
Hatteras Financial Corp.		125,690		3,514,292
Home Properties of New York, Inc.		35,518		1,694,564
Hospitality Properties Trust		20,320		481,787
HRPT Properties Trust		30,630		198,176
Kilroy Realty Corp.		14,030		430,300
LaSalle Hotel Properties		33,110		702,925
Liberty Property Trust		6,290		201,343
LTC Properties, Inc.		73,880		1,976,290
Mack-Cali Realty Corp.		24,870		859,756
Mid-America Apartment Communities, Inc.		127,749		6,167,722
Monmouth Real Estate Investment Corp., Cl. A		29,510		219,554
National Health Investors, Inc.		29,141		1,077,926
Nationwide Health Properties, Inc.		6,610		232,540
Newcastle Investment Corp.1		60,349		126,129
Realty Income Corp.		1,578		40,886
Starwood Property Trust, Inc.		121,650		2,297,969
Tanger Factory Outlet Centers, Inc.		80,430		3,135,966
Walter Investment Management Corp.		84,480		1,210,598
				35,215,834
Real Estate Management & Development—0.3%
E-House China Holdings Ltd., ADS1		43,220		783,146
FirstService Corp.1		9,855		188,428
Forestar Group, Inc.1		65,810		1,446,504
				2,418,078
Thrifts & Mortgage Finance—0.6%
First Defiance Financial Corp.		25,990		293,427
First Niagara Financial Group, Inc.		142,200		1,978,002
NASB Financial, Inc.		3,738		87,058
Northwest Bancshares, Inc.		71,600		810,512
OceanFirst Financial Corp.		50,710		573,023
United Financial Bancorp., Inc.		30,854		404,496
				4,146,518
Health Care—14.9%
Biotechnology—1.4%
Acorda Therapeutics, Inc.1		99,300		2,504,346
Cubist Pharmaceuticals, Inc.1		9,600		182,112
Indevus Pharmaceuticals, Inc.1,2		2,500		25
Martek Biosciences Corp.1		75,137		1,423,095
PDL BioPharma, Inc.		177,362		1,216,703
Savient Pharmaceuticals, Inc.1		307,045		4,178,882
Sinovac Biotech Ltd.1		109,060		690,350
				10,195,513
Health Care Equipment & Supplies—4.2%
American Medical Systems Holdings, Inc.1		59,960		1,156,628
Atrion Corp.		3,638		566,509
Dexcom, Inc.1		20,400		164,832
Greatbatch, Inc.1		108,800		2,092,224
Hill-Rom Holdings, Inc.		59,727		1,432,851
Integra LifeSciences Holdings Corp.1		76,800		2,824,704
Invacare Corp.		52,101		1,299,399
Kensey Nash Corp.1		30,058		766,479
Kinetic Concepts, Inc.1		34,934		1,315,265
Masimo Corp.1		55,540		1,689,527
Merit Medical Systems, Inc.1		89,530		1,727,034
Natus Medical, Inc.1		101,010		1,493,938
NuVasive, Inc.1		143,060		4,575,059
Orthofix International NV1		67,130		2,079,016
Quidel Corp.1		44,870		618,309
Sirona Dental Systems, Inc.1		7,970		252,968
Steris Corp.		50,710		1,418,359
SurModics, Inc.1		22,221		503,528
Symmetry Medical, Inc.1		81,070		653,424

	Shares		Value
Health Care Equipment & Supplies Continued
Thoratec Corp.1		53,700	$	1,445,604
Utah Medical Products, Inc.		7,320		214,622
Volcano Corp.1		154,400		2,683,472
Young Innovations, Inc.		8,050		199,479
				31,173,230
Health Care Providers & Services—7.3%
Alliance HealthCare Services, Inc.1		22,190		126,705
Allied Healthcare International, Inc.1		72,150		209,957
Amedisys, Inc.1		28,410		1,379,590
America Service Group, Inc.		31,360		497,683
American Dental Partners, Inc.1		14,950		192,855
AMN Healthcare Services, Inc.1		66,896		606,078
AmSurg Corp.1		74,890		1,649,078
Centene Corp.1		72,412		1,532,962
Chemed Corp.		26,872		1,289,050
Community Health Systems, Inc.1		19,582		697,119
Continucare Corp.1		68,900		301,093
CorVel Corp.1		4,750		159,315
Emergency Medical Services LP, Cl. A1		24,020		1,300,683
Ensign Group, Inc. (The)		13,510		207,649
Genoptix, Inc.1		86,391		3,069,472
Gentiva Health Services, Inc.1		62,486		1,687,747
Health Management Associates, Inc., Cl. A1		965,900		7,022,093
HEALTHSOUTH Corp.1		67,310		1,263,409
Healthspring, Inc.1		121,888		2,146,448
Healthways, Inc.1		31,891		584,881
HMS Holdings Corp.1		57,700		2,809,413
InVentiv Health, Inc.1		56,216		909,013
Kindred Healthcare, Inc.1		21,500		396,890
LHC Group, Inc.1		47,610		1,600,172
LifePoint Hospitals, Inc.1		29,671		964,604
Lincare Holdings, Inc.1		45,624		1,693,563
Magellan Health Services, Inc.1		36,570		1,489,496
MEDNAX, Inc.1		77,752		4,673,673
Metropolitan Health Networks, Inc.1		97,890		194,801
Molina Healthcare, Inc.1		56,536		1,292,978
Nighthawk Radiology Holdings, Inc.1		74,170		335,990
NovaMed Eyecare, Inc.1		48,280		187,326
Odyssey Healthcare, Inc.1		88,150		1,373,377
PharMerica Corp.1		87,743		1,393,359
PSS World Medical, Inc.1		1,370		30,921
RehabCare Group, Inc.1		56,825		1,729,185
Res-Care, Inc.1		36,042		403,670
Sun Healthcare Group, Inc.1		322,042		2,953,125
Triple-S Management Corp., Cl. B1		61,882		1,089,123
U.S. Physical Therapy, Inc.1		29,075		492,240
Universal Health Services, Inc., Cl. B		20,842		635,681
VCA Antech, Inc.1		16,996		423,540
Virtual Radiologic Corp.1		15,780		201,353
WellCare Health Plans, Inc.1		22,650		832,614
				54,029,974
Health Care Technology—0.3%
MedAssets, Inc.1		115,800		2,456,118
Life Sciences Tools & Services—0.5%
Bruker Corp.1		28,550		344,313
Cambrex Corp.1		77,770		433,957
eResearch Technology, Inc.1		123,420		741,754
Harvard Bioscience, Inc.1		56,220		200,705
ICON plc, Sponsored ADR1		36,100		784,453
Kendle International, Inc.1		59,890		1,096,586
				3,601,768
Pharmaceuticals—1.2%
Biovail Corp.		55,690		777,432
Cornerstone Therapeutics, Inc.1		36,000		219,600
Endo Pharmaceuticals Holdings, Inc.1		31,702		650,208
Impax Laboratories, Inc.1		43,630		593,368
K-V Pharmaceutical Co., Cl. A1		97,680		358,486
King Pharmaceuticals, Inc.1		80,978		993,600
Medicis Pharmaceutical Corp., Cl. A		24,286		656,936
Par Pharmaceutical Cos., Inc.1		16,620		449,737
Perrigo Co.		44,530		1,774,075
Questcor Pharmaceuticals, Inc.1		307,488		1,460,568
Valeant Pharmaceuticals International, Inc.1		38,180		1,213,742
				9,147,752
Industrials—15.7%
Aerospace & Defense—1.5%
BE Aerospace, Inc.1		265,218		6,232,623
Ceradyne, Inc.1		67,410		1,294,946
Cubic Corp.		16,700		622,910
DynCorp International, Inc., Cl. A1		83,833		1,203,004
Gencorp, Inc.1		93,760		656,320
Triumph Group, Inc.		28,660		1,382,845
				11,392,648

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Air Freight & Logistics—0.8%
Atlas Air Worldwide Holdings, Inc.1		15,370	$	572,533
Hub Group, Inc., Cl. A1		197,180		5,290,339
				5,862,872
Airlines—0.5%
Allegiant Travel Co.1		22,390		1,056,136
Hawaiian Holdings, Inc.1		136,138		952,966
Pinnacle Airlines Corp.1		29,510		203,029
Republic Airways Holdings, Inc.1		96,459		712,832
SkyWest, Inc.		68,990		1,167,311
				4,092,274
Building Products—0.5%
Aaon, Inc.		32,665		636,641
Ameron International Corp.		18,234		1,157,130
Apogee Enterprises, Inc.		97,434		1,364,076
Gibraltar Industries, Inc.1		29,290		460,732
NCI Building Systems, Inc.1		77,060		139,479
Universal Forest Products, Inc.		10,313		379,622
				4,137,680
Commercial Services & Supplies—2.2%
American Reprographics Co.1		123,396		865,006
ATC Technology Corp.1		54,163		1,291,788
Brink’s Co. (The)		24,330		592,192
Consolidated Graphics, Inc.1		12,790		447,906
Courier Corp.		2,914		41,525
Deluxe Corp.		89,546		1,324,385
EnergySolutions, Inc.		254,400		2,159,856
Ennis, Inc.		31,150		523,009
G&K Services, Inc., Cl. A		28,780		723,241
M&F Worldwide Corp.1		12,842		507,259
Miller (Herman), Inc.		63,790		1,019,364
North American Galvanizing & Coating, Inc.1		45,580		221,063
R. R. Donnelley & Sons Co.		76,240		1,697,865
Sykes Enterprises, Inc.1		29,223		744,310
Team, Inc.1		25,990		488,872
Waste Connections, Inc.1		103,420		3,448,023
				16,095,664
Construction & Engineering—1.4%
Baker (Michael) Corp.1		20,813		861,658
Comfort Systems USA, Inc.		117,662		1,451,949
Dycom Industries, Inc.1		136,770		1,098,263
EMCOR Group, Inc.1		67,160		1,806,604
Pike Electric Corp.1		35,180		326,470
Primoris Services Corp.		27,960		222,841
Sterling Construction Co., Inc.1		23,930		458,977
Tutor Perini Corp.1		219,723		3,972,592
				10,199,354
Electrical Equipment—2.1%
AZZ, Inc.1		30,430		995,061
Encore Wire Corp.		52,275		1,101,434
EnerSys, Inc.1		75,328		1,647,423
GT Solar International, Inc.1		133,690		743,316
Harbin Electric, Inc.1		90,540		1,859,692
Hubbell, Inc., Cl. B		37,030		1,751,519
Powell Industries, Inc.1		39,710		1,252,056
Regal-Beloit Corp.		65,030		3,377,658
Smith (A.O.) Corp.		19,480		845,237
Thomas & Betts Corp.1		50,379		1,803,064
				15,376,460
Industrial Conglomerates—0.4%
Carlisle Cos., Inc.		43,090		1,476,263
Tredegar Corp.		77,681		1,228,913
				2,705,176
Machinery—3.8%
Altra Holdings, Inc.1		27,367		337,982
American Railcar Industries, Inc.		19,290		212,576
Ampco-Pittsburgh Corp.		22,190		699,651
Chart Industries, Inc.1		73,061		1,209,160
Colfax Corp.1		98,984		1,191,767
EnPro Industries, Inc.1		80,833		2,134,800
Force Protection, Inc.1		90,241		470,156
Freightcar America, Inc.		61,600		1,221,528
Gardner Denver, Inc.		144,006		6,127,455
Graco, Inc.		142,200		4,062,654
Harsco Corp.		13,240		426,725
K-Tron International, Inc.1		2,224		241,838
Lincoln Electric Holdings, Inc.		14,941		798,746
Mueller Industries, Inc.		76,020		1,888,337
Oshkosh Corp.		6,910		255,877
Portec Rail Products, Inc.		22,251		238,308
Timken Co.		32,930		780,770
Toro Co. (The)		31,800		1,329,558
Wabtec Corp.		93,050		3,800,162
Watts Water Technologies, Inc., Cl. A		19,300		596,756
				28,024,806

	Shares		Value
Marine—0.2%
Diana Shipping, Inc.1		49,140	$	711,547
Kirby Corp.1		12,430		432,937
Safe Bulkers, Inc.		75,670		662,869
				1,807,353
Professional Services—0.7%
GP Strategies Corp.1		27,640		208,129
Resources Connection, Inc.1		73,847		1,567,033
School Specialty, Inc.1		72,670		1,699,751
Spherion Corp.1		67,273		378,074
VSE Corp.		10,010		451,251
Watson Wyatt & Co. Holdings		18,532		880,641
				5,184,879
Road & Rail—1.2%
Avis Budget Group, Inc.1		168,030		2,204,554
Dollar Thrifty Automotive Group, Inc.1		51,220		1,311,744
Old Dominion Freight Line, Inc.1		177,110		5,437,277
				8,953,575
Trading Companies & Distributors—0.4%
Aircastle Ltd.		23,600		232,460
DXP Enterprises, Inc.1		15,697		205,160
Genesis Lease Ltd., ADS		8,120		72,512
Houston Wire & Cable Co.		37,728		448,963
Interline Brands, Inc.1		14,530		250,933
WESCO International, Inc.1		58,270		1,573,873
				2,783,901
Information Technology—20.3%
Communications Equipment—3.6%
ADTRAN, Inc.		35,310		796,241
Arris Group, Inc.1		451,030		5,155,273
Black Box Corp.		27,165		769,856
Blue Coat Systems, Inc.1		304,708		8,696,366
Comtech Telecommunications Corp.1		125,700		4,405,785
InterDigital, Inc.1		26,100		692,694
Ituran Location and Control Ltd.		15,741		202,114
Netgear, Inc.1		33,662		730,129
Oplink Communications, Inc.1		16,974		278,204
Plantronics, Inc.		48,214		1,252,600
Polycom, Inc.1		111,800		2,791,646
Sierra Wireless, Inc.1		80,130		849,378
				26,620,286
Computers & Peripherals—1.3%
China Digital TV Holding Co. Ltd., ADR		33,830		206,025
Diebold, Inc.		13,200		375,540
NCR Corp.1		51,390		571,971
QLogic Corp.1		90,440		1,706,603
Rimage Corp.1		12,280		212,935
STEC, Inc.1		59,910		978,929
Synaptics, Inc.1		174,690		5,354,249
				9,406,252
Electronic Equipment & Instruments—1.6%
Anixter International, Inc.1		18,250		859,575
Benchmark Electronics, Inc.1		92,639		1,751,803
Cogent, Inc.1		44,250		459,758
Insight Enterprises, Inc.1		88,466		1,010,282
Multi-Fineline Electronix, Inc.1		55,402		1,571,755
PC Connection, Inc.1		5,520		37,260
PC Mall, Inc.1		30,330		158,323
ScanSource, Inc.1		48,308		1,289,824
Spectrum Control, Inc.1		25,790		244,231
SYNNEX Corp.1		49,743		1,525,120
Tech Data Corp.1		40,868		1,906,901
Technitrol, Inc.		46,940		205,597
TTM Technologies, Inc.1		90,970		1,048,884
				12,069,313
Internet Software & Services—1.9%
DivX, Inc.1		17,800		100,392
EarthLink, Inc.		185,108		1,538,247
GigaMedia Ltd.1		252,860		826,852
j2 Global Communications, Inc.1		200,965		4,089,638
Perficient, Inc.1		23,820		200,803
Saba Software, Inc.1		52,090		215,653
SkillSoft plc, ADR1		60,800		637,184
Sohu.com, Inc.1		9,640		552,179
United Online, Inc.		117,672		846,062
ValueClick, Inc.1		125,710		1,272,185
VistaPrint NV1		66,163		3,748,796
Web.com Group, Inc.1		16,280		106,308
				14,134,299
IT Services—4.5%
Acxiom Corp.1		148,450		1,992,199
Broadridge Financial Solutions, Inc.		76,728		1,730,984
CACI International, Inc., Cl. A1		99,500		4,860,575
Cass Information Systems, Inc.		2,230		67,792

STATEMENT OF INVESTMENTS Continued

	Shares		Value
IT Services Continued
Convergys Corp.1		108,627	$	1,167,740
CSG Systems International, Inc.1		69,031		1,317,802
DST Systems, Inc.1		31,134		1,355,886
Forrester Research, Inc.1		16,110		418,055
Gartner, Inc.1		70,610		1,273,804
Global Cash Access, Inc.1		97,785		732,410
iGate Corp.		31,716		317,160
Lender Processing Services, Inc.		75,880		3,085,281
Ness Technologies, Inc.1		76,640		375,536
NeuStar, Inc., Cl. A1		217,228		5,004,933
Patni Computer Systems Ltd., ADR		47,240		966,058
Satyam Computer Services Ltd., ADR1		161,020		742,302
Syntel, Inc.		13,838		526,259
TeleTech Holdings, Inc.1		94,516		1,893,155
Telvent GIT SA		20,730		808,055
TNS, Inc.1		42,660		1,095,935
Unisys Corp.1		31,500		1,214,640
Virtusa Corp.1		75,300		682,218
Wright Express Corp.1		49,010		1,561,459
				33,190,238
Semiconductors & Semiconductor Equipment—3.2%
Amkor Technology, Inc.1		30,020		214,943
Atheros Communications, Inc.1		122,600		4,197,824
Himax Technologies, Inc.		181,050		501,509
Mellanox Technologies Ltd.1		17,090		322,317
Micrel, Inc.		132,917		1,089,919
Netlogic Microsystems, Inc.1		86,950		4,022,307
Semtech Corp.1		239,439		4,072,857
Sigma Designs, Inc.1		48,870		522,909
Silicon Motion Technology Corp., ADR1		32,707		111,531
Skyworks Solutions, Inc.1		256,820		3,644,276
Tessera Technologies, Inc.1		39,359		915,884
Varian Semiconductor Equipment Associates, Inc.1		107,359		3,852,041
Volterra Semiconductor Corp.1		28,980		554,098
				24,022,415
Software—4.2%
Actuate Corp.1		111,460		477,049
Blackboard, Inc.1		38,610		1,752,508
Changyou.com Ltd., ADR1		6,290		208,891
Compuware Corp.1		160,458		1,160,111
Concur Technologies, Inc.1		56,280		2,405,970
Double-Take Software, Inc.1		27,700		276,723
FactSet Research Systems, Inc.		75,582		4,978,586
Fair Isaac Corp.		75,431		1,607,435
Fortinet, Inc.1		14,630		257,049
Giant Interactive Group, Inc., ADR		65,800		461,916
Henry (Jack) & Associates, Inc.		24,704		571,156
i2 Technologies, Inc.1		44,110		843,383
Informatica Corp.1		50,260		1,299,724
JDA Software Group, Inc.1		25,500		649,485
Manhattan Associates, Inc.1		55,155		1,325,375
MICROS Systems, Inc.1		12,720		394,702
MicroStrategy, Inc., Cl. A1		18,756		1,763,439
Monotype Imaging Holdings, Inc.1		25,890		233,787
Net 1 UEPS Technologies, Inc.1		89,680		1,741,586
Novell, Inc.1		23,490		97,484
Perfect World Co. Ltd.1		25,960		1,023,862
Pervasive Software, Inc.1		37,750		181,955
Quest Software, Inc.1		85,230		1,568,232
S1 Corp.1		109,560		714,331
SonicWALL, Inc.1		96,700		735,887
Sybase, Inc.1		22,000		954,800
TIBCO Software, Inc.1		342,530		3,298,564
Websense, Inc.1		37,490		654,575
				31,638,565
Materials—5.0%
Chemicals—2.0%
Ashland, Inc.		32,799		1,299,496
Cabot Corp.		9,290		243,677
Cytec Industries, Inc.		72,281		2,632,474
Hawkins, Inc.		25,780		562,777
Innophos Holdings, Inc.		76,770		1,764,942
Innospec, Inc.		14,540		146,709
KMG Chemicals, Inc.		16,710		249,815
Koppers Holdings, Inc.		4,136		125,900
LSB Industries, Inc.1		42,271		596,021
Minerals Technologies, Inc.		29,684		1,616,887
NewMarket Corp.		9,840		1,129,337
Omnova Solutions, Inc.1		63,330		388,213
PolyOne Corp.1		96,750		722,723
Schulman (A.), Inc.		51,700		1,043,306
Spartech Corp.		53,051		544,303
Stepan Co.		8,150		528,202
W.R. Grace & Co.1		35,810		907,784
				14,502,566

	Shares			Value
Construction Materials—0.5%
Eagle Materials, Inc.		139,560		$	3,635,538
Containers & Packaging—1.1%
AEP Industries, Inc.1		18,365			703,012
Boise, Inc.1		84,480			448,589
Bway Holding Co.1		38,114			732,551
Myers Industries, Inc.		61,680			561,288
Packaging Corp. of America		206,740			4,757,087
Rock-Tenn Co., Cl. A		24,959			1,258,183
					8,460,710
Metals & Mining—1.1%
Century Aluminum Co.1		117,500			1,902,325
Compass Minerals International, Inc.		73,090			4,910,917
Mesabi Trust		13,790			176,512
Redcorp Ventures Ltd., Legend Shares1,2		666,400			3,186
Thompson Creek Metals Co., Inc.1		112,820			1,322,250
					8,315,190
Paper & Forest Products—0.3%
Buckeye Technologies, Inc.1		82,410			804,322
Clearwater Paper Corp.1		13,880			762,984
Domtar Corp.1		6,850			379,559
KapStone Paper & Packing Corp.1		52,510			517,224
					2,464,089
Telecommunication Services—0.4%
Diversified Telecommunication Services—0.3%
Atlantic Tele-Network, Inc.		4,449			244,739
Cincinnati Bell, Inc.1		480,672			1,658,318
Hickory Tech Corp.		24,450			215,894
Nortel Inversora SA, Sponsored ADR1		13,930			208,950
					2,327,901
Wireless Telecommunication Services—0.1%
USA Mobility, Inc.		79,212			872,124
Utilities—3.1%
Electric Utilities—1.0%
Cleco Corp.		73,000			1,995,090
Companhia Paranaense de Energia-Copel, Sponsored ADR		87,951			1,886,549
El Paso Electric Co.1		44,480			902,054
Empresa Distribuidora y Comercializadora Norte SA, ADR1		28,270			223,333
Westar Energy, Inc.		119,400			2,593,368
					7,600,394
Energy Traders—0.2%
Calpine Corp.1		9,100			100,100
Mirant Corp.1		83,860			1,280,542
					1,380,642
Gas Utilities—1.0%
AGL Resources, Inc.		44,240			1,613,433
Atmos Energy Corp.		54,940			1,615,236
Chesapeake Utilities Corp.		5,160			165,378
Laclede Group, Inc. (The)		12,490			421,787
New Jersey Resources Corp.		37,421			1,399,545
Nicor, Inc.		19,980			841,158
Southwest Gas Corp.		45,900			1,309,527
					7,366,064
Multi-Utilities—0.5%
Avista Corp.		36,490			787,819
NorthWestern Corp.		126,449			3,290,203
					4,078,022
Water Utilities—0.4%
Aqua America, Inc.		168,800			2,955,677
Total Common Stocks (Cost $624,546,465)					732,503,227
Investment Companies—1.8%
Apollo Investment Corp.		83,320			794,040
Ares Capital Corp.		40,288			501,586
ASA Ltd.		1,123			86,976
BlackRock Kelso Capital Corp.		28,270			240,860
Gladstone Capital Corp.		70,558			543,297
Hercules Technology Growth Capital, Inc.		136,377			1,416,957
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%3,4		263,497			263,497
MCG Capital Corp.1		98,070			423,662
NGP Capital Resources Co.		28,570			232,274
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%3,5		6,595,140			6,595,140
PennantPark Investment Corp.		64,478			575,144
Prospect Capital Corp.		97,512			1,151,617
TICC Capital Corp.		50,370			304,739
Total Investment Companies (Cost $12,337,101)					13,129,789
Total Investments, at Value (Cost $636,883,566)		100.2	%		745,633,016
Liabilities in Excess of Other Assets		(0.2	)		(1,471,750	)
Net Assets		100.0	%	$	744,161,266

STATEMENT OF INVESTMENTS Continued

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $439,407, which represents 0.06% of the Fund’s net assets. See Note 6 of accompanying Notes.
3.	Rate shown is the 7-day yield as of December 31, 2009.
4.	Interest rate is less than 0.0005%.
5.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
OFI Liquid Assets Fund, LLC		65,710,173		292,370,758		358,080,931		—
Oppenheimer Institutional Money Market Fund, Cl. E		6,344,806		279,898,173		279,647,839		6,595,140

	Value		Income
OFI Liquid Assets Fund, LLC	$	—	$	799,148	a
Oppenheimer Institutional Money Market Fund, Cl. E		6,595,140		51,276
	$	6,595,140	$	850,424

a. Net of compensation to the securities lending agent and rebates paid to the borrowing counterparties.

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)
2)	Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)
3)	Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value
Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	101,706,724	$	—	$	—	$	101,706,724
Consumer Staples		17,125,482		—		—		17,125,482
Energy		33,612,052		—		—		33,612,052
Financials		137,797,687		—		—		137,797,687
Health Care		110,604,330		—		25		110,604,355
Industrials		116,616,642		—		—		116,616,642
Information Technology		151,081,368		—		—		151,081,368
Materials		37,374,907		—		3,186		37,378,093
Telecommunication Services		3,200,025		—		—		3,200,025
Utilities		23,380,799		—		—		23,380,799
Investment Companies		13,129,789		—		—		13,129,789
Total Assets	$	745,629,805	$	—	$	3,211	$	745,633,016

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $630,288,426)	$	739,037,876
Affiliated companies (cost $6,595,140)		6,595,140
		745,633,016
Receivables and other assets:
Dividends		856,830
Shares of beneficial interest sold		712,507
Investments sold		1,700
Other		12,864
Total assets		747,216,917
Liabilities
Payables and other liabilities:
Investments purchased		2,063,531
Distribution and service plan fees		400,076
Shares of beneficial interest redeemed		273,820
Shareholder communications		212,111
Transfer and shareholder servicing agent fees		61,914
Trustees’ compensation		9,100
Other		35,099
Total liabilities		3,055,651
Net Assets	$	744,161,266
Composition of Net Assets
Par value of shares of beneficial interest	$	52,065
Additional paid-in capital		899,758,500
Accumulated net investment income		3,373,950
Accumulated net realized loss on investments and foreign currency transactions		(267,772,699	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		108,749,450
Net Assets	$	744,161,266
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 $81,813,729 and 5,681,449 shares of beneficial interest outstanding)	$	14.40
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $662,347,537 and 46,383,987 shares of beneficial interest outstanding)	$	14.28

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $11,968)	$	9,542,038
Affiliated companies		51,276
Income from investment of securities lending cash collateral, net:
Unaffiliated companies		93,103
Affiliated companies		799,148
Interest		4,066
Total investment income		10,489,631
Expenses
Management fees		4,857,461
Distribution and service plan fees—Service shares		1,530,214
Transfer and shareholder servicing agent fees:
Non-Service shares		54,634
Service shares		437,044
Shareholder communications:
Non-Service shares		70,939
Service shares		613,905
Trustees’ compensation		26,215
Custodian fees and expenses		8,450
Other		66,282
Total expenses		7,665,144
Less waivers and reimbursements of expenses		(556,778	)
Net expenses		7,108,366
Net Investment Income		3,381,265
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments from unaffiliated companies		(133,062,028	)
Foreign currency transactions		(126,301	)
Net realized loss		(133,188,329	)
Net change in unrealized appreciation on:
Investments		345,818,161
Translation of assets and liabilities denominated in foreign currencies		403,244
Net change in unrealized appreciation		346,221,405
Net Increase in Net Assets Resulting from Operations	$	216,414,341

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	3,381,265		$	4,647,051
Net realized loss		(133,188,329	)		(131,260,264	)
Net change in unrealized appreciation (depreciation)		346,221,405			(252,725,263	)
Net increase (decrease) in net assets resulting from operations		216,414,341			(379,338,476	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(605,525	)		(406,564	)
Service shares		(4,276,612	)		(2,093,583	)
		(4,882,137	)		(2,500,147	)
Distributions from net realized gain:
Non-Service shares		—			(4,514,393	)
Service shares		—			(43,539,151	)
		—			(48,053,544	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		894,228			5,447,779
Service shares		(78,387,647	)		118,985,953
		(77,493,419	)		124,433,732
Net Assets
Total increase (decrease)		134,038,785			(305,458,435	)
Beginning of period		610,122,481			915,580,916
End of period (including accumulated net investment income of $3,373,950 and $4,880,816, respectively)	$	744,161,266		$	610,122,481

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	10.65		$	18.20		$	19.15		$	17.18		$	16.05
Income (loss) from investment operations:
Net investment income1		.08			.12			.09			.08			.04
Net realized and unrealized gain (loss)		3.78			(6.73	)		(.30	)		2.46			1.51
Total from investment operations		3.86			(6.61	)		(.21	)		2.54			1.55
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.11	)		(.08	)		(.06	)		(.03	)		—
Distributions from net realized gain		—			(.86	)		(.68	)		(.54	)		(.42	)
Total dividends and/or distributions to shareholders		(.11	)		(.94	)		(.74	)		(.57	)		(.42	)
Net asset value, end of period	$	14.40		$	10.65		$	18.20		$	19.15		$	17.18
Total Return, at Net Asset Value2		37.20	%		(37.83	)%		(1.21	)%		15.00	%		9.92	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	81,814		$	58,478		$	93,939		$	81,405		$	44,820
Average net assets (in thousands)	$	69,585		$	80,406		$	94,815		$	62,659		$	39,708
Ratios to average net assets:3
Net investment income		0.71	%		0.80	%		0.48	%		0.46	%		0.23	%
Total expenses		0.91	%4		0.75	%4		0.73	%4		0.77	%4		0.81	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.82	%		0.75	%		0.73	%		0.77	%		0.81	%
Portfolio turnover rate		140	%		130	%		115	%		110	%		110	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.91	%
Year Ended December 31, 2008	0.75	%
Year Ended December 31, 2007	0.73	%
Year Ended December 31, 2006	0.77	%

See accompanying Notes to Financial Statements.

Service Shares    Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	10.54		$	18.03		$	18.98		$	17.06		$	15.97
Income (loss) from investment operations:
Net investment income1		.05			.08			.05			.04			—	2
Net realized and unrealized gain (loss)		3.76			(6.67	)		(.29	)		2.42			1.51
Total from investment operations		3.81			(6.59	)		(.24	)		2.46			1.51
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.07	)		(.04	)		(.03	)		—	2		—
Distributions from net realized gain		—			(.86	)		(.68	)		(.54	)		(.42	)
Total dividends and/or distributions to shareholders		(.07	)		(.90	)		(.71	)		(.54	)		(.42	)
Net asset value, end of period	$	14.28		$	10.54		$	18.03		$	18.98		$	17.06
Total Return, at Net Asset Value3		36.88	%		(38.00	)%		(1.39	)%		14.66	%		9.71	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	662,347		$	551,644		$	821,642		$	636,430		$	314,868
Average net assets (in thousands)	$	612,651		$	769,150		$	766,102		$	479,456		$	221,324
Ratios to average net assets:4
Net investment income		0.47	%		0.52	%		0.23	%		0.23	%		0.02	%
Total expenses		1.15	%5		0.99	%5		0.97	%5		1.00	%5		1.04	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.07	%		0.99	%		0.97	%		1.00	%		1.04	%
Portfolio turnover rate		140	%		130	%		115	%		110	%		110	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
3.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.15	%
Year Ended December 31, 2008	0.99	%
Year Ended December 31, 2007	0.97	%
Year Ended December 31, 2006	1.00	%

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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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.

Investment 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. When applicable, the Fund’s investment in LAF is included in the Statement of Investments. Shares of LAF are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of LAF’s expenses, including its management fee of 0.08%.

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
						Appreciation Based
						on Cost of Securities
Undistributed		Undistributed		Accumulated		and Other Investments
Net Investment		Long-Term		Loss		for Federal Income
Income		Gain		Carryforward1,2,3		Tax Purposes
$	3,385,900	$	—	$	253,669,994	$	94,650,105

1. As of December 31, 2009, the Fund had $253,669,994 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, 2009, details of the capital loss carryforwards were as follows:

Expiring
2016	$	91,876,720
2017		161,793,274
Total	$	253,669,994

2.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
3.	During the fiscal year ended December 31, 2008, 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

		Reduction
Reduction		to Accumulated Net
to Accumulated Net		Realized Loss
Investment Income		on Investments
$	5,994	$	5,994

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	4,882,137	$	7,557,183
Long-term capital gain		—		42,996,508
Total	$	4,882,137	$	50,553,691

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, 2009 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	$	650,982,911
Gross unrealized appreciation	$	115,425,855
Gross unrealized depreciation		(20,775,750	)
Net unrealized appreciation	$	94,650,105

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.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		3,169,215		$	36,433,519			1,628,830		$	24,176,255
Dividends and/or distributions reinvested		83,752			605,525			326,974			4,920,957
Redeemed		(3,063,138	)		(36,144,816	)		(1,624,446	)		(23,649,433	)
Net increase		189,829		$	894,228			331,358		$	5,447,779
Service Shares
Sold		14,093,981		$	149,861,179			14,415,062		$	222,143,048
Dividends and/or distributions reinvested		592,905			4,262,989			3,047,035			45,492,232
Redeemed		(20,638,747	)		(232,511,815	)		(10,696,966	)		(148,649,327	)
Net increase (decrease)		(5,951,861	)	$	(78,387,647	)		6,765,131		$	118,985,953

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 IMMF and LAF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	930,003,724	$	1,002,571,378

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. For the year ended December 31, 2009, the Fund paid $431,484 to OFS for services to the Fund.

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 daily 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 May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets would not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $59,921 and $487,552 for Non-Service and Service shares, respectively. This voluntary undertaking may be amended or withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived $9,305 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Foreign currency exchange contracts, if any, are reported on a schedule following the Statement of Investments. These contracts will be valued daily based upon the closing prices of the 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.

     The Fund has purchased and sold foreign currency exchange contracts of different currencies in order to acquire currencies to pay for related foreign securities purchase transactions, or to convert foreign currencies to U.S. dollars from related foreign securities sale transactions. These foreign currency exchange contracts are negotiated at the current spot exchange rate with settlement typically within two business days thereafter.

     Additional associated risk to the Fund includes counterparty credit risk. Counterparty 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, 2009, the Fund held no outstanding forward contracts.

6. Illiquid Securities

As of December 31, 2009, 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.

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, 2009, the Fund had no securities on loan.

NOTES TO FINANCIAL STATEMENTS Continued

8. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

9. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff “) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Money Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Money Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Money Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Principal
	Amount		Value
Certificates of Deposit—15.4%
Yankee Certificates of Deposit—15.4%
Bank of Nova Scotia, Houston TX, 0.20%, 3/3/10	$	3,000,000	$	3,000,000
BNP Paribas, New York:
0.27%, 1/21/10		4,000,000		4,000,000
0.27%, 1/25/10		3,000,000		3,000,000
0.27%, 2/11/10		2,000,000		2,000,000
National Australia Bank, New York, 0.19%, 3/1/10		1,500,000		1,500,000
Nordea Bank Finland plc, New York:
0.25%, 1/13/10		2,000,000		2,000,000
0.25%, 1/15/10		4,500,000		4,500,000
Rabobank Nederland NV, New York:
0.65%, 2/18/10		2,000,000		2,000,000
0.72%, 7/26/10		2,000,000		2,000,000
0.95%, 6/23/10		1,000,000		1,000,000
1.05%, 4/30/10		2,900,000		2,905,238
Total Certificates of Deposit (Cost $27,905,238)				27,905,238
Direct Bank Obligations—16.9%
Bank of America NA, 0.20%, 3/17/10		650,000		650,000
Calyon North America, Inc., 0.15%, 2/3/10		2,000,000		1,999,734
CBA (Delaware) Finance:
0.18%, 2/22/10		2,500,000		2,499,350
0.20%, 2/10/10		1,500,000		1,499,667
0.20%, 3/2/10		2,000,000		1,999,367
Danske Corp., 0.18%, 2/5/101		1,300,000		1,299,773
National Australia Funding (Delaware), Inc.:
0.20%, 1/27/101		2,150,000		2,149,689
0.215%, 2/16/101		2,900,000		2,899,203
0.39%, 1/7/101		2,000,000		1,999,870
Nordea North America, Inc., 0.21%, 1/22/10		2,150,000		2,149,749
Societe Generale North America, Inc.:
0.15%, 1/5/10		2,400,000		2,399,944
0.215%, 1/20/10		4,000,000		3,999,546
Westpac Banking Corp., 0.21%, 4/1/101		5,000,000		4,997,375
Total Direct Bank Obligations (Cost $30,543,267)				30,543,267
Short-Term Notes—60.5%
Diversified Financial Services—3.0%
General Electric Capital Corp., 0.20%, 1/20/10		1,950,000		1,949,794
General Electric Capital Services, 0.22%, 1/28/10		3,500,000		3,499,423
				5,449,217
Food Products—2.9%
Nestle Capital Corp.:
0.50%, 3/15/101		2,000,000		1,997,567
0.51%, 3/16/101		3,300,000		3,296,541
				5,294,108
Insurance—1.1%
United of Omaha Life Insurance Co., 0.531%, 12/29/102,3		2,000,000		2,000,000
Leasing & Factoring—2.8%
Toyota Motor Credit Corp.:
0.20%, 3/5/10		2,000,000		1,999,300
0.21%, 3/4/10		3,000,000		2,998,915
				4,998,215
Municipal—14.9%
Allegheny Cnty., PA Industrial Development Authority Bonds, Union Electric Steel Corp., Series 1997, 0.29%, 1/4/103		2,141,000		2,141,000
Chicago, IL Industrial Development Revenue Bonds, Freedman Seating Co. Project, Series 1998, 0.42%, 1/4/103		1,335,000		1,335,000
Health Care Revenue Bonds, SFO Associates Project, Series 1994, 0.30%, 1/1/103		2,200,000		2,200,000
IL Finance Authority Industrial Development Revenue Bonds, Freedman Seating Co. Project, Series 2005, 0.42%, 1/4/103		1,795,000		1,795,000
Laurel Grocery Project Nts., Series 1999, 0.80%, 1/4/103		1,235,000		1,235,000
Manassas, VA Industrial Development Authority Bonds, Aurora Flight Science, Series 2005, 0.35%, 1/1/103		985,000		985,000
Miami-Dade Cnty., FL Industrial Development Authority, Airbus Service Co., Inc. Project, Series 98, 0.39%, 1/4/103		1,000,000		1,000,000
PA Economic Finance Authority, Kovatch Mobile Project, Series 2009A, 0.26%, 1/4/103		1,500,000		1,500,000
Phoenix Civic Improvement Corp. Wastewater System Revenue Bond Anticipation Nts., Series 2009, 0.33%, 2/5/10		2,000,000		2,000,000
Putnam Cnty., WV Solid Waste Disposal Revenue Bonds, FMC Corp., Series 1991, 0.47%, 2/1/103		1,730,000		1,730,000
San Antonio, TX Industrial Development Authority Revenue Bonds, Tindall Corp. Project, Series 2008, 0.29%, 1/4/103		3,600,000		3,600,000
Valdosta-Lowndes Cnty., GA Industrial Authority, Steeda Autosports, Inc. Project, Series 2008, 0.35%, 1/1/103		1,000,000		1,000,000

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Municipal Continued
Vigo Cnty., IN Economic Development Revenue Bonds, Republic Services, Inc. Project, Series 03, 0.32%, 1/4/103	$	5,000,000		$	5,000,000
Whitehall, WI Industrial Development Revenue Bonds, Whitehall Specialties, 0.37%, 1/4/103		500,000			500,000
Wright Brothers, Inc. Nts., Series 2005, 0.80%, 1/4/103		985,000			985,000
					27,006,000
Personal Products—2.5%
Procter & Gamble International Funding SCA:
0.285%, 5/7/101,3		1,500,000			1,500,000
0.525%, 2/8/101,3		3,000,000			3,000,000
					4,500,000
Pharmaceuticals—2.8%
Roche Holdings, Inc., 1.26%, 2/25/103,4		5,000,000			5,000,000
Receivables Finance—19.5%
Barton Capital Corp.:
0.17%, 2/8/101		1,500,000			1,499,731
0.21%, 1/12/101		2,000,000			1,999,859
0.23%, 1/14/101		4,000,000			3,999,668
0.23%, 2/2/101		1,100,000			1,099,775
Chariot Funding LLC, 0.22%, 1/7/104		600,000			599,978
Fairway Finance Corp.:
0.20%, 3/11/101		1,800,000			1,799,310
0.20%, 3/16/101		2,100,000			2,099,137
0.23%, 1/14/101		1,359,000			1,358,887
0.24%, 1/4/101		3,500,000			3,499,930
Gemini Securitization Corp., 0.22%, 2/9/101		4,000,000			3,999,047
Old Line Funding Corp.:
0.20%, 3/1/101		1,701,000			1,700,442
0.27%, 1/26/101		2,000,000			1,999,625
Park Avenue Receivables Co. LLC, 0.22%, 1/15/101		1,700,000			1,699,855
Ranger Funding Co. LLC, 0.20%, 3/12/10		1,000,000			999,611
Thunder Bay Funding LLC, 0.26%, 2/2/104		3,832,000			3,831,114
Yorktown Capital LLC, 0.23%, 2/5/101		3,000,000			2,999,329
					35,185,298
Special Purpose Financial—8.8%
Crown Point Capital Co.:
0.50%, 1/5/10		3,000,000			2,999,833
0.50%, 1/8/10		3,000,000			2,999,708
FCAR Owner Trust I, 0.35%, 1/4/10		3,000,000			2,999,900
Lexington Parker Capital Co. LLC:
0.50%, 1/6/101		3,500,000			3,499,757
0.50%, 1/12/101		1,500,000			1,499,771
0.50%, 1/19/101		2,000,000			1,999,500
					15,998,469
U.S. Government Obligations—2.2%
Straight-A Funding LLC, Series I:
0.20%, 2/8/10		2,000,000			1,999,578
0.21%, 1/11/10		2,000,000			1,999,883
					3,999,461
Total Short-Term Notes (Cost $109,430,768)					109,430,768
U.S. Government Agencies—6.6%
Federal Home Loan Bank:
0.50%, 10/28/10-10/29/10		7,000,000			7,000,000
0.73%, 3/12/103		4,000,000			4,000,000
3.125%, 11/12/10		1,000,000			1,022,334
Total U.S. Government Agencies (Cost $12,022,334)					12,022,334
Total Investments, at Value (Cost $179,901,607)		99.4	%		179,901,607
Other Assets Net of Liabilities		0.6			1,053,074
Net Assets		100.0	%	$	180,954,681

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.	Security issued in an exempt transaction without registration under the Securities Act of 1933. Such securities amount to $59,893,641, or 33.10% of the Fund’s net assets, and have been determined to be liquid pursuant to guidelines adopted by the Board of Trustees.
2.	Illiquid security. The aggregate value of illiquid securities as of December 31, 2009 was $2,000,000, which represents 1.11% of the Fund’s net assets. See Note 4 of accompanying Notes.
3.	Represents the current interest rate for a variable or increasing rate security.
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 $9,431,092 or 5.21% of the Fund’s net assets as of December 31, 2009.

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value
Assets Table
Investments, at Value:
Certificates of Deposit	$	—	$	27,905,238	$	—	$	27,905,238
Direct Bank Obligations		—		30,543,267		—		30,543,267
Short-Term Notes		—		109,430,768		—		109,430,768
U.S. Government Agencies		—		12,022,334		—		12,022,334
Total Assets	$	—	$	179,901,607	$	—	$	179,901,607

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value (cost $179,901,607)—see accompanying statement of investments	$	179,901,607
Cash		1,001,498
Receivables and other assets:
Shares of beneficial interest sold		239,901
Interest		94,578
Other		8,256
Total assets		181,245,840
Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed		241,077
Legal, auditing and other professional fees		16,934
Transfer and shareholder servicing agent fees		15,571
Shareholder communications		9,181
Trustees’ compensation		4,453
Dividends		576
Other		3,367
Total liabilities		291,159
Net Assets	$	180,954,681
Composition of Net Assets
Par value of shares of beneficial interest	$	180,919
Additional paid-in capital		180,764,475
Accumulated net realized gain on investments		9,287
Net Assets—applicable to 180,919,306 shares of beneficial interest outstanding	$	180,954,681
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, 2009

Investment Income
Interest	$	1,802,055
Expenses
Management fees		982,135
Transfer and shareholder servicing agent fees		141,353
Insurance expenses		58,164
Shareholder communications		22,348
Trustees’ compensation		9,532
Custodian fees and expenses		2,065
Other		34,069
Total expenses		1,249,666
Less waivers and reimbursements of expenses		(213,291	)
Net expenses		1,036,375
Net Investment Income		765,680
Net Realized Gain on Investments		10,354
Net Increase in Net Assets Resulting from Operations	$	776,034

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	765,680		$	5,787,151
Net realized gain		10,354			321
Net increase in net assets resulting from operations		776,034			5,787,472
Dividends and/or Distributions to Shareholders
Dividends from net investment income		(765,999	)		(5,787,153	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions		(62,411,738	)		53,607,490
Net Assets
Total increase (decrease)		(62,401,703	)		53,607,809
Beginning of period		243,356,384			189,748,575
End of period (including accumulated net investment loss of $– and $1,067, respectively)	$	180,954,681		$	243,356,384

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Year Ended December 31,	2009			2008			2007			2006			2005
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		—	2		.03			.05			.05			.03
Dividends and/or distributions to shareholders:
Dividends from net investment income		—	2		(.03	)		(.05	)		(.05	)		(.03	)
Distributions from net realized gain		—			—			—	2		—	2		—
Total dividends and/or distributions to shareholders		—	2		(.03	)		(.05	)		(.05	)		(.03	)
Net asset value, end of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return3		0.32	%		2.78	%		4.98	%		4.71	%		2.86	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	180,955		$	243,356		$	189,749		$	171,521		$	173,162
Average net assets (in thousands)	$	218,079		$	212,564		$	181,271		$	171,118		$	186,453
Ratios to average net assets:4
Net investment income		0.35	%		2.72	%		4.86	%		4.61	%		2.80	%
Total expenses		0.57	%		0.50	%		0.50	%		0.49	%		0.48	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.48	%		0.50	%		0.50	%		0.49	%		0.48	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
3.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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.

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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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
$61,455	$	—	$	—

1.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforwards.
2.	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.

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, 2009. Net assets of the Fund were unaffected by the reclassifications.

		Reduction
Reduction		to Accumulated Net
to Accumulated Net		Realized Gain
Investment Loss		on Investments
$	1,386	$	1,386

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	765,999	$	5,787,153

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.

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.

NOTES TO FINANCIAL STATEMENTS Continued

2. Shares of Beneficial Interest

The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:

	Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Sold		66,197,591		$	66,197,591			163,835,502		$	163,835,502
Dividends and/or distributions reinvested		765,999			765,999			5,787,153			5,787,153
Redeemed		(129,375,328	)		(129,375,328	)		(116,015,165	)		(116,015,165	)
Net increase (decrease)		(62,411,738	)	$	(62,411,738	)		53,607,490		$	53,607,490

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. For the year ended December 31, 2009, the Fund paid $126,642 to OFS for services to the Fund.

Waivers and Reimbursements of Expenses. The Manager has voluntarily undertaken to waive fees and/or reimburse expenses to the extent necessary to assist the Fund in attempting to maintain a positive yield. There is no guarantee that the Fund will maintain a positive yield. This undertaking may be amended or withdrawn at any time. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $135,299.

     Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as a percentage of daily net assets will not exceed the annual rate of 0.50%. This voluntary undertaking may be amended or withdrawn at any time. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $77,992.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees to 0.35% of average annual net assets of the Fund.

4. Illiquid Securities

As of December 31, 2009, 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. Temporary Guarantee Program for Money Market Funds

The Fund’s Board of Trustees 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 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 also notified the Treasury Department of its intent to continue its participation in the Program through September 18, 2009. The Program could not be extended beyond September 18, 2009.

     Under the Program, shareholders of the Fund as of the close of business on September 19, 2008 were guaranteed against loss in the event that the Fund’s net asset value fell below $0.995. The Program applied only to shareholders of record as of the close of business on September 19, 2008. The number of shares covered by the Program was 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 fell below $0.995. If the number of shares of the Fund a shareholder held after September 19, 2008 fluctuated 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 would not have been covered.

     The Fund 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 paid a 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. The Fund paid an additional fee to continue its participation in the Program through September 18, 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 expenses” on the Statement of Operations.

6. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

7. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff “) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer MidCap Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer MidCap Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer MidCap Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

KPMG llp

Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Shares		Value
Common Stocks—98.6%
Consumer Discretionary—17.2%
Diversified Consumer Services—1.3%
Education Management Corp.1		172,400	$	3,794,524
Strayer Education, Inc.		18,100		3,846,069
				7,640,593
Hotels, Restaurants & Leisure—2.3%
Chipotle Mexican Grill, Inc., Cl. A1		43,030		3,793,525
Panera Bread Co., Cl. A1		73,500		4,922,295
WMS Industries, Inc.1		116,014		4,640,560
				13,356,380
Household Durables—0.8%
Tupperware Brands Corp.		98,500		4,587,145
Media—1.5%
Discovery Communications, Inc.1		183,400		5,624,878
Scripps Networks Interactive, Cl. A		67,500		2,801,250
				8,426,128
Multiline Retail—2.3%
Dollar Tree, Inc.1		169,150		8,169,945
Nordstrom, Inc.		128,700		4,836,546
				13,006,491
Specialty Retail—6.1%
American Eagle Outfitters, Inc.		188,900		3,207,522
Chico’s FAS, Inc.1		333,400		4,684,270
Guess?, Inc.		151,100		6,391,530
J. Crew Group, Inc.1		167,600		7,498,424
Tiffany & Co.		130,400		5,607,200
Urban Outfitters, Inc.1		221,580		7,753,084
				35,142,030
Textiles, Apparel & Luxury Goods—2.9%
Phillips/Van Heusen Corp.		64,300		2,615,724
Polo Ralph Lauren Corp., Cl. A		102,840		8,327,983
Warnaco Group, Inc. (The)1		127,500		5,379,225
				16,322,932
Consumer Staples—2.9%
Food Products—1.8%
J.M. Smucker Co. (The)		95,100		5,872,425
TreeHouse Foods, Inc.1		115,200		4,476,672
				10,349,097
Household Products—0.7%
Church & Dwight Co., Inc.		65,300		3,947,385
Personal Products—0.4%
Nu Skin Asia Pacific, Inc., Cl. A		99,500		2,673,565
Energy—7.2%
Energy Equipment & Services—2.4%
Cameron International Corp.1		210,750		8,809,350
Oceaneering International, Inc.1		83,100		4,863,012
				13,672,362
Oil, Gas & Consumable Fuels—4.8%
Concho Resources, Inc.1		238,850		10,724,365
EXCO Resources, Inc.		265,600		5,638,688
Petrohawk Energy Corp.1		210,300		5,045,097
Range Resources Corp.		125,246		6,243,513
				27,651,663
Financials—9.0%
Capital Markets—4.6%
Greenhill & Co., Inc.		47,600		3,819,424
Jefferies Group, Inc.1		304,800		7,232,904
Stifel Financial Corp.1		130,100		7,707,124
Waddell & Reed Financial, Inc., Cl. A		258,900		7,906,806
				26,666,258
Commercial Banks—0.8%
Signature Bank1		139,400		4,446,860
Diversified Financial Services—0.6%
MSCI, Inc., Cl. A1		104,610		3,326,598
Insurance—1.1%
Assured Guaranty Ltd.		165,700		3,605,632
RenaissanceRe Holdings Ltd.		51,160		2,719,154
				6,324,786
Real Estate Investment Trusts—1.0%
Digital Realty Trust, Inc.		113,200		5,691,696
Real Estate Management &
Development—0.9%
Jones Lang LaSalle, Inc.		87,400		5,278,960
Health Care—16.3%
Biotechnology—4.5%
Alexion Pharmaceuticals, Inc.1		247,300		12,073,186
Human Genome Sciences, Inc.1		151,300		4,629,780
Myriad Genetics, Inc.1		147,650		3,853,665
United Therapeutics Corp.1		95,300		5,017,545
				25,574,176
Health Care Equipment & Supplies—4.3%
Edwards Lifesciences Corp.1		120,570		10,471,505
IDEXX Laboratories, Inc.1		108,340		5,789,690

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Health Care Equipment & Supplies Continued
ResMed, Inc.1		55,800	$	2,916,666
Thoratec Corp.1		210,300		5,661,276
				24,839,137
Health Care Providers & Services—5.3%
Catalyst Health Solutions, Inc.1		89,800		3,275,006
Genoptix, Inc.1		147,011		5,223,301
HMS Holdings Corp.1		150,500		7,327,845
MEDNAX, Inc.1		144,700		8,697,917
Schein (Henry), Inc.1		107,170		5,637,142
				30,161,211
Health Care Technology—0.9%
Cerner Corp.1		65,900		5,432,796
Life Sciences Tools & Services—0.5%
Illumina, Inc.1		99,101		3,037,446
Pharmaceuticals—0.8%
Perrigo Co.		114,110		4,546,142
Industrials—12.3%
Aerospace & Defense—0.9%
Rockwell Collins, Inc.		98,600		5,458,496
Air Freight & Logistics—1.9%
C.H. Robinson Worldwide, Inc.		187,480		11,010,700
Commercial Services & Supplies—2.0%
Stericycle, Inc.1		118,122		6,516,791
Waste Connections, Inc.1		141,600		4,720,944
				11,237,735
Electrical Equipment—1.3%
Regal-Beloit Corp.		88,800		4,612,272
Roper Industries, Inc.		51,600		2,702,292
				7,314,564
Machinery—3.7%
Bucyrus International, Inc.		104,300		5,879,391
Flowserve Corp.		54,000		5,104,620
Gardner Denver, Inc.		140,081		5,960,447
Nordson Corp.		72,300		4,423,314
				21,367,772
Professional Services—2.5%
IHS, Inc., Cl. A1		79,280		4,345,337
Manpower, Inc.		76,500		4,175,370
Monster Worldwide, Inc.1		150,000		2,610,000
Verisk Analytics, Inc., Cl. A1		99,540		3,014,071
				14,144,778
Information Technology—26.0%
Communications Equipment—2.0%
F5 Networks, Inc.1		137,700		7,295,346
Juniper Networks, Inc.1		155,100		4,136,517
				11,431,863
Computers & Peripherals—1.3%
NetApp, Inc.1		209,870		7,217,429
Electronic Equipment &
Instruments—1.3%
Amphenol Corp., Cl. A		96,810		4,470,686
FLIR Systems, Inc.1		90,700		2,967,704
				7,438,390
Internet Software & Services—4.1%
Equinix, Inc.1		68,983		7,322,545
GSI Commerce, Inc.1		179,800		4,565,122
Mercadolibre, Inc.1		43,802		2,272,010
Rackspace Hosting, Inc.1		144,200		3,006,570
VistaPrint NV1		110,370		6,253,564
				23,419,811
IT Services—2.4%
Cognizant Technology Solutions Corp.1		229,610		10,401,333
Global Payments, Inc.		67,300		3,624,778
				14,026,111
Semiconductors & Semiconductor Equipment—5.8%
Broadcom Corp., Cl. A1		141,400		4,447,030
Lam Research Corp.1		209,220		8,203,516
Marvell Technology Group Ltd.1		314,700		6,530,025
Netlogic Microsystems, Inc.1		101,400		4,690,764
Silicon Laboratories, Inc.1		118,400		5,723,456
Varian Semiconductor Equipment Associates, Inc.1		109,800		3,939,624
				33,534,415
Software—9.1%
Ansys, Inc.1		138,830		6,033,552
Concur Technologies, Inc.1		109,400		4,676,850
FactSet Research Systems, Inc.		92,780		6,111,419
Informatica Corp.1		55,500		1,435,230
Longtop Financial Technologies Ltd., ADR1		173,400		6,419,268
Nuance Communications, Inc.1		278,100		4,321,674
Red Hat, Inc.1		147,800		4,567,020
Salesforce.com, Inc.1		123,780		9,131,251
Solarwinds, Inc.1		143,600		3,304,236
Sybase, Inc.1		136,300		5,915,420
				51,915,920

	Shares			Value
Materials—5.2%
Chemicals—2.1%
Airgas, Inc.		74,600		$	3,550,960
Lubrizol Corp. (The)		119,320			8,704,394
					12,255,354
Containers & Packaging—1.0%
Rock-Tenn Co., Cl. A		117,300			5,913,093
Metals & Mining—2.1%
Silver Wheaton Corp.1		164,400			2,469,288
Steel Dynamics, Inc.		292,400			5,181,328
Thompson Creek Metals Co., Inc.1		345,400			4,048,088
					11,698,704
Telecommunication Services—2.5%
Wireless Telecommunication Services—2.5%
American Tower Corp.1		179,780			7,768,294
SBA Communications Corp.1		187,070			6,390,310
					14,158,604
Total Common Stocks (Cost $450,312,111)					565,645,576
Investment Companies—1.9%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%2,3		46,893			46,893
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%2,4		10,877,341			10,877,341
Total Investment Companies (Cost $10,924,234)					10,924,234
Total Investments, at Value (Cost $461,236,345)		100.5	%		576,569,810
Liabilities in Excess of Other Assets		(0.5	)		(2,789,055	)
Net Assets		100.0	%	$	573,780,755

Footnotes to Statement of Investments
1.	Non-income producing security.
2.	Rate shown is the 7-day yield as of December 31, 2009.
3.	Interest rate is less than 0.0005%.
4.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
Oppenheimer Institutional Money Market Fund, Cl. E		28,742,391		248,128,858		265,993,908		10,877,341

	Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E	$	10,877,341	$	121,804

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)

2) Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)

3) Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value
Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	98,481,699	$	—	$	—	$	98,481,699
Consumer Staples		16,970,047		—		—		16,970,047
Energy		41,324,025		—		—		41,324,025
Financials		51,735,158		—		—		51,735,158
Health Care		93,590,908		—		—		93,590,908
Industrials		70,534,045		—		—		70,534,045
Information Technology		148,983,939		—		—		148,983,939
Materials		29,867,151		—		—		29,867,151
Telecommunication Services		14,158,604		—		—		14,158,604
Investment Companies		10,924,234		—		—		10,924,234
Total Assets	$	576,569,810	$	—	$	—	$	576,569,810

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $450,359,004)	$	565,692,469
Affiliated companies (cost $10,877,341)		10,877,341
		576,569,810
Receivables and other assets:
Dividends		286,972
Shares of beneficial interest sold		498
Other		19,752
Total assets		576,877,032
Liabilities
Payables and other liabilities:
Shares of beneficial interest redeemed		2,914,855
Shareholder communications		78,424
Transfer and shareholder servicing agent fees		48,123
Trustees’ compensation		16,259
Distribution and service plan fees		15,509
Other		23,107
Total liabilities		3,096,277
Net Assets	$	573,780,755
Composition of Net Assets
Par value of shares of beneficial interest	$	15,728
Additional paid-in capital		993,267,282
Accumulated net investment income		37,265
Accumulated net realized loss on investments		(534,872,985	)
Net unrealized appreciation on investments		115,333,465
Net Assets	$	573,780,755
Net Asset Value Per Share
Non-Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $547,682,402 and 14,997,735 shares of beneficial interest outstanding)	$	36.52
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $26,098,353 and 730,031 shares of beneficial interest outstanding)	$	35.75

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $3,443)	$	2,549,649
Affiliated companies		121,804
Interest		1,778
Total investment income		2,673,231
Expenses
Management fees		3,638,767
Distribution and service plan fees—Service shares		56,482
Transfer and shareholder servicing agent fees:
Non-Service shares		338,903
Service shares		19,137
Shareholder communications:
Non-Service shares		233,703
Service shares		11,043
Trustees’ compensation		23,128
Custodian fees and expenses		2,246
Other		46,762
Total expenses		4,370,171
Less waivers and reimbursements of expenses		(771,861	)
Net expenses		3,598,310
Net Investment Loss		(925,079	)
Realized and Unrealized Gain (Loss)
Net realized loss on investments from unaffiliated companies		(78,545,847	)
Net change in unrealized appreciation on investments		224,373,833
Net Increase in Net Assets Resulting from Operations	$	144,902,907

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment loss	$	(925,079	)	$	(2,429,611	)
Net realized loss		(78,545,847	)		(219,835,993	)
Net change in unrealized appreciation (depreciation)		224,373,833			(251,402,010	)
Net increase (decrease) in net assets resulting from operations		144,902,907			(473,667,614	)
Beneficial Interest Transactions
Net decrease in net assets resulting from beneficial interest transactions:
Non-Service shares		(52,496,797	)		(88,752,649	)
Service shares		(2,261,210	)		(3,655,383	)
		(54,758,007	)		(92,408,032	)
Net Assets
Total increase (decrease)		90,144,900			(566,075,646	)
Beginning of period		483,635,855			1,049,711,501
End of period (including accumulated net investment income of $37,265 and $80,204, respectively)	$	573,780,755		$	483,635,855

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares   Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	27.54		$	54.07		$	50.85		$	49.39		$	43.97
Income (loss) from investment operations:
Net investment loss1		(.05	)		(.13	)		(.02	)		(.02	)		(.12	)
Net realized and unrealized gain (loss)		9.03			(26.40	)		3.24			1.48			5.54
Total from investment operations		8.98			(26.53	)		3.22			1.46			5.42
Net asset value, end of period	$	36.52		$	27.54		$	54.07		$	50.85		$	49.39
Total Return, at Net Asset Value2		32.61	%		(49.07	)%		6.33	%		2.96	%		12.33	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	547,683		$	461,684		$	1,002,442		$	1,054,809		$	1,227,881
Average net assets (in thousands)	$	478,968		$	754,170		$	1,045,592		$	1,135,831		$	1,177,979
Ratios to average net assets:3
Net investment loss		(0.17	)%		(0.30	)%		(0.04	)%		(0.04	)%		(0.26	)%
Total expenses		0.86	%4		0.71	%4		0.69	%4		0.69	%4		0.69	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.71	%		0.68	%		0.69	%		0.69	%		0.69	%
Portfolio turnover rate		102	%		78	%		112	%		56	%		32	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	0.86	%
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.

Service Shares   Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	27.03		$	53.22		$	50.19		$	48.87		$	43.64
Income (loss) from investment operations:
Net investment loss1		(.13	)		(.24	)		(.17	)		(.16	)		(.25	)
Net realized and unrealized gain (loss)		8.85			(25.95	)		3.20			1.48			5.48
Total from investment operations		8.72			(26.19	)		3.03			1.32			5.23
Net asset value, end of period	$	35.75		$	27.03		$	53.22		$	50.19		$	48.87
Total Return, at Net Asset Value2		32.26	%		(49.21	)%		6.04	%		2.70	%		11.99	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	26,098		$	21,952		$	47,270		$	47,131		$	36,551
Average net assets (in thousands)	$	22,605		$	35,815		$	49,421		$	44,273		$	28,798
Ratios to average net assets:3
Net investment loss		(0.44	)%		(0.57	)%		(0.31	)%		(0.33	)%		(0.54	)%
Total expenses		1.12	%4		0.98	%4		0.96	%4		0.97	%4		0.97	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.97	%		0.95	%		0.96	%		0.97	%		0.97	%
Portfolio turnover rate		102	%		78	%		112	%		56	%		32	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	1.12	%
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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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 unadjusted 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.

     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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

					Net Unrealized Appreciation
					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
$               —	$	—	$	531,261,211	$	111,775,206

1. As of December 31, 2009, the Fund had $531,261,211 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, 2009, details of the capital loss carryforwards were as follows:

Expiring
2010	$	230,224,822
2017		301,036,389
Total	$	531,261,211

2.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
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, 2009, $225,332,848 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

			Reduction to
	Reduction		Accumulated Net
Reduction	to Accumulated Net		Realized Loss
to Paid-in Capital	Investment Loss		on Investments
$226,596,595	$	882,140	$	225,714,455

No distributions were paid during the years ended December 31, 2009 and December 31, 2008.

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, 2009 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	$	464,794,604
Gross unrealized appreciation	$	114,959,287
Gross unrealized depreciation		(3,184,081	)
Net unrealized appreciation	$	111,775,206

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, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		730,850		$	22,021,499			1,670,583		$	61,944,000
Redeemed		(2,496,465	)		(74,518,296	)		(3,445,654	)		(150,696,649	)
Net decrease		(1,765,615	)	$	(52,496,797	)		(1,775,071	)	$	(88,752,649	)
Service Shares
Sold		97,563		$	2,820,902			131,251		$	5,180,963
Redeemed		(179,541	)		(5,082,112	)		(207,366	)		(8,836,346	)
Net decrease		(81,978	)	$	(2,261,210	)		(76,115	)	$	(3,655,383	)

NOTES TO FINANCIAL STATEMENTS Continued

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 IMMF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	491,481,494	$	509,739,681

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. For the year ended December 31, 2009, the Fund paid $311,637 to OFS for services to the Fund.

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 daily 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 September 1, 2008 through August 31, 2009, the Manager had 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 was in the fourth or fifth quintile of the Fund’s Lipper peer group.

     Effective April 1, 2009 through March 31, 2010, the Manager has agreed to voluntarily waive its advisory fee by 0.09% of the Fund’s average annual net assets. This voluntary waiver will be applied after all other waivers and/or reimbursements and may be amended or withdrawn at any time.

     During the year ended December 31, 2009, the Manager waived $666,761 in advisory fees as a result of these voluntary arrangements.

     Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. This voluntary undertaking may be amended or withdrawn at any time. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $84,220 and $4,001 for Non-Service and Service shares, respectively.

     Prior to May 1, 2009, 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.

     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, 2009, the Manager waived $16,879 for IMMF management fees.

5. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

6. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff ”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of Oppenheimer Variable Account Funds:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Value Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), including the statement of investments, as of December 31, 2009, and the related statements of operations and changes in net assets and the financial highlights for the year 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 audit. The accompanying financial statements and financial highlights of Oppenheimer Value Fund/VA for the years ended prior to January 1, 2009 were audited by other auditors whose report dated February 11, 2009 expressed an unqualified opinion on those statements and financial highlights.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian, transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Value Fund/VA as of December 31, 2009, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

KPMG LLP
Denver, Colorado
February 16, 2010

STATEMENT OF INVESTMENTS December 31, 2009

	Shares		Value
Common Stocks—94.3%
Consumer Discretionary—9.9%
Hotels, Restaurants & Leisure—0.5%
Brinker International, Inc.		2,720	$	40,582
Household Durables—0.5%
Mohawk Industries, Inc.1		880		41,888
Media—7.7%
Comcast Corp., Cl. A		2,090		35,237
News Corp., Inc., Cl. A		12,318		168,633
Time Warner Cable, Inc.		5,130		212,331
Viacom, Inc., Cl. B1		5,500		163,515
				579,716
Multiline Retail—0.1%
Dollar General Corp.1		190		4,262
Specialty Retail—1.1%
Bed Bath & Beyond, Inc.1		2,150		83,055
Consumer Staples—5.2%
Beverages—1.3%
Molson Coors Brewing Co., Cl. B, Non-Vtg.		2,242		101,249
Food & Staples Retailing—3.9%
Kroger Co. (The)		6,840		140,425
Walgreen Co.		4,104		150,699
				291,124
Energy—15.7%
Oil, Gas & Consumable Fuels—15.7%
Apache Corp.		2,246		231,720
Chevron Corp.		4,870		374,941
CONSOL Energy, Inc.		3,230		160,854
EOG Resources, Inc.		460		44,758
Exxon Mobil Corp.		2,384		162,565
Marathon Oil Corp.		6,588		205,677
				1,180,515
Financials—19.8%
Capital Markets—4.8%
Goldman Sachs Group, Inc. (The)		850		143,514
Morgan Stanley		7,484		221,526
				365,040
Commercial Banks—1.9%
Comerica, Inc.		1,290		38,145
Wells Fargo & Co.		3,910		105,531
				143,676
Diversified Financial Services—6.0%
Bank of America Corp.		8,090		121,835
JPMorgan Chase & Co.		7,860		327,526
				449,361
Insurance—7.1%
ACE Ltd.		2,060		103,824
Allstate Corp.		2,420		72,697
Assurant, Inc.		3,650		107,602
Everest Re Group Ltd.		1,287		110,270
MetLife, Inc.		3,950		139,633
				534,026
Health Care—11.4%
Health Care Equipment & Supplies—2.1%
Covidien plc		3,360		160,910
Health Care Providers & Services—2.5%
Aetna, Inc.		5,960		188,932
Pharmaceuticals—6.8%
Biovail Corp.		5,410		75,524
Merck & Co., Inc.		6,570		240,068
Pfizer, Inc.		10,859		197,525
				513,117
Industrials—11.1%
Aerospace & Defense—1.3%
AerCap Holdings NV1		1,970		17,848
Lockheed Martin Corp.		1,070		80,625
				98,473
Electrical Equipment—1.9%
General Cable Corp.1		4,890		143,864
Industrial Conglomerates—3.6%
Tyco International Ltd.		7,620		271,882
Machinery—3.2%
Navistar International Corp.1		6,263		242,065
Trading Companies & Distributors—1.1%
Aircastle Ltd.		6,600		65,010
Genesis Lease Ltd., ADS		2,010		17,949
				82,959
Information Technology—8.0%
Communications Equipment—3.3%
Motorola, Inc.1		27,760		215,418
QUALCOMM, Inc.		750		34,695
				250,113
Computers & Peripherals—2.5%
Dell, Inc.1		12,980		186,393

STATEMENT OF INVESTMENTS Continued

	Shares			Value
Software—2.2%
Oracle Corp.		6,680		$	163,927
Materials—5.1%
Chemicals—4.1%
Celanese Corp., Series A		4,610			147,981
Potash Corp. of Saskatchewan, Inc.		1,470			159,495
					307,476
Metals & Mining—1.0%
Xstrata plc, Unsponsored ADR1		20,500			74,825
Telecommunication Services—3.6%
Diversified Telecommunication Services—3.2%
AT&T, Inc.		8,702			243,917
Wireless Telecommunication Services—0.4%
Sprint Nextel Corp.1		7,150			26,169
Utilities—4.5%
Electric Utilities—3.5%
Edison International, Inc.		4,350			151,293
Exelon Corp.		2,266			110,739
					262,032
Multi-Utilities—1.0%
PG&E Corp.		1,794			80,102
Total Common Stocks (Cost $6,183,029)					7,111,650
Preferred Stocks—1.9%
Bank of America Corp., 10% Cv., Series S1 (Cost $142,500)		9,500			141,740
Investment Companies—4.6%
JPMorgan U.S. Treasury Plus Money Market Fund, Agency Shares, 0.00%2,3		9,096			9,096
Oppenheimer Institutional Money Market Fund, Cl. E, 0.21%2,4		340,073			340,073
Total Investment Companies (Cost $349,169)					349,169
Total Investments, at Value (Cost $6,674,698)		100.8	%		7,602,559
Liabilities in Excess of Other Assets		(0.8	)		(59,743	)
Net Assets		100.0	%	$	7,542,816

Footnotes to Statement of Investments

1.	Non-income producing security.
2.	Rate shown is the 7-day yield as of December 31, 2009.
3.	Interest rate is less than 0.0005%.
4.	Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2009, 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, 2008		Additions		Reductions		December 31, 2009
Oppenheimer Institutional Money Market Fund, Cl. E		664,973		10,850,044		11,174,944		340,073

	Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E	$	340,073	$	1,614

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—unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange)
2)	Level 2—inputs other than unadjusted quoted prices that are observable for the asset (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)
3)	Level 3—significant unobservable inputs (including the Manager’s own judgments about assumptions that market participants would use in pricing the asset).

The table below categorizes amounts that are included in the Fund’s Statement of Assets and Liabilities as of December 31, 2009 based on valuation input level:

					Level 3—
	Level 1—		Level 2—		Significant
	Unadjusted		Other Significant		Unobservable
	Quoted Prices		Observable Inputs		Inputs		Value
Assets Table
Investments, at Value:
Common Stocks
Consumer Discretionary	$	749,503	$	—	$	—	$	749,503
Consumer Staples		392,373		—		—		392,373
Energy		1,180,515		—		—		1,180,515
Financials		1,492,103		—		—		1,492,103
Health Care		862,959		—		—		862,959
Industrials		839,243		—		—		839,243
Information Technology		600,433		—		—		600,433
Materials		382,301		—		—		382,301
Telecommunication Services		270,086		—		—		270,086
Utilities		342,134		—		—		342,134
Preferred Stocks		141,740		—		—		141,740
Investment Companies		349,169		—		—		349,169
Total Assets	$	7,602,559	$	—	$	—	$	7,602,559

Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table 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 methodologies, if any, during the reporting period.

See accompanying Notes to Financial Statements.

STATEMENT OF ASSETS AND LIABILITIES December 31, 2009

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $6,334,625)	$	7,262,486
Affiliated companies (cost $340,073)		340,073
		7,602,559
Receivables and other assets:
Dividends		6,790
Other		5,662
Total assets		7,615,011
Liabilities
Payables and other liabilities:
Investments purchased		26,993
Legal, auditing and other professional fees		20,012
Shareholder communications		9,656
Shares of beneficial interest redeemed		5,007
Distribution and service plan fees		4,454
Trustees’ compensation		3,187
Transfer and shareholder servicing agent fees		638
Other		2,248
Total liabilities		72,195
Net Assets	$	7,542,816
Composition of Net Assets
Par value of shares of beneficial interest	$	840
Additional paid-in capital		9,026,679
Accumulated net investment income		53,310
Accumulated net realized loss on investments and foreign currency transactions		(2,465,874	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		927,861
Net Assets	$	7,542,816
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 $37,677 and 5,222 shares of beneficial interest outstanding)	$	7.22
Service Shares:
Net asset value, redemption price per share and offering price per share (based on net assets of $7,505,139 and 835,048 shares of beneficial interest outstanding)	$	8.99

See accompanying Notes to Financial Statements.

STATEMENT OF OPERATIONS For the Year Ended December 31, 2009

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $589)	$	122,990
Affiliated companies		1,614
Interest		18
Total investment income		124,622
Expenses
Management fees		41,350
Distribution and service plan fees—Service shares		12,371
Transfer and shareholder servicing agent fees:
Non-Service shares		27
Service shares		4,166
Shareholder communications:
Non-Service shares		114
Service shares		21,464
Legal, auditing and other professional fees		27,002
Trustees’ compensation		6,612
Registration and filing fees		4,267
Custodian fees and expenses		148
Other		2,129
Total expenses		119,650
Less waivers and reimbursements of expenses		(55,747	)
Net expenses		63,903
Net Investment Income		60,719
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies (including premiums on options exercised)		(217,690	)
Closing and expiration of option contracts written		3,628
Foreign currency transactions		(22,722	)
Net realized loss		(236,784	)
Net change in unrealized appreciation on:
Investments		1,765,327
Translation of assets and liabilities denominated in foreign currencies		3,599
Net change in unrealized appreciation		1,768,926
Net Increase in Net Assets Resulting from Operations	$	1,592,861

See accompanying Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,	2009			2008
Operations
Net investment income	$	60,719		$	56,053
Net realized loss		(236,784	)		(1,927,397	)
Net change in unrealized appreciation (depreciation)		1,768,926			(1,273,014	)
Net increase (decrease) in net assets resulting from operations		1,592,861			(3,144,358	)
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Non-Service shares		(103	)		(2,000	)
Service shares		(9,896	)		(47,216	)
		(9,999	)		(49,216	)
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Non-Service shares		23,026			(1,475,254	)
Service shares		1,240,784			1,155,875
		1,263,810			(319,379	)
Net Assets
Total increase (decrease)		2,846,672			(3,512,953	)
Beginning of period		4,696,144			8,209,097
End of period (including accumulated net investment income of $53,310 and $2,584, respectively)	$	7,542,816		$	4,696,144

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Non-Service Shares         Year Ended December 31,	2009			2008			2007			2006			2005
Per Share Operating Data
Net asset value, beginning of period	$	4.99		$	11.73		$	11.58		$	11.16		$	12.26
Income (loss) from investment operations:
Net investment income (loss)1		.11			.12			.10			(.03	)		.02
Net realized and unrealized gain (loss)		2.14			(4.44	)		.59			1.61			.71
Total from investment operations		2.25			(4.32	)		.69			1.58			.73
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.02	)		(2.42	)		(.10	)		(.01	)		(.02	)
Distributions from net realized gain		—			—			(.44	)		(1.15	)		(1.81	)
Total dividends and/or distributions to shareholders		(.02	)		(2.42	)		(.54	)		(1.16	)		(1.83	)
Net asset value, end of period	$	7.22		$	4.99		$	11.73		$	11.58		$	11.16
Total Return, at Net Asset Value2		45.08	%		(36.43	)%		5.89	%		14.03	%		5.88	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	38		$	6		$	1,728		$	2,657		$	2,562
Average net assets (in thousands)	$	20		$	857		$	2,753		$	2,695		$	2,878
Ratios to average net assets:3
Net investment income (loss)		1.75	%		1.07	%		0.80	%		(0.29	)%		0.15	%
Total expenses		2.30	%4		1.48	%4		1.49	%4		2.14	%4		1.78	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		0.85	%		1.25	%		1.25	%		2.14	%		1.78	%
Portfolio turnover rate		122	%		175	%		142	%		124	%		86	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	2.31	%
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.

FINANCIAL HIGHLIGHTS Continued

Service Shares         Year Ended December 31,	2009			2008			2007			20061
Per Share Operating Data
Net asset value, beginning of period	$	6.79		$	11.75		$	11.57		$	11.89
Income (loss) from investment operations:
Net investment income (loss)2		.09			.08			.06			(.05	)
Net realized and unrealized gain (loss)		2.12			(4.97	)		.60			.88
Total from investment operations		2.21			(4.89	)		.66			.83
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.01	)		(.07	)		(.04	)		—
Distributions from net realized gain		—			—			(.44	)		(1.15	)
Total dividends and/or distributions to shareholders		(.01	)		(.07	)		(.48	)		(1.15	)
Net asset value, end of period	$	8.99		$	6.79		$	11.75		$	11.57
Total Return, at Net Asset Value3		32.57	%		(41.62	)%		5.70	%		6.81	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	7,505		$	4,690		$	6,481		$	455
Average net assets (in thousands)	$	5,501		$	5,561		$	3,527		$	268
Ratios to average net assets:4
Net investment income (loss)		1.10	%		0.84	%		0.49	%		(1.30	)%
Total expenses5		2.17	%		2.13	%		1.63	%		2.89	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.15	%		1.50	%		1.50	%		2.88	%
Portfolio turnover rate		122	%		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 initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one full year. Total return information does not reflect expenses that apply at the separate account level or to related insurance products. Inclusion of these charges would reduce the total return figures for all periods shown. 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, 2009	2.18	%
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.

     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. Unadjusted quoted prices in active markets for identical securities are classified as “Level 1,” inputs other than unadjusted quoted prices for an asset that are observable are classified as “Level 2” and significant 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 unadjusted quoted market prices, when available, as supplied primarily either by portfolio pricing services approved by the Board of Trustees or dealers.

     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 it is 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.

     In the absence of a readily available unadjusted 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

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

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 unadjusted 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.

     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. When applicable, the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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, however, during the year ended December 31, 2009, the Fund paid federal excise tax of $114. 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
					Appreciation
					Based on Cost of
					Securities and
Undistributed	Undistributed		Accumulated		Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3		Tax Purposes
$64,428	$	—	$	2,303,479	$	757,533

1. As of December 31, 2009, the Fund had $2,303,479 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, 2009, details of the capital loss carryforwards were as follows:

Expiring
2016	$	1,303,597
2017		999,882
Total	$	2,303,479

2.	During the fiscal year ended December 31, 2009, the Fund did not utilize any capital loss carryforward.
3.	During the fiscal year ended December 31, 2008, 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, 2009. Net assets of the Fund were unaffected by the reclassifications.

			Reduction to
Reduction to	Increase to		Accumulated Net
Paid-in	Accumulated Net		Realized Loss on
Capital	Investment Income		Investments
$114	$	6	$	108

The tax character of distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:

	Year Ended		Year Ended
	December 31, 2009		December 31, 2008
Distributions paid from:
Ordinary income	$	9,999	$	49,216

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, 2009 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	$	6,845,026
Gross unrealized appreciation	$	999,389
Gross unrealized depreciation		(241,856	)
Net unrealized appreciation	$	757,533

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, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount
Non-Service Shares
Sold		4,808		$	27,757			957		$	8,036
Dividends and/or distributions reinvested		14			103			409			2,000
Redeemed		(846	)		(4,834	)		(147,464	)		(1,485,290	)
Net increase (decrease)		3,976		$	23,026			(146,098	)	$	(1,475,254	)
Service Shares
Sold		326,123		$	2,582,040			461,846		$	4,322,028
Dividends and/or distributions reinvested		1,092			9,896			7,057			47,216
Redeemed		(182,945	)		(1,351,152	)		(329,902	)		(3,213,369	)
Net increase		144,270		$	1,240,784			139,001		$	1,155,875

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 IMMF, for the year ended December 31, 2009, were as follows:

	Purchases		Sales
Investment securities	$	7,710,909	$	6,421,680

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. For the year ended December 31, 2009, the Fund paid $3,564 to OFS for services to the Fund.

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 daily 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 January 1, 2007, the Manager voluntarily agreed to limit the Fund’s total annual operating expenses so that those expenses as percentages of daily net assets would not exceed the annual rate of 1.25% for Non-Service shares and 1.50% for Service shares. Effective May 1, 2009, the Manager has voluntarily undertaken to limit the Fund’s total annual operating expenses so that those expenses, as percentages of daily net assets will not exceed the annual rate of 0.80% for Non-Service shares and 1.05% for Service shares. During the year ended December 31, 2009, the Manager waived fees and/or reimbursed the Fund $295 and $55,158 for Non-Service and Service shares, respectively. This voluntary undertaking and may be amended or withdrawn at any time.

     Prior to May 1, 2009, OFS had voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class.

     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, 2009, the Manager waived $294 for IMMF management fees.

5. Risk Exposures and the Use of Derivative Instruments

The Fund’s investment objectives not only permit the Fund to purchase investment securities, they also allow the Fund to enter into various types of derivatives contracts, including, but not limited to, futures contracts, forward foreign currency exchange contracts, credit default swaps, interest rate swaps, total return swaps, and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase, decrease, or change the level or types of exposure to market risk factors. Central to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity and debt securities: they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Fund to pursue its objectives more quickly and efficiently than if it were to make direct purchases or sales of securities capable of effecting a similar response to market factors.

Market Risk Factors. In accordance with its investment objectives, the Fund may use derivatives to increase or decrease its exposure to one or more of the following market risk factors defined below:

Commodity Risk. Commodity risk relates to the change in value of commodities or commodity indexes as they relate to increases or decreases in the commodities market. Commodities are physical assets that have tangible properties. Examples of these types of assets are crude oil, heating oil, metals, livestock, and agricultural products.

Credit Risk. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds.

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Foreign Exchange Rate Risk. Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency.

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

Volatility Risk. Volatility risk refers to the magnitude of the movement, but not the direction of the movement, in a financial instrument’s price over a defined time period. Large increases or decreases in a financial instrument’s price over a relative time period typically indicate greater volatility risk, while small increases or decreases in its price typically indicate lower volatility risk.

The Fund’s actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below.

Risks of Investing in Derivatives. The Fund’s use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

     Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Fund to increase its market value exposure relative to its net assets and can substantially increase the volatility of the Fund’s performance.

     Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Typically, the associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Counterparty Credit Risk. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund’s derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction. To reduce this risk the Fund has entered into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) master agreements, which allow the Fund to net unrealized appreciation and depreciation for positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty. In addition, the Fund may require that certain counterparties post cash and/or securities in collateral accounts to cover their net payment obligations for those derivative contracts subject to ISDA master agreements. If the counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Fund.

Credit Related Contingent Features. The Fund has several credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s Net Asset Value or NAV. The contingent features are established within the Fund’s ISDA master agreements which govern positions in swaps, over-the-counter options, and forward currency exchange contracts for each individual counterparty.

The effect of derivative instruments on the Statement of Operations is as follows:

Amount of Realized Gain or Loss Recognized on Derivatives
	Investments
	from unaffiliated
Derivatives Not	companies (including			Closing and
Accounted for as	premiums on			expiration of option
Hedging Instruments	options exercised)*			contracts written		Total
Equity contracts	$	(110	)	$	3,628	$	3,518

* Includes purchased option contracts, purchased swaption contracts and written option contracts exercised, if any.

NOTES TO FINANCIAL STATEMENTS Continued

5. Risk Exposures and the Use of Derivative Instruments Continued

Foreign Currency Exchange Contracts

The Fund may enter into current and forward foreign currency exchange contracts for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Foreign currency exchange contracts, if any, are reported on a schedule following the Statement of Investments. These contracts will be valued daily based upon the closing prices of the 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.

     The Fund has purchased and sold foreign currency exchange contracts of different currencies in order to acquire currencies to pay for related foreign securities purchase transactions, or to convert foreign currencies to U.S. dollars from related foreign securities sale transactions. These foreign currency exchange contracts are negotiated at the current spot exchange rate with settlement typically within two business days thereafter.

     Additional associated risk to the Fund includes counterparty credit risk. Counterparty 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, 2009, the Fund held no outstanding forward contracts.

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 Fund has written put options on individual equity securities and, or, equity indexes to increase exposure to equity risk. A written put option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

     The Fund has written covered call options on individual equity securities and, or, equity indexes to decrease exposure to equity risk. A written covered call option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

     The Fund has purchased call options on individual equity securities and, or, equity indexes to increase exposure to equity risk. A purchased call option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price.

     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.

     Additional associated risks to the Fund include counterparty credit risk for over-the-counter options and liquidity risk. Written option activity for the year ended December 31, 2009 was as follows:

	Call Options						Put Options
	Number of			Amount of			Number of			Amount of
	Contracts			Premiums			Contracts			Premiums
Options outstanding as of December 31, 2008		—		$	—			—		$	—
Options written		168			11,721			17			1,895
Options closed or expired		(160	)		(10,654	)		(17	)		(1,895	)
Options exercised		(8	)		(1,067	)		—			—
Options outstanding as of December 31, 2009		—		$	—			—		$	—

6. Subsequent Events Evaluation

The Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through February 16, 2010, the date the financial statements were issued. This evaluation determined that there are no subsequent events that necessitated disclosures and/or adjustments.

7. Pending Litigation

Since 2009, a number of lawsuits have been filed in federal courts against the Manager, the Distributor, and certain mutual funds (“Defendant Funds”) advised by the Manager and distributed by the Distributor (but not against the Fund). The lawsuits naming the Defendant Funds also name certain officers, trustees and former trustees of the respective Defendant Funds. The plaintiffs seek class action status on behalf of purchasers of shares of the respective Defendant Fund during a particular time period. The lawsuits against the Defendant Funds raise claims under federal securities laws alleging that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund’s investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     In 2009, lawsuits were filed in state court against the Manager and its subsidiary (but not against the Fund), on behalf of the New Mexico Education Plan Trust. These lawsuits allege breach of contract, breach of fiduciary duty, negligence and violation of state securities laws, and seek compensatory damages, equitable relief and an award of attorneys’ fees and litigation expenses.

     Other lawsuits have been filed since 2008 in various state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates. Those lawsuits relate to the alleged investment fraud perpetrated by Bernard Madoff and his firm (“Madoff”) and allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys’ fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

NOTES TO FINANCIAL STATEMENTS Continued

7. Pending Litigation Continued

     The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds’ Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

Oppenheimer Variable Account Funds

Website
www.oppenheimerfunds.com

Investment Adviser
OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Distributor
OppenheimerFunds Distributor, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1.800.CALL OPP (225.5677)

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 Funds & Independent Directors
K&L Gates LLP
70 West Madison Street, Suite 3100
Chicago, Illinois 60602

PXOVAF.001.0410

OPPENHEIMER VARIABLE ACCOUNT FUNDS

FORM N-1A

PART C

OTHER INFORMATION

Item 28. Exhibits

(a)      Eighteenth Amended and Restated Declaration of Trust dated 4/30/10: Filed herewith

(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. 2 to the Registration Statement of Oppenheimer Portfolio Series Fixed Income Active Allocation Fund (Reg. No. 333-146105), (5/29/09), 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 9/17/09:  Previously filed with Post-Effective Amendment No. 16 to the Registration Statement of Oppenheimer Main Street Cap Fund (Reg. No. 333-78269), 10/2/09, and incorporated herein by reference.

(o)  (i) Powers of Attorney dated August 26, 2009 for all Trustees/Directors and Officers, with the exception of William F. Glavin, Jr.: Previously filed with Post-Effective Amendment No. 24 to the Registration Statement of Oppenheimer Senior Floating Rate Fund (Reg. No. 333-128848), (11/20/09), and incorporated herein by reference.

     (ii) Power of Attorney dated December 18, 2009 for William F. Glavin, Jr.: Previously filed with Post Effective Amendment No. 64 to the Registration Statement of Oppenheimer Quest for Value Funds, (Reg. No. 33-15489), (12/18/09), and incorporated herein by reference.

(p)     Amended and Restated Code of Ethics of the Oppenheimer Funds dated November 30, 2007 under Rule 17j-1 of the Investment Company Act of 1940: Previously filed with Post-Effective Amendment No. 65 to the Registration Statement of Oppenheimer Quest for Value Funds, (Reg. No. 33-15489), (02/24/10), and incorporated herein by reference.

Item 29. - Persons Controlled by or Under Common Control with the Fund

None.
 

Item 30. - 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 31. - 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 31(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.
Obi Akunwafor, Assistant Vice President	Formerly Senior Associate at Goldman Sachs & Co. (January 2000 – January 2008).
Carl Algermissen, Vice President & Associate Counsel	Assistant Secretary of Centennial Asset Management Corporation.
Victor Alino, Vice President	None
Michael Amato, Vice President	None
Nicole Andersen, Assistant Vice President	None
Raymond Anello, Vice President	Formerly Portfolio Manager of Dividend Strategy/Sector Analyst for Energy/Utilities at RS Investments (June 2007- April 2009).
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).
Hany S. Ayad, Vice President	None
Paul Aynsley, Vice President	None
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, Senior 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 Bellamy, Vice President	None
Emanuele Bergagnini, 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.
Adam Bierstedt, Assistant Vice President	Formerly a manager in the Business Controller Group at OppenheimerFunds, Inc. (February 2006 – January 2010).
Craig Billings, Vice President	None
Mark Binning, Assistant Vice President	None
Julie Blanchard, Assistant Vice President	None
Beth Bleimehl, Assistant Vice President	None
Lisa I. Bloomberg, Senior Vice President & Deputy General Counsel	Assistant Secretary of Oppenheimer Real Asset Management, Inc.
Veronika Boesch, Vice President	None
Chad Boll, Vice President	None
Michelle Borre Massick, Vice President	None
Lori E. Bostrom, Senior Vice President & Deputy General Counsel	Assistant Secretary of OppenheimerFunds Legacy Program.
John Boydell, Vice President	None
Donal Brishnoi, Assistant Vice President	Formerly an Analyst at Moore Capital Management (April 2007 – December 2008).
Richard Britton, Vice President	None
Garrett C. Broadrup, Vice President & Associate Counsel	None
Michael Bromberg, Assistant Vice President	None
Holly Broussard, Vice President	None
Jack Brown, Vice President	None
Roger Buckley, Assistant Vice President	None
Joy Budzinski, Vice President	None
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	None
Michael Camarella, Assistant Vice President	None
Dale Campbell, Assistant Vice President	None
Jason Carter, Assistant Vice President	None
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	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	None
Eric Compton, Assistant Vice President	None
Gerald James Concepcion, Assistant Vice President	None
Cheryl Corrigan, Assistant Vice President	None
Scott Cottier, Vice President: Rochester Division	None
William Couch, Assistant Vice President	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.
Roger W. Crandall, Director	President, Director and Chief Executive Officer of Massachusetts Mutual Life Insurance Company
Jerry Cubbin, Vice President	Formerly a Consultant at National Australia Bank, (May 2009 – October 2009), a Consultant at Magnitude Capital, (November 2008 – May 2009) and a Managing Director at Brown Brothers Harriman (March 2001 – July 2008).
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
Peter Dao, 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
Alessio de Longis, Assistant Vice President	Formerly Sr. Research Analyst (February 2008 – April 2009).
Damaris De Los Santos, Assistant Vice President	None
Richard Demarco, Assistant Vice President	None
Mark Demitry, 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.
Andrew Donohue, Assistant Vice President	Formerly Manager at OppenheimerFunds, Inc. (2007 – June 2009).
Alicia Dopico, Vice President	None
Andrew Doyle, Senior Vice President	Formerly First Vice President, head of Global Wealth Management Rewards and Information Services at Bank of America (March 2006 – March 2009).
Thomas Doyle, Assistant Vice President	None
Bruce C. Dunbar, Senior Vice President	None
Robert Dunphy, Assistant Vice President	Formerly Intermediate Analyst at OppenheimerFunds, Inc (August 2004 – May 2009).
Brian Dvorak, Vice President	None
Richard Edmiston, Vice President	None
Taylor Edwards, Vice President & Associate Counsel	None
Peter Ellman, Assistant 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
Kim Evans, Vice President	Formerly an Owner of Evans Consulting Group, LLC (February 2000 – August 2009) and a Managing Member of Cranbury Design Center, LLC (February 2000 – February 2009).
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	None
Matthew Farkas, Vice President and Associate 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
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.
Arnella Forde, Assistant Vice President	Formerly Managing Editor / Communications Consultant at Franklin Templeton Investments (September 2007 – March 2009).
Colleen M. Franca, Vice President	None
Debbie Francis, Assistant Vice President	Previously employed at OppenheimerFunds, Inc (August 2007 – August 2009).
Dominic Freud, Vice President	None
Marcus Franz, Vice President	None
Hazem Gamal, Vice President	None
Charles Gapay, Assistant Vice President	None
Anthony W. Gennaro, Jr., Vice President	Formerly a sector manager for media, internet and telecom and a co-portfolio manager for mid-cap portfolios with the RS Core Equity Team of RS Investment Management Co. LLC (October 2006 – April 2009.)
Timothy Gerlach, Assistant Vice President	None
Alan C. Gilston, Vice President	None
Jacqueline Girvin-Harkins, Assistant Vice President	None
William F. Glavin, Jr., Chairman, Chief Executive Officer, President and Director	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	None
Manind Govil, Senior Vice President	Formerly portfolio manager with RS Investment Management Co. LLC (October 2006 – May 2009).
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
Cheryl Hampton, Vice President	Formerly Vice President and Director of Mutual Fund and Hedge Fund Operations at Calamos Advisors LLC (March 2007 – September 2009).
Kelly Haney, Assistant Vice President	None
Jason Harubin, Assistant Vice President	None
Steve Hauenstein, Assistant Vice President	None
Thomas B. Hayes, Vice President	None
Bradley Hebert, Assistant Vice President	None
Heidi Heikenfeld, Assistant Vice President	None
Annika Helgerson, Assistant Vice President	None
Kenneth Herold, Assistant Vice President	None
Daniel Herrmann, Vice President	Vice President of OFI Private Investments Inc.
Benjamin Hetrick, Assistant Vice President	None
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	None
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, Senior 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, Senior 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
Rezo Kanovich, Vice President	None
Amee Kantesaria, Vice President and Assistant Counsel	None
Thomas W. Keffer, Senior Vice President	Senior Vice President of OppenheimerFunds Distributor, Inc.
Sean Keller, Vice President	None
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
Daniel Kohn, Vice President	None
Samuel Koren, Vice President and Deputy General Counsel	Formerly Managing Director of the Litigation and Regulatory Group at Bear, Stearns; Attorney at Cleary Gottlieb Steen & Hamilton.
Martin S. Korn, Senior Vice President	None
Michael Kotlartz, Vice President	None
Brian Kramer, Vice President	None
Magnus Krantz, Vice President	Formerly an Analyst at RS Investments (December 2005 – May 2009).
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.
Eric Larson, Vice President	Formerly Senior Equity Trader at RS Investments (October 2006 – May 2009).
Gayle Leavitt, Assistant Vice President	None
Christopher M. Leavy, Executive Vice President & Chief Investment Officer, Equities	Senior Vice President of OFI Private Investments Inc., OFI Institutional Asset Management, Inc., and Trinity Investment Management Corporation.
Johnny C. Lee, Vice President & Assistant Counsel	Formerly Vice President at Morgan Stanley Investment Management, Inc. (August 2006 – February 2009).
Victor Lee, Vice President	None
Young-Sup Lee, Vice President	Formerly a Vice President at Morgan Stanley (July 2006- July 2008).
Randy Legg, Vice President & Associate Counsel	None
Michael Leskinen, Vice President	Formerly Senior Sector Analyst (December 2007 – February 2009).
Michael S. Levine, Vice President	None
Brian Levitt, Vice President	None
Justin Leverenz, Vice President	None
William M. Levey, Assistant Vice President & Assistant Counsel	Formerly an attorney at Seward & Kissel LLP (September 2005 – April 2009).
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
William Linden, 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
Aaron Magid, Assistant Vice President	None
Matthew Maley, Vice President	None
Jerry Mandzij, Vice President	None
Dana Mangnuson, Assistant Vice President	Formerly a Marketing Manager at OppenheimerFunds, Inc.
Daniel Martin, Assistant Vice President	None
Kenneth Martin, Vice President	Formerly a Compliance Officer at Merrill Lynch & Co. (May 2007 – August 2009).
William T. Mazzafro, Vice President	None
Melissa Mazer, 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.
Joseph McDonnell, Vice President	None
Joseph McGovern, Vice President	None
William McNamara, 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	None
Rejeev Mohammed, Assistant Vice President	None
David Moore, Vice President	Formerly Vice President at RNK Capital (June 2004 - September 2008).
Sarah Morrison, Assistant Vice President	None
Jill Mulcahy, Vice President: Rochester Division	None
Suzanne Murphy, Vice President	Vice President of OFI Private Investments Inc.
Thomas J. Murray, Vice President	None
Pankaj Naik, 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, Vice President	None
Kristina Olson, Senior Vice President	None
Kristin Pak, Vice President	None
Lerae A. Palumbo, Assistant Vice President	None
Kim Pascalau, Assistant 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, Director, Executive 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
Stacy Pottinger, Vice President	None
David Preuss, Assistant Vice President	None
Christopher Proctor, Vice President	None
Ellen Puckett, Assistant Vice President	None
Jodi Pullman, Assistant Vice President	None
Paul Quarles, Assistant Vice President	None
Michael E. Quinn, Vice President	None
Julie S. Radtke, Vice President	None
Benjamin Ram, Vice President	Formerly a sector manager at RS Investment Management Co. LLC (October 2006 – May 2009) and Portfolio Manager Mid Cap Strategies.
Norma J. Rapini, Assistant Vice President: Rochester Division	None
Jill Reiter, Assistant Vice President	None
Jason Reuter, Assistant Vice President	None
Eric Rhodes, Vice President	None
Maria Ribeiro De Castro, Vice President	None
Grace Roberts, Assistant Vice President	None
Robert Robis, Vice President	None
Benjamin Rockmuller, Vice President	None
Antoinette Rodriguez, Vice President	None
Lucille Rodriguez, Assistant Vice President	None
Michael Rollings, Director	Executive Vice President and Chief Financial Officer of Massachusetts Mutual Life Insurance Company
Stacey Roode, Senior Vice President	None
Erica Rualo, Assistant Vice President	None
Adrienne Ruffle, Vice President & Associate Counsel	Assistant Secretary of OppenheimerFunds Legacy Program.
Kim Russomanno, Assistant Vice President	None
Gerald Rutledge, Vice President	None
Julie Anne Ryan, Vice President	None
Sean Ryan, Assistant Vice President and Assistant Counsel	Formerly an associate at Sidley Austin, LLP.
Timothy Ryan, Vice President	None
Rohit Sah, Vice President	None
Gary Salerno, Assistant Vice President	None
Valerie Sanders, Vice President	None
Carlos Santiago Assistant Vice President	Legal Disclosure and Paralegal Manager at OppenheimerFunds, Inc. (since May 2007).
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.
Patrick Schneider, Assistant Vice President	None
Jeffrey Schwartz, Assistant Vice President	Formerly Manager in Fund Operations at OppenheimerFunds, Inc. (Sept 2006 – May 2009).
Scott A. Schwegel, Assistant Vice President	None
Allan P. Sedmak, Assistant Vice President	None
Matthew Severski, Assistant Vice President	Formerly Lead IS Engineer at OppenheimerFunds, Inc. (August 2006 – May 2009).
Jennifer L. Sexton, Vice President	Senior Vice President of OFI Private Investments Inc.
Rudi Schadt, Vice President	None
Asutosh Shah, Vice President	None
Kamal Shah, Vice President	None
Tammy Sheffer, Vice President	None
William Sheppard, Vice President	Formerly an Investment Analyst (October 2004 – March 2008).
Mary Dugan Sheridan, Vice President	None
Nicholas Sherwood, Assistant Vice President	None
Joel Simon, Vice President	Formerly Assistant Vice President at OppenheimerFunds, Inc. (1999-2009).
David C. Sitgreaves, Assistant Vice President	None
Jan Smith, Assistant Vice President	Formerly Manager at OppenheimerFunds Inc. (May 2005 – June 2009).
Scott Smith, Vice President	None
Paul Snogren, Assistant Vice President	None
Louis Sortino, Vice President: Rochester Division	None
Astrid Yee-Sobraques, Vice President	Formerly a manager at GE Corporate (September 2005 – September 2008).
Keith J. Spencer, Senior Vice President	None
Brett Stein, Vice President	None
Richard A. Stein, Vice President: Rochester Division	None
Arthur P. Steinmetz, Executive Vice President & Chief Investment Officer, Fixed Income	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.
Agata Strzelichowski, Assistant Vice President	Formerly an associate at Goldman, Sachs & Co. (December 2005 – July 2008).
Amy Sullivan, Assistant Vice President	Formerly a Manager at OppenheimerFunds, Inc. (January 2006-March 2008).
Michael Sussman, Vice President	Vice President of OppenheimerFunds Distributor, Inc.
Brian C. Szilagyi, Assistant Vice President	None
Kelly Thomas, Assistant Vice President	None
Vincent Toner, Vice President	None
Matthew Torpey, Assistant 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
Raman Vardharaj, Vice President	Formerly a sector manager and a senior quantitative analyst at RS Investment Management Co. LLC (October 2006 - May 2009).
Rene Vecka, Assistant Vice President: Rochester Division	None
Elaine Villas Assistant Vice President	None
Ryan Virag, Assistant Vice President	None
Jake Vogelaar, Assistant Vice President	None
Phillip F. Vottiero, Senior Vice President	None
Mark Wachter, Vice President	None
Lisa Walsh, Assistant Vice President	None
Darren Walsh, Executive Vice President	President and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc.
Eliot Walsh, Assistant Vice President	None
Richard Walsh, Vice President	Vice President of OFI Private Investments.
Elizabeth Ward, Director	Senior Vice President and Chief Enterprise Risk Officer of Massachusetts Mutual Life Insurance Company.
Thomas Waters, Vice President	Vice President of OFI Institutional Asset Management, Inc.
Margaret 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
Adam Weiner, Vice President	None
Christine Wells, Vice President	None
Joseph J. Welsh, Senior 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
Martha Willis, Executive Vice President	Formerly Executive Vice President of Investment Product Management at Fidelity Investments.
Julie Wimer, Assistant Vice President	None
Deanna Wine, Assistant Vice President	None
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
Caleb C. Wong, Vice President	None
Sookhee Yee, Assistant Vice President	Vice President at Merrill Lynch Bank and Trust, FSB (February 2002 – May 2009).
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
Sara Zervos, Vice President	None
Ronald Zibelli, Jr. Vice President	Formerly Managing Director and Small Cap Growth Team Leader at Merrill Lynch.
Matthew Ziehl, Vice President	Formerly a portfolio manager with RS Investment Management Co. LLC (from October 2006 - May 2009)

The Oppenheimer Funds include the following:

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 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 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 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

Oppenheimer Real Estate Fund

Oppenheimer Rising Dividends Fund

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 32. 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 31(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 Austin(1)	Vice President	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
Ken Broadsky(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
Nicholas Cirbo(1)	Vice President	None
Melissa Clayton(2)	Assistant Vice President	None
Craig Colby(2)	Vice President	None
Rodney Constable(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
Brian Dietrich (1)	Assistant Vice President	None
Steven Dombrower 13 Greenbrush Court Greenlawn, NY 11740	Vice President	None
Robert Dunphy(2)	Vice President	None
Beth Arthur Du Toit(1)	Vice President	None
Paul Eck 3055 Forest Ridge Court Fairlawn, OH 44333	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
Matthew Farrier(1)	Vice President	None
Kristie Feinberg(2)	Assistant Treasurer	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
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
Diane Frankenfield(2)	Senior Vice President	None
Jerry Fraustro(2)	Vice President	None
William Friebel 2919 St. Albans Forest Circle Glencoe, MO 63038	Vice President	None
Alyson Frost(2)	Assistant Vice President	None
Greg Fulginite 515 N. Bemiston Ave. St. Louis, MO 63130	Vice President	None
William Gahagan(2)	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)	Senior 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)	Senior 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
Brian Johnson(1)	Vice President	None
Eric K. Johnson 8588 Colonial Drive Lone Tree, CO 80124	Senior 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
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
Anthony Mazzariello(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	President and Director	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
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
James Mugno(2)	Vice President	None
Matthew Mulcahy(2)	Vice President	None
Wendy Jean Murray 32 Carolin Road Upper Montclair, NJ 07043	Vice President	None
Janet Oleary(2)	Vice President	None
John S. Napier 17 Hillcrest Ave. Darien, CT 06820	Senior 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
Timothy O’Connell(2)	Vice President	None
Janet Oleary(2)	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
David Pfeffer(2)	Director	None
Andrew Phillips(1)	Assistant 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
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
Kenneth Shell(1)	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
Brian Taylor	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
Peter Winters 911 N. Organce Ave, Apt. 514 Orlando, FL 32801	Vice President	None
Patrick Wisneski(1)	Vice President	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 33. 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 34. Management Services

Not applicable
 

Item 35. 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 28th day of April, 2010.
 
 

Oppenheimer Variable Account Funds

          By:     William F. Glavin, Jr.*               

               William F. Glavin, Jr., 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:
 

SignaturesTitleDate

William L. Armstrong*                                Chairman of the                            April 28, 2010
William L. Armstrong                                  Board of Trustees
 
 

William F. Glavin, Jr.*                                President, Principal                        April 28, 2010

William F. Glavin, Jr.                                 Executive Officer and Trustee
 
 

Brian W. Wixted*                                     Treasurer, Principal                         April 28, 2010
Brian W. Wixted                                       Financial & Accounting Officer
 

George C. Bowen*                                    Trustee                                           April 28, 2010
George C. Bowen
 
 

Edward L. Cameron*                                Trustee                                            April 28, 2010
Edward L. Cameron
 
 

Jon S. Fossel*                                          Trustee                                            April 28, 2010
Jon S. Fossel
 

Sam Freedman*                                       Trustee                                             April 28, 2010
Sam Freedman
 
 

Beverly L. Hamilton*                               Trustee                                              April 28, 2010
Beverly L. Hamilton
 
 

Robert J. Malone*                                    Trustee                                              April 28, 2010

Robert J. Malone
 
 

F. William Marshall, Jr.*                           Trustee                                               April 28, 2010
F. William Marshall, Jr.

*By:     /s/ Mitchell J. Lindauer     
     Mitchell J. Lindauer, Attorney-in-Fact

OPPENHEIMER VARIABLE ACCOUNT FUNDS

Post-Effective Amendment No. 56
 
Registration No. 2-93177
 
EXHIBIT INDEX

Exhibit No.Description

28(a)     Eighteenth Amended and Restated Declaration of Trust dated 4/30/10

28(j)     Independent Registered Public Accounting Firm’s Consent

EX-99

EIGHTEENTH AMENDED AND RESTATED DECLARATION OF TRUST

OF

OPPENHEIMER VARIABLE ACCOUNT FUNDS

This EIGHTEENTH AMENDED AND RESTATED DECLARATION OF TRUST, is made as of the 30^th day of April 2010, by and among the individuals executing this Eighteenth Amended and Restated Declaration of Trust as the Trustees.

WHEREAS, (i) by Declaration of Trust dated August 28, 1984, the Trustees established a Trust initially named Oppenheimer Variable Life Funds, a trust fund under the laws of the Commonwealth of Massachusetts, for the investment and reinvestment of funds contributed thereto, (ii) by the First Restated Declaration of Trust dated March 11, 1986, the Trustees amended and restated said Declaration of Trust to create two new Series of Shares, (iii) by the Second Restated Declaration of Trust dated August 15, 1986, the Trustees further amended and restated said Declaration of Trust to change the Trust’s name to Oppenheimer Variable Account Funds and to make certain other changes, (iv) by the Third Restated Declaration of Trust dated October 21, 1986, the Trustees amended and restated said Declaration of Trust to create a new Series of Shares, (v) by the Fourth Restated Declaration of Trust dated June 4, 1990, the Trustees amended and restated said Declaration of Trust to create a new Series of Shares, (vi) by the Fifth Restated Declaration of Trust dated February 25, 1993, the Trustees amended and restated said Declaration of Trust to create a new Series of Shares, (vii) by the Sixth Restated Declaration of Trust dated February 28, 1995, the Trustees amended and restated said Declaration of Trust to create a new Series of Shares, (viii) by the Seventh Restated Declaration of Trust dated December 16, 1997, the Trustees amended and restated said Declaration of Trust to create two new Series of Shares, (ix) by the Eighth Restated Declaration of Trust dated May 1, 1998, the Trustees amended and restated said Declaration of Trust to create a new class of Shares for each Series and to change the names of two Series, (x) by the Ninth Restated Declaration of Trust dated May 1, 1999, the Trustees amended and restated such Declaration of Trust to change the names of all ten Series, (xi) by the Tenth Restated Declaration of Trust dated May 1, 2000, the Trustees amended and restated such Declaration of Trust to change the name of the Class previously designated as “Class 2” to “Service Shares”, (xii) by the Eleventh Restated Declaration of Trust dated September 20, 2000, such Declaration of Trust was amended and restated to incorporate changes approved at the Shareholder meeting held September 20, 2000, and (xiii) by the Twelfth Amended and Restated Declaration of Trust dated May 1, 2001, the Trustees changed the name of one Series, (xiv) by the Thirteenth Amended and Restated Declaration of Trust dated August 27, 2002, the Trustees amended and restated such Declaration of Trust to create a new Series and to change the registered agent for service of process and the address of the Trust, (xv) by the Fourteenth Amended and Restated Declaration of Trust dated May 1, 2003, the Trustees amended and restated such Declaration of Trust to create a new class of shares and to change the name of the Series “Oppenheimer Main Street Growth & Income Fund/VA” to “Oppenheimer Main Street Fund/VA, (xvi) by the Fifteenth Amended and Restated Declaration of Trust dated May 1, 2004, the Trustees changed the name of one series “Oppenheimer Multiple Strategies Fund/VA” to “Oppenheimer Balanced Fund/VA” and created a new (fourth) class of shares, (xvii) by the Sixteenth Amended and Restated Declaration of Trust dated April 29, 2005, the Trustees changed the name of one Series “Oppenheimer Bond Fund/VA” to “Oppenheimer Core Bond Fund/VA,” and (xviii) by the Seventeenth Amended and Restated Declaration of Trust dated April 30, 2006, the Trustees changed the name of one Series “Oppenheimer Aggressive Growth Fund/VA” to “Oppenheimer MidCap Fund/VA.”

WHEREAS, the Trustees desire to further amend such Declaration of Trust, as amended and restated, to change the name of two Series “Oppenheimer MidCap Fund/VA” to “Oppenheimer Small- & Mid-Cap Growth Fund/VA” and “Oppenheimer Strategic Bond Fund/VA” to “Oppenheimer Global Strategic Income Fund/VA.”

NOW, THEREFORE, the Trustees declare that all money and property held or delivered to the Trust shall be held and managed under this Eighteenth Amended and Restated Declaration of Trust IN TRUST as herein set forth below.

ARTICLE FIRST – NAME

This Trust shall be known as OPPENHEIMER VARIABLE ACCOUNT FUNDS. The address of Oppenheimer Variable Account Funds is 6803 South Tucson Way, Centennial, Colorado 80112-3924. The Registered Agent of Service for Process is CT Corporation System, 101 Federal Street, Boston, MA 02110.

ARTICLE SECOND – DEFINITIONS

Whenever used herein, unless otherwise required by the context or specifically provided:

1.     All terms used in this Declaration of Trust that are defined in the 1940 Act (defined below) shall have the meanings given to them in the 1940 Act.

2.     “1940 Act” refers to the Investment Company Act of 1940 and the Rules and Regulations of the Commission thereunder, all as amended from time to time.

3.     “Board” or “Board of Trustees” or the “Trustees” means the Board of Trustees of the Trust.

4.     “By-Laws” means the By-Laws of the Trust as amended from time to time.

5.     “Class” means a class of a series of shares of the Trust established and designated under or in accordance with the provisions of Article FOURTH.

6.      “Commission” means the Securities and Exchange Commission.

7.      “Declaration of Trust” shall mean this Eighteenth Amended and Restated Declaration of Trust as it may be amended or restated from time to time.

8.      “Majority Vote of Shareholders” shall mean, with respect to any matter on which the Shares of the Trust or of a Series or Class thereof, as the case may be, may be voted, the “vote of a majority of the outstanding voting securities” (as defined in the 1940 Act or the rules and regulations of the Commission thereunder) of the Trust or such Series or Class, as the case may be.

9.     “Net asset value” means, with respect to any Share of any Series, (i) in the case of a Share of a Series whose Shares are not divided into Classes, the quotient obtained by dividing the value of the net assets of that Series (being the value of the assets belonging to that Series less the liabilities belonging to that Series) by the total number of Shares of that Series outstanding, and (ii) in the case of a Share of a Class of Shares of a Series whose Shares are divided into Classes, the quotient obtained by dividing the value of the net assets of that Series allocable to such Class (being the value of the assets belonging to that Series allocable to such Class less the liabilities belonging to such Class) by the total number of Shares of such Class outstanding; all determined in accordance with the methods and procedures, including without limitation those with respect to rounding, established by the Trustees from time to time.

10.     “Series” refers to series of shares of the Trust established and designated under or in accordance with the provisions of Article FOURTH.

11.     “Shareholder” means a record owner of Shares of the Trust.

12.     “Shares” refers to the transferable units of interest into which the beneficial interest in the Trust or any Series or Class of the Trust (as the context may require) shall be divided from time to time and includes fractions of Shares as well as whole Shares.

13.     “Trust” refers to the Massachusetts business trust created by this Declaration of Trust, as amended or restated from time to time.

14.     “Trustees” refers to the individual trustees in their capacity as trustees hereunder of the Trust and their successor or successors for the time being in office as such trustees.

ARTICLE THIRD – PURPOSE OF TRUST

The purpose or purposes for which the Trust is formed and the business or objects to be transacted, carried on and promoted by it are as follows:

1.     To hold, invest or reinvest its funds, and in connection therewith to hold part or all of its funds in cash, and to purchase or otherwise acquire, hold for investment or otherwise, sell, lend, pledge, mortgage, write options on, lease, sell short, assign, negotiate, transfer, exchange or otherwise dispose of or turn to account or realize upon, securities (which term “securities” shall for the purposes of this Declaration of Trust, without limitation of the generality thereof, be deemed to include any stocks, shares, bonds, financial futures contracts, indexes, debentures, notes, mortgages or other obligations, and any certificates, receipts, warrants or other instruments representing rights to receive, purchase or subscribe for the same, or evidencing or representing any other rights or interests therein, or in any property or assets) created or issued by any issuer (which term “issuer” shall for the purposes of this Declaration of Trust, without limitation of the generality thereof, be deemed to include any persons, firms, associations, corporations, syndicates, business trusts, partnerships, investment companies, combinations, organizations, governments, or subdivisions thereof) and in financial instruments (whether they are considered as securities or commodities); and to exercise, as owner or holder of any securities or financial instruments, all rights, powers and privileges in respect thereof; and to do any and all acts and things for the preservation, protection, improvement and enhancement in value of any or all such securities or financial instruments.

2.     To borrow money and pledge assets in connection with any of the objects or purposes of the Trust, and to issue notes or other obligations evidencing such borrowings, to the extent permitted by the 1940 Act and by the Trust’s fundamental investment policies under the 1940 Act.

3.     To issue and sell its Shares in such Series and Classes and amounts and on such terms and conditions, for such purposes and for such amount or kind of consideration (including without limitation thereto, securities) now or hereafter permitted by the laws of the Commonwealth of Massachusetts and by this Declaration of Trust, as the Trustees may determine.

4.     To purchase or otherwise acquire, hold, dispose of, resell, transfer, reissue, redeem or cancel its Shares, or to classify or reclassify any unissued Shares or any Shares previously issued and reacquired of any Series or Class into one or more Series or Classes that may have been established and designated from time to time, all without the vote or consent of the Shareholders of the Trust, in any manner and to the extent now or hereafter permitted by this Declaration of Trust.

5.     To conduct its business in all its branches at one or more offices in New York, Colorado and elsewhere in any part of the world, without restriction or limit as to extent.

6.     To carry out all or any of the foregoing objects and purposes as principal or agent, and alone or with associates or to the extent now or hereafter permitted by the laws of Massachusetts, as a member of, or as the owner or holder of any securities or other instruments of, or share of interest in, any issuer, and in connection therewith or make or enter into such deeds or contracts with any issuers and to do such acts and things and to exercise such powers, as a natural person could lawfully make, enter into, do or exercise.

7.     To do any and all such further acts and things and to exercise any and all such further powers as may be necessary, incidental, relative, conducive, appropriate or desirable for the accomplishment, carrying out or attainment of all or any of the foregoing purposes or objects.

The foregoing objects and purposes shall, except as otherwise expressly provided, be in no way limited or restricted by reference to, or inference from, the terms of any other clause of this or any other Article of this Declaration of Trust, and shall each be regarded as independent and construed as powers as well as objects and purposes, and the enumeration of specific purposes, objects and powers shall not be construed to limit or restrict in any manner the meaning of general terms or the general powers of the Trust now or hereafter conferred by the laws of the Commonwealth of Massachusetts nor shall the expression of one thing be deemed to exclude another, though it be of a similar or dissimilar nature, not expressed; provided, however, that the Trust shall not carry on any business, or exercise any powers, in any state, territory, district or country except to the extent that the same may lawfully be carried on or exercised under the laws thereof.

ARTICLE FOURTH – SHARES

1.     The beneficial interest in the Trust shall be divided into Shares, all with $.001 par value per share, but the Trustees shall have the authority from time to time, without obtaining shareholder approval, to create one or more Series of Shares in addition to the Series specifically established and designated in part 3 of this Article FOURTH, and to divide the shares of any Series into two or more Classes pursuant to part 2 of this Article FOURTH, all as they deem necessary or desirable, to establish and designate such Series and Classes, and to fix and determine the relative rights and preferences as between the different Series of Shares or Classes as to right of redemption and the price, terms and manner of redemption, liabilities and expenses to be borne by any Series or Class, special and relative rights as to dividends and other distributions and on liquidation, sinking or purchase fund provisions, conversion on liquidation, conversion rights, and conditions under which the several Series or Classes shall have individual voting rights or no voting rights. Except as established by the Trustees with respect to such Series or Classes, pursuant to the provisions of this Article FOURTH, and except as otherwise provided herein, all Shares of the different Series and Classes of a Series, if any, shall be identical.

(a)     The number of authorized Shares and the number of Shares of each Series and each Class of a Series that may be issued is unlimited, and the Trustees may issue Shares of any Series or Class of any Series for such consideration and on such terms as they may determine (or for no consideration if pursuant to a Share dividend or split-up), or may reduce the number of issued Shares of a Series or Class in proportion to the relative net asset value of the Shares of such Series or Class, all without action or approval of the Shareholders. All Shares when so issued on the terms determined by the Trustees shall be fully paid and non-assessable. The Trustees may classify or reclassify any unissued Shares or any Shares previously issued and reacquired of any Series into one or more Series or Classes of Series that may be established and designated from time to time. The Trustees may hold as treasury Shares (of the same or some other Series), reissue for such consideration and on such terms as they may determine, or cancel, at their discretion from time to time, any Shares reacquired by the Trust.

(b)     The establishment and designation of any Series or any Class of any Series in addition to that established and designated in part 3 of this Article FOURTH shall be effective upon either (i) the execution by a majority of the Trustees of an instrument setting forth such establishment and designation and the relative rights and preferences of such Series or such Class of such Series, whether directly in such instrument or by reference to, or approval of, another document that sets forth such relative rights and preferences of the Series or any Class of any Series including, without limitation, any registration statement of the Trust, (ii) upon the execution of an instrument in writing by an officer of the Trust pursuant to the vote of a majority of the Trustees, or (iii) as otherwise provided in either such instrument. At any time that there are no Shares outstanding of any particular Series or Class previously established and designated, the Trustees may by an instrument executed by a majority of their number or by an officer of the Trust pursuant to a vote of a majority of the Trustees abolish that Series or Class and the establishment and designation thereof. Each instrument referred to in this paragraph shall be an amendment to this Declaration of Trust, and the Trustees may make any such amendment without shareholder approval.

(c)     Any Trustee, officer or other agent of the Trust, and any organization in which any such person is interested may acquire, own, hold and dispose of Shares of any Series or Class of any Series of the Trust to the same extent as if such person were not a Trustee, officer or other agent of the Trust; and the Trust may issue and sell or cause to be issued and sold and may purchase Shares of any Series or Class of any Series to or from any such person or any such organization subject only to the general limitations, restrictions or other provisions applicable to the sale or purchase of Shares of such Series or Class generally.

2.     (a)     Classes. The Trustees shall have the exclusive authority from time to time, without obtaining shareholder approval, to divide the Shares of any Series into two or more Classes as they deem necessary or desirable, and to establish and designate such Classes. In such event, each Class of a Series shall represent interests in the designated Series of the Trust and have such voting, dividend, liquidation and other rights as may be established and designated by the Trustees. Expenses and liabilities related directly or indirectly to the Shares of a Class of a Series may be borne solely by such Class (as shall be determined by the Trustees) and, as provided in this Article FOURTH. The bearing of expenses and liabilities solely by a Class of Shares of a Series shall be appropriately reflected (in the manner determined by the Trustees) in the net asset value, dividend and liquidation rights of the Shares of such Class of a Series. The division of the Shares of a Series into Classes and the terms and conditions pursuant to which the Shares of the Classes of a Series will be issued must be made in compliance with the 1940 Act. No division of Shares of a Series into Classes shall result in the creation of a Class of Shares having a preference as to dividends or distributions or a preference in the event of any liquidation, termination or winding up of the Trust, to the extent such a preference is prohibited by Section 18 of the 1940 Act as to the Trust. The fact that a Series shall have initially been established and designated without any specific establishment or designation of Classes (i.e., that all Shares of such Series are initially of a single Class), or that a Series shall have more than one established and designated Class, shall not limit the authority of the Trustees to establish and designate separate Classes, or one or more additional Classes, of said Series without approval of the holders of the initial Class thereof, or previously established and designated Class or Classes thereof.

(b)     Class Differences. The relative rights and preferences of the Classes of any Series may differ in such other respects as the Trustees may determine to be appropriate in their sole discretion, provided that such differences are set forth in the instrument establishing and designating such Classes and executed by a majority of the Trustees (or by an instrument executed by an officer of the Trust pursuant to a vote of a majority of the Trustees).

The relative rights and preferences of each Class of Shares shall be the same in all respects except that, and unless and until the Board of Trustees shall determine otherwise: (i) when a vote of Shareholders is required under this Declaration of Trust or when a meeting of Shareholders is called by the Board of Trustees, the Shares of a Class shall vote exclusively on matters that affect that Class only; (ii) the expenses and liabilities related to a Class shall be borne solely by such Class (as determined and allocated to such Class by the Trustees from time to time in a manner consistent with parts 2 and 3 of this Article FOURTH); and (iii) pursuant to part 10 of Article NINTH, the Shares of each Class shall have such other rights and preferences as are set forth from time to time in the then effective prospectus and/or statement of additional information relating to the Shares. Dividends and distributions on each Class of Shares may differ from the dividends and distributions on any other such Class, and the net asset value of each Class of Shares may differ from the net asset value of any other such Class.

3.     Establishment and Designation of Series: The Trustees have previously established and designated eleven Series of Shares: (i) by the Declaration of Trust dated August 28, 1984, “Oppenheimer Money Fund/VA,” “Oppenheimer Bond Fund/VA” (the said “Oppenheimer Bond Fund/VA” is hereby renamed “Oppenheimer Core Bond Fund/VA” by the Sixteenth Amended and Restated Declaration of Trust) and “Oppenheimer Growth Fund,” (the said “Oppenheimer Growth Fund” having subsequently been renamed “Oppenheimer Capital Appreciation Fund/VA by the Ninth Restated Declaration of Trust dated May 1, 1999); (ii) by the First Restated Declaration of Trust dated March 11, 1986, “Oppenheimer High Income Fund/VA” and “Oppenheimer Capital Appreciation Fund” (the said “Oppenheimer Capital Appreciation Fund” having subsequently been renamed “Oppenheimer Aggressive Growth Fund/VA” by the Eighth Restated Declaration of Trust dated May 1, 1998 and further renamed “Oppenheimer MidCap Fund/VA” by the Seventeenth Amended and Restated Declaration of Trust dated April 30, 2006 and further renamed “Oppenheimer Small- & Mid-Cap Growth Fund/VA” by this Eighteenth Amended and Restated Declaration of Trust dated April 30, 2010); (iii) “Oppenheimer Multiple Strategies Fund/VA,” established by the Third Restated Declaration of Trust dated October 21, 1986 (the said “Oppenheimer Multiple Strategies Fund/VA” having subsequently been renamed “Oppenheimer Balanced Fund/VA” by the Fifteenth Restated Declaration of Trust dated May 1, 2004); (iv) “Oppenheimer Global Securities Fund/VA” established by the Fourth Restated Declaration of Trust dated June 4, 1990; (v) “Oppenheimer Strategic Bond Fund/VA” established by the Fifth Restated Declaration of Trust dated February 25, 1993 (the said “Oppenheimer Strategic Bond Fund/VA” having subsequently been renamed “Oppenheimer Global Strategic Income Fund/VA” by this Eighteenth Amended and Restated Declaration of Trust dated April 30, 2010); (vi) by the Sixth Restated Declaration of Trust dated February 28, 1995, “Oppenheimer Growth & Income Fund” (the said “Oppenheimer Growth & Income Fund” having subsequently been renamed “Oppenheimer Main Street Growth & Income Fund/VA” by the Ninth Restated Declaration of Trust dated May 1, 1999) and further renamed “Oppenheimer Main Street Fund/VA” by the Fourteenth Restated Declaration of Trust dated May 1, 2003); (vii) by the Seventh Restated Declaration of Trust dated December 16, 1997, “Oppenheimer Discovery Fund” (the said “Oppenheimer Discovery Fund” having been subsequently renamed “Oppenheimer Small Cap Growth Fund” by the Eighth Restated Declaration of Trust dated May 1, 1998 and further renamed “Oppenheimer Main Street Small Cap Fund/VA” by the Twelfth Restated Declaration of Trust dated May 1, 2001); and (viii) “Oppenheimer Value Fund/VA” established by the Thirteenth Amended and Restated Declaration of Trust dated August 27, 2002. By the Ninth Restated Declaration of Trust dated May 1, 2000, all shares then established and designated were renamed by adding the designation “/VA” to them.

Establishment and Designation of Classes: The Shares of Oppenheimer Money Fund/VA, Oppenheimer High Income Fund/VA, Oppenheimer Bond Fund/VA, Oppenheimer Global Securities Fund/VA, Oppenheimer Aggressive Growth Fund/VA, Oppenheimer Capital Appreciation Fund/VA, Oppenheimer Multiple Strategies Fund/VA, Oppenheimer Strategic Bond Fund/VA, Oppenheimer Main Street Growth & Income Fund/VA, Oppenheimer Main Street Small Cap Fund/VA and Oppenheimer Value Fund/VA have previously been divided into three Classes as follows: (i) one class of the Shares of each Series authorized since the establishment and designation of that Series has no class designation other than the name of the Series set forth above; (ii) one class of the Shares of each Series as established and designated upon the division of the Shares of each Series into two Classes by the Eighth Restated Declaration of Trust dated May 1, 1998 ( “Class 2 shares”) and renamed “Service Shares” by the Tenth Restated Declaration of Trust dated May 1, 2000 and Service Shares subsequently established and designated by later amendments to this Declaration of Trust; and (iii) one class of the Shares of each Series, as established and designated by the Fourteenth Amended and Restated Declaration of Trust dated May 1, 2003, known as the Class 3 Shares.

     The Trustees of the Trust established and designated a new fourth class of Shares of each Series, by the Fifteenth Amended and Restated Declaration of Trust dated May 1, 2004, known as the Class 4 Shares.

Termination of Series and Classes: The Trustees terminated the Series of Shares, “Oppenheimer Real Asset Fund,” that was established by the SEVENTH Restated Declaration of Trust dated December 16, 1997, for which no shares were ever issued.

Further Actions: Actions previously taken by the Trustees to establish and designate Series and Classes of Shares and the rights and preferences thereof shall not limit the authority of the Trustees set forth in parts 1 and 2 of this ARTICLE FOURTH to establish and designate any further Series or Classes of Shares.

Rights and Preferences: In addition to the rights and preferences described in parts 1 and 2 of this ARTICLE FOURTH with respect to Series and Classes, the Series and Classes established hereby shall have the relative rights and preferences described in this part 3 of this ARTICLE FOURTH. The Shares of any further Series or Classes that may from time to time be established and designated by the Trustees shall (unless the Trustees otherwise determine with respect to some further Series or Classes at the time of establishing and designating the same) have the following relative rights and preferences:

(a)     Assets Belonging to Series or Class. All consideration received by the Trust for the issue or sale of Shares of a particular Series or any Class thereof, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to that Series (and may be allocated to any Classes thereof) for all purposes, subject only to the rights of creditors, and shall be so recorded upon the books of account of the Trust. Such consideration, assets, income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds, in whatever form the same may be, together with any General Items allocated to that Series as provided in the following sentence, are herein referred to as “assets belonging to” that Series. In the event that there are any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular Series (collectively “General Items”), the Trustees shall allocate such General Items to and among any one or more of the Series established and designated from time to time in such manner and on such basis as they, in their sole discretion, deem fair and equitable; and any General Items so allocated to a particular Series shall belong to that Series (and be allocable to any Classes thereof). Each such allocation by the Trustees shall be conclusive and binding upon the Shareholders of all Series (and any Classes thereof) for all purposes. No Shareholder or former Shareholder of any Series or Class shall have a claim on or any right to any assets allocated or belonging to any other Series or Class.

(b)     (1)     Liabilities Belonging to Series. The liabilities, expenses, costs, charges and reserves attributable to each Series shall be charged and allocated to the assets belonging to each particular Series. Any general liabilities, expenses, costs, charges and reserves of the Trust which are not identifiable as belonging to any particular Series shall be allocated and charged by the Trustees to and among any one or more of the Series established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. The liabilities, expenses, costs, charges and reserves allocated and so charged to each Series are herein referred to as “liabilities belonging to” that Series. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the shareholders of all Series for all purposes.

(2)     Liabilities Belonging to a Class. If a Series is divided into more than one Class, the liabilities, expenses, costs, charges and reserves attributable to a Class shall be charged and allocated to the Class to which such liabilities, expenses, costs, charges or reserves are attributable. Any general liabilities, expenses, costs, charges or reserves belonging to the Series which are not identifiable as belonging to any particular Class shall be allocated and charged by the Trustees to and among any one or more of the Classes established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. The liabilities, expenses, costs, charges and reserves allocated and so charged to each Class are herein referred to as “liabilities belonging to” that Class. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the holders of all Classes for all purposes.

(c)     Dividends. Dividends and distributions on Shares of a particular Series or Class may be paid to the holders of Shares of that Series or Class, with such frequency as the Trustees may determine, which may be daily or otherwise pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine, from such of the income, capital gains accrued or realized, and capital and surplus, from the assets belonging to that Series, or in the case of a Class, belonging to such Series and being allocable to such Class, as the Trustees may determine, after providing for actual and accrued liabilities belonging to such Series or Class. All dividends and distributions on Shares of a particular Series or Class shall be distributed pro rata to the Shareholders of such Series or Class in proportion to the number of Shares of such Series or Class held by such Shareholders at the date and time of record established for the payment of such dividends or distributions, except that in connection with any dividend or distribution program or procedure the Trustees may determine that no dividend or distribution shall be payable on Shares as to which the Shareholder’s purchase order and/or payment have not been received by the time or times established by the Trustees under such program or procedure. Such dividends and distributions may be made in cash or Shares of that Series or Class or a combination thereof as determined by the Trustees or pursuant to any program that the Trustees may have in effect at the time for the election by each Shareholder of the mode of the making of such dividend or distribution to that Shareholder. Any such dividend or distribution paid in Shares will be paid at the net asset value thereof as determined in accordance with part 13 of Article SEVENTH. Notwithstanding anything in this Declaration of Trust to the contrary, the Trustees may at any time declare and distribute a dividend of stock or other property pro rata among the Shareholders of a particular Series or Class at the date and time of record established for the payment of such dividends or distributions.

(d)     Liquidation. In the event of the liquidation or dissolution of the Trust or any Series or Class thereof, the Shareholders of each Series and all Classes of each Series that have been established and designated and are being liquidated and dissolved shall be entitled to receive, as a Series or Class, when and as declared by the Trustees, the excess of the assets belonging to that Series or, in the case of a Class, belonging to that Series and allocable to that Class, over the liabilities belonging to that Series or Class. Upon the liquidation or dissolution of the Trust or any Series or Class pursuant to this part 3(d) of this Article FOURTH the Trustees shall make provisions for the payment of all outstanding obligations, taxes and other liabilities, accrued or contingent, of the Trust or that Series or Class. The assets so distributable to the Shareholders of any particular Class and Series shall be distributed among such Shareholders in proportion to the relative net asset value of such Shares. The liquidation of the Trust or any particular Series or Class thereof may be authorized at any time by vote of a majority of the Trustees or instrument executed by a majority of their number then in office, provided the Trustees find that it is in the best interest of the Shareholders of such Series or Class or as otherwise provided in this Declaration of Trust or the instrument establishing such Series or Class. The Trustees shall provide written notice to affected shareholders of a termination effected under this part 3(d) of this Article FOURTH.

(e)     Transfer. All Shares of each particular Series or Class shall be transferable, but transfers of Shares of a particular Class and Series will be recorded on the Share transfer records of the Trust applicable to such Series or Class of that Series, as kept by the Trust or by any transfer or similar agent, as the case may be, only at such times as Shareholders shall have the right to require the Trust to redeem Shares of such Series or Class of that Series and at such other times as may be permitted by the Trustees.

(f)     Equality. Except as provided herein or in the instrument designating and establishing any Series or Class, all Shares of a particular Series or Class shall represent an equal proportionate interest in the assets belonging to that Series, or in the case of a Class, belonging to that Series and allocable to that Class, (subject to the liabilities belonging to that Series or that Class), and each Share of any particular Series or Class shall be equal to each other Share of that Series or Class; but the provisions of this sentence shall not restrict any distinctions permissible under this Article FOURTH that may exist with respect to Shares of the different Classes of a Series. The Trustees may from time to time divide or combine the Shares of any particular Class or Series into a greater or lesser number of Shares of that Class or Series provided that such division or combination does not change the proportionate beneficial interest in the assets belonging to that Series or allocable to that Class or in any way affect the rights of Shares of any other Class or Series.

(g)     Fractions. Any fractional Share of any Class or Series, if any such fractional Share is outstanding, shall carry proportionately all the rights and obligations of a whole Share of that Class and Series, including those rights and obligations with respect to voting, receipt of dividends and distributions, redemption of Shares, and liquidation of the Trust.

(h)     Conversion Rights. Subject to compliance with the requirements of the 1940 Act, the Trustees shall have the authority to provide that (i) holders of Shares of any Series shall have the right to exchange said Shares into Shares of one or more other Series of Shares, (ii) holders of shares of any Class shall have the right to exchange said Shares into Shares of one or more other Classes of the same or a different Series, and/or (iii) the Trust shall have the right to carry out exchanges of the aforesaid kind, in each case in accordance with such requirements and procedures as may be established by the Trustees.

(i)     Ownership of Shares. The ownership of Shares shall be recorded on the books of the Trust or of a transfer or similar agent for the Trust, which books shall be maintained separately for the Shares of each Class and Series that has been established and designated. No certification certifying the ownership of Shares need be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, the use of facsimile signatures, the transfer of Shares and similar matters. The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to who are the Shareholders and as to the number of Shares of each Class and Series held from time to time by each such Shareholder.

(j)     Investments in the Trust. The Trustees may accept investments in the Trust from such persons and on such terms and for such consideration, not inconsistent with the provisions of the 1940 Act, as they from time to time authorize or determine. Such investments may be in the form of cash, securities or other property in which the appropriate Series is authorized to invest, hold or own, valued as provided in part 13, Article SEVENTH. The Trustees may authorize any distributor, principal underwriter, custodian, transfer agent or other person to accept orders for the purchase or sale of Shares that conform to such authorized terms and to reject any purchase or sale orders for Shares whether or not conforming to such authorized terms.

ARTICLE FIFTH – SHAREHOLDERS’ VOTING POWERS AND MEETINGS

The following provisions are hereby adopted with respect to voting Shares of the Trust and certain other rights:

1.     The Shareholders shall have the power to vote only (a) for the election of Trustees when that issue is submitted to Shareholders, or removal of Trustees to the extent and as provided in Article SIXTH, (b) with respect to the amendment of this Declaration of Trust to the extent and as provided in part 12, Article NINTH, (c) with respect to transactions with respect to the Trust, a Series or Class as provided in part 4(a), Article NINTH, (d) to the same extent as the shareholders of a Massachusetts business corporation, as to whether or not a court action, proceeding or claim should be brought or maintained derivatively or as a class action on behalf of the Trust, any Series, Class or the Shareholders, (e) with respect to those matters relating to the Trust as may be required by the 1940 Act or required by law, by this Declaration of Trust, or the By-Laws of the Trust or any registration statement of the Trust filed with the Commission or any State, or as the Trustees may consider desirable, and (f) with respect to any other matter which the Trustees, in their sole discretion, shall submit to the Shareholders.

2.     The Trust will not hold shareholder meetings unless required by the 1940 Act, the provisions of this Declaration of Trust, or any other applicable law. The Trustees may call a meeting of shareholders from time to time.

3.     As to each matter submitted to a vote of Shareholders, each Shareholder shall be entitled to one vote for each whole Share and to a proportionate fractional vote for each fractional Share standing in such Shareholder’s name on the books of the Trust irrespective of the Series thereof or the Class thereof and all Shares of all Series and Classes shall vote together as a single Class; provided, however, that (i) as to any matter with respect to which a separate vote of one or more Series or Classes thereof is required by the 1940 Act or the provisions of the writing establishing and designating the Series or Class, such requirements as to a separate vote by such Series or Class thereof shall apply in lieu of all Shares of all Series and Classes thereof voting together as a single Class; and (ii) as to any matter which affects only the interests of one or more particular Series or Classes thereof, only the holders of Shares of the one or more affected Series or Classes thereof shall be entitled to vote, and each such Series or Class shall vote as a separate Class. All Shares of a Series shall have identical voting rights, and all Shares of a Class of a Series shall have identical voting rights. Shares may be voted in person or by proxy. Proxies may be given by or on behalf of a Shareholder orally or in writing or pursuant to any computerized, telephonic, or mechanical data gathering process.

4.     Except as required by the 1940 Act or other applicable law, the presence in person or by proxy of one-third of the Shares entitled to vote shall be a quorum for the transaction of business at a Shareholders’ meeting, provided, however, that if any action to be taken by the Shareholders of a Series or Class requires an affirmative vote of a majority, or more than a majority, of the Shares outstanding and entitled to vote, then with respect to voting on that particular issue the presence in person or by proxy of the holders of a majority of the Shares outstanding and entitled to vote at such a meeting shall constitute a quorum for the transaction of business with respect to such issue. Any number less than a quorum shall be sufficient for adjournments. If at any meeting of the Shareholders there shall be less than a quorum present with respect to a particular issue to be voted on, such meeting may be adjourned, without further notice, with respect to such issue from time to time until a quorum shall be present with respect to such issue, but voting may take place with respect to issues for which a quorum is present. Any meeting of Shareholders, whether or not a quorum is present, may be adjourned with respect to any one or more items of business for any lawful purpose, provided that no meeting shall be adjourned for more than six months beyond the originally scheduled date. Any adjourned session or sessions may be held, within a reasonable time after the date for the original meeting without the necessity of further notice. A majority of the Shares voted at a meeting at which a quorum is present shall decide any questions and a plurality shall elect a Trustee, except when a different vote is required by any provision of the 1940 Act or other applicable law or by this Declaration of Trust or By-Laws.

5.     Each Shareholder, upon request to the Trust in proper form determined by the Trust, shall be entitled to require the Trust to redeem from the net assets of that Series all or part of the Shares of such Series and Class standing in the name of such Shareholder. The method of computing such net asset value, the time at which such net asset value shall be computed and the time within which the Trust shall make payment therefor, shall be determined as hereinafter provided in Article SEVENTH of this Declaration of Trust. Notwithstanding the foregoing, the Trustees, when permitted or required to do so by the 1940 Act, may suspend the right of the Shareholders to require the Trust to redeem Shares.

6.     No Shareholder shall, as such holder, have any right to purchase or subscribe for any Shares of the Trust which it may issue or sell, other than such right, if any, as the Trustees, in their discretion, may determine.

7.     All persons who shall acquire Shares shall acquire the same subject to the provisions of the Declaration of Trust.

8.     Cumulative voting for the election of Trustees shall not be allowed.

ARTICLE SIXTH – THE TRUSTEES

1.     The persons who shall act as Trustees until their successors are duly chosen and qualify are the trustees executing this Declaration of Trust or any counterpart thereof. However, the By-Laws of the Trust may fix the number of Trustees at a number greater or lesser than the number of initial Trustees and may authorize the Trustees to increase or decrease the number of Trustees, to fill any vacancies on the Board which may occur for any reason including any vacancies created by any such increase in the number of Trustees, to set and alter the terms of office of the Trustees and to lengthen or lessen their own terms of office or make their terms of office of indefinite duration, all subject to the 1940 Act, as amended from time to time, and to this Article SIXTH. Unless otherwise provided by the By-Laws of the Trust, the Trustees need not be Shareholders.

2.     A Trustee at any time may be removed either with or without cause by resolution duly adopted by the affirmative vote of the holders of two-thirds of the outstanding Shares, present in person or by proxy at any meeting of Shareholders called for such purpose; such a meeting shall be called by the Trustees when requested in writing to do so by the record holders of not less than ten per centum of the outstanding Shares. A Trustee may also be removed by the Board of Trustees, as provided in the By-Laws of the Trust.

3.     The Trustees shall make available a list of names and addresses of all Shareholders as recorded on the books of the Trust, upon receipt of the request in writing signed by not less than ten Shareholders (who have been shareholders for at least six months) holding in the aggregate shares of the Trust valued at not less than $25,000 at current offering price (as defined in the then effective Prospectus and/or Statement of Additional Information relating to the Shares under the Securities Act of 1933, as amended from time to time) or holding not less than 1% in amount of the entire amount of Shares issued and outstanding; such request must state that such Shareholders wish to communicate with other Shareholders with a view to obtaining signatures to a request for a meeting to take action pursuant to part 2 of this Article SIXTH and be accompanied by a form of communication to the Shareholders. The Trustees may, in their discretion, satisfy their obligation under this part 3 by either making available the Shareholder list to such Shareholders at the principal offices of the Trust, or at the offices of the Trust’s transfer agent, during regular business hours, or by mailing a copy of such communication and form of request, at the expense of such requesting Shareholders, to all other Shareholders, and the Trustees may also take such other action as may be permitted under Section 16(c) of the 1940 Act.

ARTICLE SEVENTH – POWERS OF TRUSTEES

The following provisions are hereby adopted for the purpose of defining, limiting and regulating the powers of the Trust, the Trustees and the Shareholders.

1.     As soon as any Trustee is duly elected by the Shareholders or the Trustees and shall have accepted this Trust, the Trust estate shall vest in the new Trustee or Trustees, together with the continuing Trustees, without any further act or conveyance, and he or she shall be deemed a Trustee hereunder.

2.     The death, declination, resignation, retirement, removal, or incapacity of the Trustees, or any one of them, shall not operate to annul or terminate the Trust or any Series but the Trust shall continue in full force and effect pursuant to the terms of this Declaration of Trust.

3.     The assets of the Trust shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. All of the assets of the Trust shall at all times be considered as vested in the Trustees. No Shareholder shall have, as a holder of beneficial interest in the Trust, any authority, power or right whatsoever to transact business for or on behalf of the Trust, or on behalf of the Trustees, in connection with the property or assets of the Trust, or in any part thereof.

4.     The Trustees in all instances shall act as principals, and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute, and to authorize the officers and agents of the Trust to make and execute, any and all contracts and instruments that they may consider necessary or appropriate in connection with the management of the Trust. Except as otherwise provided herein or in the 1940 Act, the Trustees shall not in any way be bound or limited by present or future laws or customs in regard to Trust investments, but shall have full authority and power to make any and all investments which they, in their uncontrolled discretion and to the same extent as if the Trustees were the sole owners of the assets of the Trust and the business in their own right, shall deem proper to accomplish the purpose of this Trust. Subject to any applicable limitation in this Declaration of Trust or by the By-Laws of the Trust, and in addition to the powers otherwise granted herein, the Trustees shall have power and authority:

(a)     to adopt By-Laws not inconsistent with this Declaration of Trust providing for the conduct of the business of the Trust, including meetings of the Shareholders and Trustees, and other related matters, and to amend and repeal them to the extent that they do not reserve that right to the Shareholders;

(b)     to elect and remove such officers and appoint and terminate such officers as they consider appropriate with or without cause, and to appoint and terminate agents and consultants and hire and terminate employees, any one or more of the foregoing of whom may be a Trustee, and may provide for the compensation of all of the foregoing; to appoint and designate from among the Trustees or other qualified persons such committees as the Trustees may determine and to terminate any such committee and remove any member of such committee;

(c)     to employ as custodian of any assets of the Trust one or more banks, trust companies, companies that are members of a national securities exchange, or any other entity qualified and eligible to act as a custodian under the 1940 Act, as modified by or interpreted by any applicable order or orders of the Commission or any rules or regulations adopted or interpretive releases of the Commission thereunder, subject to any conditions set forth in this Declaration of Trust or in the By-Laws, and may authorize such depository or custodian to employ subcustodians or agents;

(d)     to retain one or more transfer agents and shareholder servicing agents, or both, and may authorize such transfer agents or servicing agents to employ sub-agents;

(e)     to provide for the distribution of Shares either through a principal underwriter or the Trust itself or both or otherwise;

(f)     to set record dates by resolution of the Trustees or in the manner provided for in the By-Laws of the Trust;

(g)     to delegate such authority as they consider desirable to any officers of the Trust and to any investment adviser, manager, custodian or underwriter, or other agent or independent contractor;

(h)     to vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property held in Trust hereunder; and to execute and deliver powers of attorney to or otherwise authorize by standing policies adopted by the Trustees, such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper;

(i)     to exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities held in trust hereunder;

(j)     to hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, either in its own name or in the name of a custodian, subcustodian or a nominee or nominees or otherwise;

(k)     to consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which is held in the Trust; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern, and to pay calls or subscriptions with respect to any security or instrument held in the Trust;

(l)     to join with other holders of any security or instrument in acting through a committee, depositary, voting trustee or otherwise, and in that connection to deposit any security or instrument with, or transfer any security to, any such committee, depositary or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depositary or trustee as the Trustees shall deem proper;

(m)     to sue or be sued in the name of the Trust;

(n)     to compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes;

(o)     to make, by resolutions adopted by the Trustees or in the manner provided in the By-Laws, distributions of income and of capital gains to Shareholders;

(p)     to borrow money and to pledge, mortgage or hypothecate the assets of the Trust or any part thereof, to the extent and in the manner permitted by the 1940 Act;

(q)     to enter into investment advisory or management contracts, subject to the 1940 Act, with any one or more corporations, partnerships, trusts, associations or other persons;

(r)     to make loans of cash and/or securities or other assets of the Trust;

(s)     to change the name of the Trust or any Class or Series of the Trust as they consider appropriate without prior shareholder approval;

(t)     to establish officers’ and Trustees’ fees or compensation and fees or compensation for committees of the Trustees to be paid by the Trust or each Series thereof in such manner and amount as the Trustees may determine;

(u)     to invest all or any portion of the Trust’s assets in any one or more registered investment companies, including investment by means of transfer of such assets in exchange for an interest or interests in such investment company or investment companies or by any other means approved by the Trustees;

(v)     to determine whether a minimum and/or maximum value should apply to accounts holding shares, to fix such values and establish the procedures to cause the involuntary redemption of accounts that do not satisfy such criteria; and

(w)     to enter into joint ventures, general or limited partnerships and any other combinations or associations;

(x)     to endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof;

(y)     to purchase and pay for entirely out of Trust property such insurance and/or bonding as they may deem necessary or appropriate for the conduct of the business, including, without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, consultants, investment advisers, managers, administrators, distributors, principal underwriters, or independent contractors, or any thereof (or any person connected therewith), of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person in any such capacity, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such person against such liability;

(z)     to pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust;

(aa)     to adopt on behalf of the Trust or any Series with respect to any Class thereof a plan of distribution and related agreements thereto pursuant to the terms of Rule 12b-1 of the 1940 Act and to make payments from the assets of the Trust or the relevant Series or Class pursuant to said Rule 12b-1 Plan;

(bb)     to operate as and carry on the business of an investment company and to exercise all the powers necessary and appropriate to the conduct of such operations;

(cc)     to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, and otherwise deal in Shares and, subject to the provisions set forth in Article FOURTH and part 4, Article FIFTH, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property of the Trust, or the particular Series of the Trust, with respect to which such Shares are issued;

     (dd)     in general to carry on any other business in connection with or incidental to any of the foregoing powers, to do everything necessary, suitable or proper for the accomplishment of any purpose or the attainment of any object or the furtherance of any power herein before set forth, either alone or in association with others, and to do every other act or thing incidental or appurtenant to or growing out of or connected with the aforesaid business or purposes, objects or powers.

The foregoing clauses shall be construed both as objects and powers, and the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of the Trustees. Any action by one or more of the Trustees in their capacity as such hereunder shall be deemed an action on behalf of the Trust or the applicable Series and not an action in an individual capacity.

5.     No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order.

6.     (a)     The Trustees shall have no power to bind any Shareholder personally or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of subscription to any Shares or otherwise. This paragraph shall not limit the right of the Trustees to assert claims against any shareholder based upon the acts or omissions of such shareholder or for any other reason.

(b)     Whenever this Declaration of Trust calls for or permits any action to be taken by the Trustees hereunder, such action shall mean that taken by the Board of Trustees by vote of the majority of a quorum of Trustees as set forth from time to time in the By-Laws of the Trust or as required by the 1940 Act.

(c)     The Trustees shall possess and exercise any and all such additional powers as are reasonably implied from the powers herein contained such as may be necessary or convenient in the conduct of any business or enterprise of the Trust, to do and perform anything necessary, suitable, or proper for the accomplishment of any of the purposes, or the attainment of any one or more of the objects, herein enumerated, or which shall at any time appear conducive to or expedient for the protection or benefit of the Trust, and to do and perform all other acts and things necessary or incidental to the purposes herein before set forth, or that may be deemed necessary by the Trustees. Without limiting the generality of the foregoing, except as otherwise provided herein or in the 1940 Act, the Trustees shall not in any way be bound or limited by present or future laws or customs in regard to trust investments, but shall have full authority and power to make any and all investments that they, in their discretion, shall deem proper to accomplish the purpose of this Trust.

(d)     The Trustees shall have the power, to the extent not inconsistent with the 1940 Act, to determine conclusively whether any moneys, securities, or other properties of the Trust are, for the purposes of this Trust, to be considered as capital or income and in what manner any expenses or disbursements are to be borne as between capital and income whether or not in the absence of this provision such moneys, securities, or other properties would be regarded as capital or income and whether or not in the absence of this provision such expenses or disbursements would ordinarily be charged to capital or to income.

7.     The By-Laws of the Trust may divide the Trustees into classes and prescribe the tenure of office of the several classes, but no class of Trustee shall be elected for a period shorter than that from the time of the election following the division into classes until the next meeting of Trustees and thereafter for a period shorter than the interval between meetings of Trustees or for a period longer than five years, and the term of office of at least one class shall expire each year.

8.     The Shareholders shall, for any lawful purpose, have the right to inspect the records, documents, accounts and books of the Trust, subject to reasonable regulations of the Trustees, not contrary to Massachusetts law, as to whether and to what extent, and at what times and places, and under what conditions and regulations, such right shall be exercised.

9.     Any officer elected or appointed by the Trustees or by the Shareholders or otherwise, may be removed at any time, with or without cause.

10.     The Trustees shall have power to hold their meetings, to have an office or offices and, subject to the provisions of the laws of Massachusetts, to keep the books of the Trust outside of said Commonwealth at such places as may from time to time be designated by them. Action may be taken by the Trustees without a meeting by unanimous written consent or by telephone or similar method of communication.

11.     Securities held by the Trust shall be voted in person or by proxy by the President or a Vice-President, or such officer or officers of the Trust or such other agent of the Trust as the Trustees shall designate or otherwise authorize by standing policies adopted by the Trustees for the purpose, or by a proxy or proxies thereunto duly authorized by the Trustees.

12.     (a)     Subject to the provisions of the 1940 Act, any Trustee, officer or employee, individually, or any partnership or association of which any Trustee, officer or employee may be a member, or any corporation or association of which any Trustee, officer or employee may be an officer, partner, director, trustee, employee or stockholder, or otherwise may have an interest, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Trust, and in the absence of fraud no contract or other transaction shall be thereby affected or invalidated; provided that in such case a Trustee, officer or employee or a partnership, corporation or association of which a Trustee, officer or employee is a member, officer, director, trustee, employee or stockholder is so interested, such fact shall be disclosed or shall have been known to the Trustees including those Trustees who are not so interested and who are neither “interested” nor “affiliated” persons as those terms are defined in the 1940 Act, or a majority thereof; and any Trustee who is so interested, or who is also a director, officer, partner, trustee, employee or stockholder of such other corporation or a member of such partnership or association which is so interested, may be counted in determining the existence of a quorum at any meeting of the Trustees which shall authorize any such contract or transaction, and may vote thereat to authorize any such contract or transaction, with like force and effect as if he were not so interested.

(b)     Specifically, but without limitation of the foregoing, the Trust may enter into a management or investment advisory contract or underwriting contract and other contracts with, and may otherwise do business with any manager or investment adviser for the Trust and/or principal underwriter of the Shares of the Trust or any subsidiary or affiliate of any such manager or investment adviser and/or principal underwriter and may permit any such firm or corporation to enter into any contracts or other arrangements with any other firm or corporation relating to the Trust notwithstanding that the Trustees of the Trust may be composed in part of partners, directors, officers or employees of any such firm or corporation, and officers of the Trust may have been or may be or become partners, directors, officers or employees of any such firm or corporation, and in the absence of fraud the Trust and any such firm or corporation may deal freely with each other, and no such contract or transaction between the Trust and any such firm or corporation shall be invalidated or in any way affected thereby, nor shall any Trustee or officer of the Trust be liable to the Trust or to any Shareholder or creditor thereof or to any other person for any loss incurred by it or him solely because of the existence of any such contract or transaction; provided that nothing herein shall protect any director or officer of the Trust against any liability to the Trust or to its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.

(c)     As used in this paragraph the following terms shall have the meanings set forth below:

(i)     the term “indemnitee” shall mean any present or former Trustee, officer or employee of the Trust, any present or former Trustee, partner, Director or officer of another trust, partnership, corporation or association whose securities are or were owned by the Trust or of which the Trust is or was a creditor and who served or serves in such capacity at the request of the Trust, and the heirs, executors, administrators, successors and assigns of any of the foregoing; however, whenever conduct by an indemnitee is referred to, the conduct shall be that of the original indemnitee rather than that of the heir, executor, administrator, successor or assignee;

(ii)     the term “covered proceeding” shall mean any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to which an indemnitee is or was a party or is threatened to be made a party by reason of the fact or facts under which he or it is an indemnitee as defined above;

(iii)     the term “disabling conduct” shall mean willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office in question;

(iv)     the term “covered expenses” shall mean expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by an indemnitee in connection with a covered proceeding; and

(v)     the term “adjudication of liability” shall mean, as to any covered proceeding and as to any indemnitee, an adverse determination as to the indemnitee whether by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent.

(d)     The Trust shall not indemnify any indemnitee for any covered expenses in any covered proceeding if there has been an adjudication of liability against such indemnitee expressly based on a finding of disabling conduct.

(e)     Except as set forth in paragraph (d) above, the Trust shall indemnify any indemnitee for covered expenses in any covered proceeding, whether or not there is an adjudication of liability as to such indemnitee, such indemnification by the Trust to be to the fullest extent now or hereafter permitted by any applicable law unless the By-laws limit or restrict the indemnification to which any indemnitee may be entitled. The Board of Trustees may adopt by-law provisions to implement subparagraphs (c), (d) and (e) hereof.

(f)     Nothing herein shall be deemed to affect the right of the Trust and/or any indemnitee to acquire and pay for any insurance covering any or all indemnities to the extent permitted by applicable law or to affect any other indemnification rights to which any indemnitee may be entitled to the extent permitted by applicable law. Such rights to indemnification shall not, except as otherwise provided by law, be deemed exclusive of any other rights to which such indemnitee may be entitled under any statute, By-Law, contract or otherwise.

13.     The Trustees are empowered, in their absolute discretion, to establish the bases or times, or both, for determining the net asset value per Share of any Class and Series in accordance with the 1940 Act and to authorize the voluntary purchase by any Class and Series, either directly or through an agent, of Shares of any Class and Series upon such terms and conditions and for such consideration as the Trustees shall deem advisable in accordance with the 1940 Act.

14.     Payment of the net asset value per Share of any Class and Series properly surrendered to it for redemption shall be made by the Trust within seven days, or as specified in any applicable law or regulation, after tender of such stock or request for redemption to the Trust for such purpose together with any additional documentation that may be reasonably required by the Trust or its transfer agent to evidence the authority of the tenderor to make such request, plus any period of time during which the right of the holders of the shares of such Class of that Series to require the Trust to redeem such shares has been suspended. Any such payment may be made in portfolio securities of such Class of that Series and/or in cash, as the Trustees shall deem advisable, and no Shareholder shall have a right, other than as determined by the Trustees, to have Shares redeemed in kind.

15.     The Trust shall have the right, at any time, without prior notice to the Shareholder to redeem Shares of the Class and Series held by a Shareholder held in any account registered in the name of such Shareholder for its current net asset value, for any reason, including, but not limited to, (i) the determination that such redemption is necessary to reimburse either that Series or Class of the Trust or the distributor (i.e., principal underwriter) of the Shares for any loss either has sustained by reason of the failure of such Shareholder to make timely and good payment for Shares purchased or subscribed for by such Shareholder, regardless of whether such Shareholder was a Shareholder at the time of such purchase or subscription, (ii) the failure of a Shareholder to supply a tax identification number if required to do so, (iii) the failure of a Shareholder to pay when due for the purchase of Shares issued to him and subject to and upon such terms and conditions as the Trustees may from time to time prescribe, (iv) pursuant to authorization by a Shareholder to pay fees or make other payments to one or more third parties, including, without limitation, any affiliate of the investment adviser of the Trust or any Series thereof, or (v) if the aggregate net asset value of all Shares of such Shareholder (taken at cost or value, as determined by the Board) has been reduced below an amount established by the Board of Trustees from time to time as the minimum amount required to be maintained by Shareholders.

ARTICLE EIGHTH – LICENSE

The name “Oppenheimer” included in the name of the Trust and of any Series shall be used pursuant to a royalty-free, non-exclusive license from OppenheimerFunds, Inc. (“OFI”), incidental to and as part of any one or more advisory, management or supervisory contracts which may be entered into by the Trust with OFI. Such license shall allow OFI to inspect and subject to the control of the Board of Trustees to control the nature and quality of services offered by the Trust under such name. The license may be terminated by OFI upon termination of such advisory, management or supervisory contracts or without cause upon 60 days’ written notice, in which case neither the Trust nor any Series or Class shall have any further right to use the name “Oppenheimer” in its name or otherwise and the Trust, the Shareholders and its officers and Trustees shall promptly take whatever action may be necessary to change its name and the names of any Series or Classes accordingly.

ARTICLE NINTH - MISCELLANEOUS:

1.     In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his being or having been a Shareholder and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or the Shareholders’ heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the Trust estate to be held harmless from and indemnified against all loss and expense arising from such liability. The Trust shall, upon request by the Shareholder, assume the defense of any such claim made against any Shareholder for any act or obligation of the Trust and satisfy any judgment thereon.

2.     It is hereby expressly declared that a trust is created hereby and not a partnership, joint stock association, corporation, bailment, or any other form of a legal relationship other than a trust, as contemplated in Massachusetts General Laws Chapter 182. No individual Trustee hereunder shall have any power to bind the Trust unless so authorized by the Trustees, or to personally bind the Trust’s officers or any Shareholder. All persons extending credit to, doing business with, contracting with or having or asserting any claim against the Trust or the Trustees shall look only to the assets of the appropriate Series for payment under any such credit, transaction, contract or claim; and neither the Shareholders nor the Trustees, nor any of their agents, whether past, present or future, shall be personally liable therefor; notice of such disclaimer and agreement thereto shall be given in each agreement, obligation or instrument entered into or executed by Trust or the Trustees. There is hereby expressly disclaimed Shareholder and Trustee liability for the acts and obligations of the Trust. Nothing in this Declaration of Trust shall protect a Trustee or officer against any liability to which such Trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee or of such officer hereunder.

3.     The exercise by the Trustees of their powers and discretion hereunder in good faith and with reasonable care under the circumstances then prevailing, shall be binding upon everyone interested. Subject to the provisions of part 2 of this Article NINTH, the Trustees shall not be liable for errors of judgment or mistakes of fact or law. Subject to the foregoing, (a) Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, consultant, adviser, administrator, distributor or principal underwriter, custodian or transfer, dividend disbursing, Shareholder servicing or accounting agent of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee; (b) the Trustees may take advice of counsel or other experts with respect to the meaning and operations of this Declaration of Trust, applicable laws, contracts, obligations, transactions or any other business the Trust may enter into, and subject to the provisions of part 2 of this Article NINTH, shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice; and (c) in discharging their duties, the Trustees, when acting in good faith, shall be entitled to rely upon the books of account of the Trust and upon written reports made to the Trustees by any officer appointed by them, any independent public accountant, and (with respect to the subject matter of the contract involved) any officer, partner or responsible employee of a party who has been appointed by the Trustees or with whom the Trust has entered into a contract pursuant to Article SEVENTH. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required.

4.     This Trust shall continue without limitation of time but subject to the provisions of sub-sections (a) and (b) of this part 4.

(a)      Subject to applicable Federal and State law, and except as otherwise provided in part 5 of this Article NINTH, the Trustees, with the Majority Vote of Shareholders of an affected Series or Class, may sell and convey all or substantially all the assets of that Series or Class (which sale may be subject to the retention of assets for the payment of liabilities and expenses and may be in the form of a statutory merger to the extent permitted by applicable law) to another issuer or to another Series or Class of the Trust for a consideration which may be or include securities of such issuer or may merge or consolidate with any other corporation, association, trust, or other organization or may sell, lease, or exchange all or a portion of the Trust property or Trust property allocated or belonging to such Series or Class, upon such terms and conditions and for such consideration when and as authorized by such vote. Such transactions may be effected through share-for-share exchanges, transfers or sale of assets, shareholder in-kind redemptions and purchases, exchange offers, or any other method approved by the Trustees. Upon making provision for the payment of liabilities, by assumption by such issuer or otherwise, the Trustees shall distribute the remaining proceeds among the holders of the outstanding Shares of the Series or Class, the assets of which have been so transferred, in proportion to the relative net asset value of such Shares.

(b)     Upon completion of the distribution of the remaining proceeds or the remaining assets as provided in sub-section (a) hereof or pursuant to part 3(d) of Article FOURTH, as applicable, the Series the assets of which have been so transferred shall terminate, and if all the assets of the Trust have been so transferred, the Trust shall terminate and the Trustees shall be discharged of any and all further liabilities and duties hereunder and the right, title and interest of all parties shall be canceled and discharged.

5.     Subject to applicable Federal and state law, the Trustees may without the vote or consent of Shareholders cause to be organized or assist in organizing one or more corporations, trusts, partnerships, limited liability companies, associations, or other organization, under the laws of any jurisdiction, to take over all or a portion of the Trust property or all or a portion of the Trust property allocated or belonging to such Series or Class or to carry on any business in which the Trust shall directly or indirectly have any interest, and to sell, convey and transfer the Trust property or the Trust property allocated or belonging to such Series or Class to any such corporation, trust, limited liability company, partnership, association, or organization in exchange for the shares or securities thereof or otherwise, and to lend money to, subscribe for the shares or securities of, and enter into any contracts with any such corporation, trust, partnership, limited liability company, association, or organization or any corporation, partnership, limited liability company, trust, association, or organization in which the Trust or such Series or Class holds or is about to acquire shares or any other interest. Subject to applicable Federal and state law, the Trustees may also cause a merger or consolidation between the Trust or any successor thereto or any Series or Class thereof and any such corporation, trust, partnership, limited liability company, association, or other organization. Nothing contained herein shall be construed as requiring approval of shareholders for the Trustees to organize or assist in organizing one or more corporations, trusts, partnerships, limited liability companies, associations, or other organizations and selling, conveying, or transferring the Trust property or a portion of the Trust property to such organization or entities; provided, however, that the Trustees shall provide written notice to the affected Shareholders of any transaction whereby, pursuant to this part 5, Article NINTH, the Trust or any Series or Class thereof sells, conveys, or transfers all or a substantial portion of its assets to another entity or merges or consolidates with another entity. Such transactions may be effected through share-for-share exchanges, transfer or sale of assets, shareholder in-kind redemptions and purchases, exchange offers, or any other approved by the Trustees.

6.     The original or a copy of this instrument and of each restated declaration of trust or instrument supplemental hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each supplemental or restated declaration of trust shall be filed with the Secretary of the Commonwealth of Massachusetts, as well as any other governmental office where such filing may from time to time be required. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to whether or not any such supplemental or restated declarations of trust have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this instrument or of any such supplemental or restated declaration of trust. In this instrument or in any such supplemental or restated declaration of trust, references to this instrument, and all expressions like “herein”, “hereof” and “hereunder” shall be deemed to refer to this instrument as amended or affected by any such supplemental or restated declaration of trust. This instrument may be executed in any number of counterparts, each of which shall be deemed an original.

7.     The Trust set forth in this instrument is created under and is to be governed by and construed and administered according to the laws of the Commonwealth of Massachusetts. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust.

8.     In the event that any person advances the organizational expenses of the Trust, such advances shall become an obligation of the Trust subject to such terms and conditions as may be fixed by, and on a date fixed by, or determined with criteria fixed by the Board of Trustees, to be amortized over a period or periods to be fixed by the Board.

9.     Whenever any action is taken under this Declaration of Trust including action which is required or permitted by the 1940 Act or any other applicable law, such action shall be deemed to have been properly taken if such action is in accordance with the construction of the 1940 Act or such other applicable law then in effect as expressed in “no action” letters of the staff of the Commission or any release, rule, regulation or order under the 1940 Act or any decision of a court of competent jurisdiction, notwithstanding that any of the foregoing shall later be found to be invalid or otherwise reversed or modified by any of the foregoing.

10.     Any action which may be taken by the Board of Trustees under this Declaration of Trust or its By-Laws may be taken by the description thereof in the then effective prospectus and/or statement of additional information relating to the Shares under the Securities Act of 1933 or in any proxy statement of the Trust rather than by formal resolution of the Board.

11.     Whenever under this Declaration of Trust, the Board of Trustees is permitted or required to place a value on assets of the Trust, such action may be delegated by the Board, and/or determined in accordance with a formula determined by the Board, to the extent permitted by the 1940 Act.

12.     The Trustee may, without the vote or consent of the Shareholders, amend or otherwise supplement this Declaration of Trust by executing or authorizing an officer of the Trust to execute on their behalf a Restated Declaration of Trust or a Declaration of Trust supplemental hereto, which thereafter shall form a part hereof, provided, however, that none of the following amendments shall be effective unless also approved by a Majority Vote of Shareholders: (i) any amendment to parts 1, 3 and 4, Article FIFTH; (ii) any amendment to this part 12, Article NINTH; (iii) any amendment to part 1, Article NINTH; and (iv) any amendment to part 4(a), Article NINTH that would change the voting rights of Shareholders contained therein. Any amendment required to be submitted to the Shareholders that, as the Trustees determine, shall affect the Shareholders of any Series or Class shall, with respect to the Series or Class so affected, be authorized by vote of the Shareholders of that Series or Class and no vote of Shareholders of a Series or Class not affected by the amendment with respect to that Series or Class shall be required. Notwithstanding anything else herein, any amendment to Article NINTH, part 1 shall not limit the rights to indemnification or insurance provided therein with respect to action or omission or indemnities or Shareholder indemnities prior to such amendment.

     13.     The captions used herein are intended for convenience of reference only, and shall not modify or affect in any manner the meaning or interpretation of any of the provisions of this Agreement. As used herein, the singular shall include the plural, the masculine gender shall include the feminine and neuter, and the neuter gender shall include the masculine and feminine, unless the context otherwise requires.

1

IN WITNESS WHEREOF, the undersigned, acting pursuant to Paragraph 12 of ARTICLE NINTH, has executed this instrument on behalf of the Trustees as of this 28th day of April 2010.

/s/ Kathleen T. Ives__________

Kathleen T. Ives
Assistant Secretary

2

EX-23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Balanced Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Balanced Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Capital Appreciation Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Capital Appreciation Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Core Bond Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Core Bond Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Global Securities Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Global Securities Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Global Strategic Income Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 18, 2010, relating to the financial statements and financial highlights of Oppenheimer Global Strategic Bond Fund/VA (formerly known as Strategic Bond Fund/VA), appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer High Income Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer High Income Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Main Street Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Main Street Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Main Street Small Cap Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Main Street Small Cap Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Money Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Money Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Small- & Mid-Cap Growth Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Small- & Mid-Cap Value Fund (formerly known as Oppenheimer MidCap Fund/VA), appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010
 
 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of

Oppenheimer Variable Account Funds:
 

We consent to the use in this Registration Statement of Oppenheimer Value Fund/VA (one of the portfolios constituting the Oppenheimer Variable Account Funds), of our report dated February 16, 2010, relating to the financial statements and financial highlights of Oppenheimer Value Fund/VA, appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the references to our firm under the headings “Financial Highlights” appearing in the Prospectus, which is also part of such Registration Statement and “Independent Registered Public Accounting Firm” appearing in the Statement of Additional Information.

                         /s/ KPMG LLP
                         KPMG LLP
 
Denver, Colorado

April 26, 2010